Individual sectors struggle amid S&P 500 rally

Individual sectors struggle amid S&P 500 rally | Cboe to debut volatility indexes, FX platform | Fed actions calm fears of market disruption

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June 25, 2020

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Top Story

Individual sectors struggle amid S&P 500 rally

The S&P 500's discretionary and energy sectors look set to achieve the best quarterly performance on record, rising at least 26% quarter to date. Other sectors, however, including real estate and utilities, are hovering above correction territory. After the worst quarter since 2008, the S&P 500 is up 18% this quarter and is reducing year-to-date losses to 5.6%. "It's a difficult environment for investors who are trying to make sense" of sometimes contradictory signals, says Jeffrey Kleintop, chief global investment strategist at Charles Schwab.

Full Story: The Wall Street Journal (tiered subscription model) (6/24)

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Industry Update

Cboe to debut volatility indexes, FX platform

Cboe Global Markets will launch volatility indexes during the third quarter based on the iShares 20+ Year Treasury Bond exchange-traded fund. Cboe will also increase indexes based on interest-rate swaps and eventually list futures and options. Additionally, the company will launch a currency-trading service called Cboe FX Central, offering an alternative to foreign exchange trading.

Full Story: BNN Bloomberg (Canada) (6/24), Financial Times (subscription required) (6/24)

Fed actions calm fears of market disruption

Federal Reserve interventions appear to have stabilized funding markets, with indicators of stress falling to levels last seen in early March. Spreads between three-month Libor and the risk-free rate have slipped back, the benchmark repo rate remains under control, and banks have barely used the Fed's overnight liquidity funding facility this week.

Full Story: Bloomberg (tiered subscription model) (6/25)

US proposes tariffs on $3.1B in UK, EU products

US Trade Representative Robert Lighthizer has called for heavier tariffs on $3.1 billion in products exported by Germany, France, Spain and the UK, raising the possibility of further trade conflicts. The proposal includes higher tariffs on items such as cheese, yogurt and aircraft and new tariffs on beer, gin, olives and trucks.

Full Story: BNN Bloomberg (Canada) (6/24)

Coronavirus-driven bankruptcies hit CLO market

US businesses took on huge debt before the coronavirus pandemic through collateralized loan obligations, which pass debt on to investors through bonds. Many borrowers are no longer able to make payments, triggering bankruptcies and prompting investors to reassess risk in CLOs.

Full Story: The Wall Street Journal (tiered subscription model) (6/24)

Revamped US bank stress tests to challenge analysts

Analysts may find the results of the Federal Reserve's latest bank stress tests, due for release today, particularly difficult to interpret. Uncertainties have arisen because of the coronavirus pandemic coinciding with changes to the test methodology.

Full Story: Reuters (6/24)

New York Focus

Reopening of N.Y. movie theaters, malls, gyms postponed

New York will hold off on reopening the movie theaters, malls and gyms that were closed to slow the spread of the coronavirus, Gov. Andrew Cuomo says. He says the reopenings are being postponed to give the State Department of Health more time to study indoor transmission of the virus.

Full Story: The Wall Street Journal (tiered subscription model) (6/24), New York Post (6/24)

"Black Lives Matter" mural to be put outside Trump Tower

New York City plans to paint a street mural with the message "Black Lives Matter" in front of Trump Tower in Manhattan, said Julia Arredondo, a spokeswoman for Mayor Bill de Blasio. The mural, which is expected to be completed by the Fourth of July, will be painted along Fifth Avenue between 56th and 57th streets.

Full Story: The Hill (6/24)

On The Economy

Coronavirus outbreaks affect economic recovery

A resurgence of coronavirus cases in some states is making its presence felt in the economy, with activity weakening after a pickup when businesses reopened. The stutter suggests recovery is "going to be fits and starts," says Michelle Meyer, head of US economics at Bank of America.

Full Story: BNN Bloomberg (Canada) (6/25)

6.2% of Fed aid used so far

The Federal Reserve has spent $143 billion, or 6.2%, of $2.3 trillion pledged to help the economy survive the coronavirus pandemic. Two main reasons are the complexity of programs and a decrease in demand.

Full Story: CNBC (6/24)

Financial Products

Global X rolls out 2 specialized ETFs

Global X has introduced two exchange-traded funds with narrowly defined equity investment strategies. The Global X S&P Catholic Values Developed ex-US ETF selects investments based on Catholic investing principles, while the Global X US Preferred ETF is linked to an index of preferred securities with floating or variable coupons or dividends.

Full Story: ETF (6/24)