-
ETFs Outpace Mutual Funds: Bloomberg Intelligence Data shows investors added around $427 billion to exchange-traded funds (ETFs) this year while simultaneously pulling just under $470 billion assets out of mutual funds. That is the worst year for mutual fund outflows since data began being tracked in 1990. Despite ETFs momentum they still only account for $5.3 trillion in assets in the US compared to the $17.5 trillion in mutual funds. This discrepancy is largely due to the fact that 401(k)s still primarily invest in mutual funds.
-
China’s Success Becomes Its Threat: With higher interest rates than the rest of the globe, China has benefited from foreign investment funds purchasing 30% more of the country's stocks and bonds than last year. This increased demand has led to a stronger yuan currency, which has risen by 10% since May. The risk is that a rising yuan will decrease demand for Chinese exports, which are driving the economic recovery. However, if China decreases interest rates to make the yuan less attractive then businesses will take out more loans at a time when debt is at a record level.
-
Housing Market Climb Continues : The extremely low interest rates and desire to move into more suburban areas has spurred increased demand in the US housing market. In fact home prices rose 7% year-over-year through the end of 3Q20. Given the immense growth, some analysts now question why the Federal Reserve is still buying $40 billion per month in agency mortgage-backed securities, a market that the Fed now controls over one third of. Continuing to make such purchases may further support price increases that will a make new home less attainable for the first time buyers.
-
Money Managers Embrace Green: Fidelity International, Axa Investment Managers, Calvert Research and Management, Legal & General Investment Management, UBS Asset Management, Wellington Management, and others have signed an initiative to work with pension funds to have their portfolios hit net-zero greenhouse gas emission standards by 2050. These types of movements will directly and negatively impact fossil fuel companies. This past month alone NY State pension ($226 billion) announced it will divest from coal and tar sands by 2040 and evaluate other industries soon after.
Economic Calendar
Monday: N/A
Tuesday: Import price index, Industrial production
Wednesday: Retail sales, Manufacturing PMI, Business inventories, Home builders index, FOMC rate decision
Thursday: Housing starts, building permits
Friday: N/A
