Consumer Sentiment Index | AICPA and SIFMA FMS National Conference on the Securities Industry (Day 3) | GDP sees strong recovery, but headwinds persist
October 30, 2020
SIFMA SmartBrief
News on the capital markets
Morning Bell
The Russell 2000 index is up 3.6% this month, compared with a 1.6% decline for the S&P 500, as investors bet on more fiscal support for the economy. "The economy doesn't have to get back to normal," LPL Financial equity strategist Jeff Buchbinder says. "We just have to have visibility into it and confidence that it's coming."
Full Story: The Wall Street Journal (tiered subscription model) (10/29) 
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Baird goes live with Refinitiv and NRI
Refinitiv and NRI have completed a successful launch of Refinitiv BETA and I-STAR/GX with Baird. The integrated solution enables global diversification for Baird's North American Wealth management customers. Visit our virtual booth at SIFMA Ops Virtual Forum on Nov 4th & 5th to learn more!
Happening Today
Advancing Together: Dematerializing Physical U.S. Securities
By dematerializing physical securities, we can create a more efficient marketplace for all. Read our white paper to see our goals in the next three years to cease the issuance of new physical securities and eliminate the remaining inventory in the industry's vaults.
Industry News
GDP expanded 7.4% in the third quarter compared with Q2, or an annualized 33.1%, regaining a large portion of loss brought by the coronavirus pandemic. However, experts say other indicators suggest the recovery is slowing, with Grant Thornton Chief Economist Diane Swonk noting, "Record gains aren't enough to get us out of the hole that COVID left us in."
Full Story: The Wall Street Journal (tiered subscription model) (10/29),  CNBC (10/29),  CNN (10/29),  The New York Times (tiered subscription model) (10/29) 
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Net income at Fannie Mae increased to $4.23 billion in the third quarter from $2.55 billion in Q2, while net income at Freddie Mac rose to $2.46 billion in Q3 from $1.78 billion in Q2. Both firms have benefited from a healthy mortgage-refinance market, although Fannie expects 2020 net income to be lower than the 2019 amount and predicts an uncertain outlook because of the coronavirus pandemic.
Full Story: The Wall Street Journal (tiered subscription model) (10/29) 
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Recovery rates for credit default swaps at auction have been falling, driven by shifts in funding structures that weaken bondholder claims on bankruptcy, Gillian Tett writes.
Full Story: Financial Times (subscription required) (10/29) 
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Investors withdrew $2.5 billion from US debt funds in the week through Wednesday, according to EPFR Global, amid rising coronavirus cases and a lack of progress on further economic relief.
Full Story: Financial Times (subscription required) (10/29) 
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Credit Suisse is set to hire staffers for an investment banking advisory unit created for high-net-worth clients. Former Bank of America investment banking chief Christian Meissner leads the unit.
Full Story: Reuters (10/29) 
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Six tools for generating alpha
New alternative data sources, massive computing power, and Artificial Intelligence can help uncover alpha-generating insights, but humans need assistance to interpret and understand the signals. Google Cloud shares six powerful tools for efficient signal generation. Download now.
Washington Roundup
The Securities and Exchange Commission's decision not to pursue retail investor protections on leveraged and inverse exchange-traded funds was sharply criticized by some commissioners.
Full Story: Financial Times (subscription required) (10/29) 
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Webinar: Reg BI Reality Check
Since June 30, 2020 regulators have focused on how broker-dealers have revised their practices under the new legislation. Join this webinar facilitated by Jillian Enoch of SIFMA to learn from broker dealers and industry experts on what matters most and what an audit actually looks like. Register Now
Global Update
The European Central Bank has indicated additional economic aid is likely in December. "Incoming information signals that the euro-area economic recovery is losing momentum more rapidly than expected," President Christine Lagarde says.
Full Story: CNN (10/29),  CNBC (10/30),  Financial Times (subscription required) (10/29) 
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Asset Management Report
BlackRock supports a proposal from the International Accounting Standards Board for a single rulemaker to address sustainability standards. The asset manager says multiple disclosure initiatives have led to "a lack of consistent and comparable data."
Full Story: Investment & Pensions Europe magazine online (free registration) (10/29),  Financial Times (subscription required) (10/29) 
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Operations Update
A Bank for International Settlements report says algorithms helped foreign exchange transactions remain relatively smooth when the coronavirus pandemic struck. "While many observers and market participants expected them to be less widely used during a crisis, it appears that the opposite has happened," the report notes.
Full Story: Bloomberg (tiered subscription model) (10/30) 
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Demand for London office space dropped 77% in the third quarter as financial firms instructed staffers to continue working from home, according to the Royal Institution of Chartered Surveyors. A Morgan Stanley poll shows 63% of office workers expect to work from home part of the week in the future.
Full Story: Financial News (UK) (tiered subscription model) (10/29) 
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Data of the Day
First-time unemployment claims totaled 751,000 last week, down from a revised 791,000 the previous week, according to Labor Department data. The latest figure is the lowest since the start of the coronavirus pandemic.
Full Story: The Hill (10/29),  The Wall Street Journal (tiered subscription model) (10/29) 
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SIFMA's Ops Virtual Forum will gather key industry leaders and regulators Nov. 4-5 to discuss critical operations and technology issues facing financial services, including a review of COVID-19-related activities. This two-day virtual program will also address the possible impact of the election results on the industry, as well as focus on areas where the financial industry continues to improve operational efficiencies and manage risk in a digitized world. Sessions include The Pandemic Stress Test, Securities Operations Now, Cybersecurity Threats to the Financial Sector, Regulatory Priorities, Digital Asset Securities, and more.
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The US fixed-income markets are the largest in the world, comprising 39.9% of the $106 trillion securities outstanding across the globe, or $42 trillion (as of the first quarter). Fixed-income markets are an integral component to economic growth, providing efficient, long-term and cost-effective funding. Download the latest SIFMA Research Quarterly for statistics and brief commentary on markets including US Treasurys, mortgage-backed securities, corporate bonds, municipal securities, federal agency securities, asset-backed securities, money markets, repurchase agreements and secured overnight financing rate.
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SIFMA: Invested in America
The capital markets perform a vital function, matching capital to ideas so that those ideas can flourish into successful enterprises, creating millions of jobs and fueling economic growth. SIFMA exists to advocate that America's capital markets operate effectively and efficiently, to the benefit of all market participants.
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David Bowie,
singer-songwriter, musician, actor
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