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Smith's Research & Gradings
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November 23, 2020

Smith's Research & Gradings

Treasury Secretary to Close COVID-19 Lending Facilities

Treasury Secretary to Close COVID-19 Lending Facilities

On Thursday, November 19, Treasury Secretary Mnuchin sent a letter to Fed Chair Powell indicating that he would be allowing most of the Fed's 13(3) emergency lending facilities to expire at year-end, and requesting that the Fed "return unused funds to the Treasury" in order for Congress to "re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities and $26 billion in unused Treasury direct loan funds."

Morgan Stanley & Co.'s top team of strategists noted the announcement was immediately met with a rare statement from the Fed, and was followed on Friday by a letter from Chair Powell responding to Secretary Mnuchin and indicating that the Fed would "work out arrangements...for returning the unused portions of the funds allocated to the CARES Act facilities in connection with their year end termination."

Christopher White, municipal strategist at Jefferies, observed the technical strength in the municipal market persists, characterized by very strong demand driven by coupon reinvestment proceeds and healthy fund inflows, a dearth of supply and general optimism on recent vaccine headlines from Pfizer and Moderna.  
Mr. White added, "Municipal market sentiment appeared undeterred following Thursday's news from Treasury Secretary Mnuchin that the Fed's emergency lending facilities, including the Municipal Liquidity Facility, will not be extended beyond the 12/31/20 expiration or by the recent COVID-19 resurgence and lockdown headlines.

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Stay on top of the latest global news that can impact your investment strategy.

US Economy – Growth on Track for Now…

The International Monetary Fund (IMF) has just released its April 2024 Economic Outlook. According to the Washington-based multilateral agency, the U.S. is on track for 2.7% real GDP growth rate in 2024, driven by strong household spending and investment (with a fair amount coming from the federal government).

Disastrous Puerto Rico Elections

Puerto Rico's elections were a mess. On Sunday, August 9, Puerto Rico was forced to partially suspend voting for primaries marred by a lack of ballots, as officials called on the president of the Commonwealth's elections commissioner Juan Ernesto Davila to resign. The primaries for voting centers that had not received ballots by early Sunday afternoon were expected to be rescheduled, while voting would continue elsewhere, the commission said.

Clean Energy Needs Reliability Requirement

Clean energy needs to include reliability requirement as new technology advances. Transformation of the energy mix used in electricity generation globally has been focused on development of renewable sources of energy such as wind and solar, but the major stumbling block has remained reliability.

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