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Mexican president says IMF ‘covers up’ for corrupt governments By Reuters

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© Reuters. FILE PHOTO: Mexico’s President Andres Manuel Lopez Obrador delivers his second state of the union address at National Palace in Mexico City

MONTERREY, Mexico (Reuters) – Mexican President Andres Manuel Lopez Obrador said on Wednesday he respects the International Monetary Fund’s recommendations to Mexico but that it should “stop covering up for corrupt governments.”

On Tuesday, the IMF said Mexico should implement larger near-term fiscal support to alleviate the economic distress largely brought about by measures to contain the coronavirus pandemic.

The IMF recommended the government expand its welfare net and unemployment benefits, and lower interest rates. It also proposed tax reform to support spending in the medium-term.

Lopez Obrador on Wednesday said he respected the IMF but that international financial entities were no longer dictating economic policy in Mexico.

“All we ask … is that they stop rescuing large corporations and that they rescue the people, that they stop covering up for corrupt governments,” he told his regular morning news conference, without providing details on any such potential cases.

The IMF declined to comment.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Economy

Goldman money funds’ liquidity buffer swells before U.S. election By Reuters

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© Reuters. FILE PHOTO: FILE PHOTO: The ticker symbol and logo for Goldman Sachs is displayed on a screen on the floor at the NYSE in New York

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By Tim McLaughlin

BOSTON (Reuters) – Two Goldman Sachs Group Inc (N:) money-market funds, whipsawed in March by billions of dollars of investor withdrawals, have steadily amassed a liquidity cushion much larger than rivals, as the $4.35 trillion industry braces for the outcome of the U.S. presidential election and another global surge in coronavirus cases.

The funds’ weekly liquidity – a barometer of how quickly investments can convert to cash in a week – rose to 85% of total assets this week, according to disclosures https://www.gsam.com/content/gsam/us/en/advisors/fund-center/fund-finder/gs-financial-square-prime-obligations-fund.html#activeTab=holdings by the bank. That is about double the level when Goldman Sachs in March injected nearly $2 billion of the bank’s own capital into the funds to prevent them from falling below the regulatory weekly liquidity threshold of 30%.

“We actively manage liquidity in our funds as dictated by the market environment,” Goldman said in an email statement.

Average weekly liquidity at about 111 U.S. prime institutional money-market funds, like the Goldman funds, was 66% at the end of September, up from 54% in the year-ago period, a Reuters analysis of U.S. regulatory filings show. Those 111 funds hold about $300 billion in assets, or 9% of the $4.35 trillion in money funds.

Although they are among the tamest investment vehicles, prime funds can be riskier than money-market portfolios that primarily hold U.S. government bonds. The upside is they may offer more yield from holding short-term debt issued by an array of top-rated global banks, for example.

Despite regulatory efforts to make institutional prime money-market funds more resilient in times of stress, they remain vulnerable to massive withdrawals, especially by clients who need cash immediately to meet their own obligations. A U.S. official recently warned that decade-old reforms to the industry may not be enough to avert major outflows during a future crisis.

Stocks have swung significantly in recent days and more volatility is expected in the wake of the U.S. election.

Under new rules put in place after the 2008-2009 financial crisis, prime institutional money-market funds have discretion to block redemptions or to impose fees when weekly liquidity falls below 30%. These funds are susceptible to big, rapid-fire withdrawals by corporations, pensions, sovereign wealth funds and hedge funds, said money fund expert Pete Crane, president of research firm Crane Data.

“These types of investors move quickly,” Crane said.

Meanwhile, the 30% liquidity threshold’s link to redemption gates has become an area of concern in the money fund industry. Investors see it as a bright line for slowing or blocking withdrawals, even though no fund boards used redemption gates or fees during the height of the March crisis.

A Northern Trust Corp (O:) prime fund twice fell below the 30% threshold, but redemptions were not blocked. The bank, however, liquidated the fund in May.

“The standard of 30 percent weekly liquidity became a new hair trigger,” Investment Company Institute President Paul Stevens said this week at a money-market symposium.

And that is what happened during the early days of the coronavirus pandemic. Investors pulled a net $8.1 billion from the GS Financial Square Prime Obligations Fund and the GS Financial Square Money Market Fund , according to Goldman fund disclosures. Weekly liquidity at the GS Financial Square Fund, for example, dropped to 34%, and was poised to fall more, before Goldman stepped in with capital support.

Over the two-week period from March 11 to March 24, net redemptions from publicly-offered prime institutional funds totaled 30 percent of the funds’ assets, or about $100 billion, according to an October report released by the Securities and Exchange Commission.

American households who parked their cash in retail prime funds were less twitchy, the SEC says. Withdrawals totaled $33 billion in March, or 7% of assets.

In the months after the first wave of coronavirus cases, some of the biggest players in the U.S. money market industry pulled the plug on prime institutional funds. The preference for funds primarily holding government debt, by institutions and households, has become clear, as assets in these portfolios topped $4 trillion this year.

Boston-based Fidelity Investments, for example, shut down two prime funds in August, even though their liquidity cushion was never threatened, citing the risk of large and frequent redemptions in times of market stress.





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Labor Department finalizes U.S. rule curbing sustainable investing by pension funds By Reuters

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© Reuters. The United States Department of Labor is seen in Washington, D.C., U.S.

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By Jessica DiNapoli and Ross Kerber

NEW YORK/BOSTON (Reuters) – The U.S. Department of Labor on Friday finalized a rule clarifying that pension fund managers must put retirees’ financial interests first when allocating investments, rather than other concerns such as climate change or racial justice.

The move by the department under the administration of U.S. President Donald Trump came ahead of Tuesday’s election and represents the latest in a series of efforts to make it harder to use investment assets to address social issues.

Labor officials said that they made “significant changes” to the rule governing roughly $10 trillion in pension plan assets in response to over 1,000 comments they received, many critical.

The main change is that the final rule does not include references to so-called “ESG investing” or picking stocks for environmental, social or governance reasons, officials said. The rule focuses on pecuniary factors, which the department says have a “material” effect on the risk and return of an investment.

Net deposits into ESG funds have soared on growing interest from clients and strong performance, trends cited by critics of the new rule including large asset managers.

In its rulemaking, the Labor Department noted many ESG-themed funds have over-weighted technology and under-weighted energy stocks, suggesting their outperformance could be “merely correlated with broader economic trends unrelated to a specific ESG factor.”

Sanford Lewis, director of the Shareholder Rights Group, representing progressive investors who opposed the rule changes, said via e-mail that even as adjusted, the department is still “interfering with ERISA funds from integrating investment strategies consistent with beneficiaries’ values.”

Marg Franklin, CEO of the CFA Institute, a standard-setting group for investors, said the new rules ran counter to the growing use of ESG factors to judge investment returns and risks.

“The department’s agenda to block consideration of anything ESG-related in the investment management process is a political gag order,” she said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Wall Street ‘fear gauge’ logs largest weekly gain in about 4 months By Reuters

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© Reuters. FILE PHOTO: Statue of George Washington at Federal Hall across Wall Street from New York Stock Exchange in New York

NEW YORK (Reuters) – The Cboe Volatility Index (), Wall Street’s “fear gauge,” rose 0.4 points on Friday to finish the week near a more than 4-month closing high logged earlier this week, as U.S. stock indexes wrapped up their worst week since the March sell-off, amid jitters over next week’s U.S. presidential election.

For the week, the options-based volatility index gained 10.5 points to close at 38.02, it’s largest weekly gain since mid June, as investors rushed to load up on defensive options contracts against further stock market losses.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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