News Roundups

Fed program in danger of fizzling, Senate confirms Inspector General to oversee bailout funds, and more

Daily news headlines about the stimulus and recovery from June 3, 2020.

Daily news headlines about the stimulus and recovery from June 3, 2020.

Fed Promised to Buy Bonds but Is Finding Few Takers

The Federal Reserve thawed credit markets in March by promising a whatever-it-takes program to buy corporate bonds. Ten weeks later, the Fed has yet to buy a single bond.

Just the announcement of the backstop ended panic selling, boosted prices and fueled a record surge of new corporate-bond sales. Companies are now reluctant to sign up for Fed purchases because such a move could be seen as a sign of weakness during a market rebound, some bond fund managers and bank executives said.

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The Fed has made valuing stocks like ‘cheating off the F student,’ strategist says

David Rosenberg, chief equity strategist at Rosenberg Research, has been saying for some time the market is running on a Federal Reserve-induced high.

In a note to clients on Tuesday, he said relative value in the current environment doesn’t make any sense, with the S&P 500 SPX, 0.81% up 37% from its March lows. “Relative value becomes meaningless when the Fed is buying everything but equities -- it’s all cheating off the proverbial F student,” he said.

The Fed has lowered interest rates to nearly zero and snapped up not just Treasury's but also corporate bond exchange-traded funds.

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Bank of America breaks down the next 2 steps the Fed will take to stimulate the coronavirus-addled economy

The Federal Reserve is set to issue more stimulus throughout the year to guide the nation's rebound from the coronavirus crisis, Bank of America said Tuesday.

Economic reopening will lift the US from its second-quarter trough, but the central bank will turn to new policy actions once lingering challenges emerge, strategist Mark Cabana and economist Michelle Meyer wrote in a note. The firm expects the Fed to use a "one-two punch" of forward guidance and yield-curve control come September to facilitate a steady recovery.

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Fed's massive 'Main Street' business rescue in danger of fizzling

A $600 billion Federal Reserve loan program designed to offer a lifeline to tens of thousands of struggling U.S. companies is heading for trouble before it even gets under way.

Some potential borrowers complain that the "Main Street" lending program — so named because it's aimed at helping midsize companies hit hard by the coronavirus crisis — imposes interest rates that are too high and requires businesses to pay back loans too quickly.

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Why stocks could keep going higher even with massive unrest across America

The great rotation continues, with some of the most down-trodden names leading the market higher: industrials, airlines, financial institutions, and energy companies.

Powerful monetary and fiscal stimulus programs are keeping stocks aloft, as investors continue to shift funds to parts of the market they believe will be helped by economic reopenings.

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Wall Street giant faces bipartisan fire in running unprecedented Fed bailout

BlackRock, a Wall Street titan that manages $7 trillion in assets, is facing growing scrutiny over its role at the center of the Federal Reserve’s massive bailout of U.S. corporations — and it's coming from all sides.

The world’s largest asset manager is sparking concern from U.S. lawmakers in both parties on multiple fronts, including over its sheer size and market power, its ties to China, its tough stance against companies that contribute to climate change and the extent to which its own bottom line may benefit from the government programs.

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Senate Confirms Inspector General to Oversee Virus Bailout Funds

A divided Senate voted on Tuesday to confirm Brian D. Miller, a White House lawyer, to be the inspector general in charge of overseeing the Treasury Department’s $500 billion pandemic recovery fund.

The confirmation, approved 51 to 40, almost entirely along party lines, puts Mr. Miller at the center of the politically charged effort to distribute government money to businesses that have been crippled by the coronavirus pandemic and comes at a time when President Trump’s management of the bailout is under intense scrutiny.

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BlackRock focuses on China credit, oil and travel in Asia

The world’s biggest asset manager, BlackRock Inc, called out oil stocks, domestic tourism and debt in China and India as investment opportunities in its Asia outlook on Wednesday.

The manager of $6.5 trillion in assets expects it may be 2022 at the earliest before global growth returns to trend but said in a statement outlining its regional outlook that “Asia stands out” as a beneficiary when the recovery arrives.

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