Another week, another risk-on rally. US stocks continued to be a leader this week in global markets. SPDR S&P 500 (SPY) surged 3.3% at the close of the trading week (Aug. 28), marking the fund’s fifth straight weekly advance. Bonds, however, hit a rough patch. Vanguard Total US Bond Market (BND) fell 0.6% this week – the second weekly loss in the past three.

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Fire Sale Risk and Expected Stock Returns
George O. Aragon (Arizona State U.) and Min S. Kim (Michigan State U.)
July 29, 2020
We measure a stock’s exposure to fire sale risk through its ownership links to equity mutual funds that experience outflows during periods of systematic outflows from the fund industry. We find that more exposed stocks earn higher average returns: a portfolio that buys (shorts) stocks with the highest (lowest) exposure outperforms by 3-7% per annum. Our findings cannot be explained by several known determinants of average returns and are consistent with the ex-ante pricing of the risk of future fire sales. We conclude that stocks’ exposures to risks inherited from the constraints of shareholders have important implications for stock prices.

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Putin warns protesters in Belarus that Russia may intervene: NYT
Japan’s Prime Minister Abe resigns due to health issues: Reuters
Fed’s new inflation policy is greeted with skepticism by some analysts: BBG
Key moments from Trump’s speech on accepting Republican nomination: CNBC
US consumer spending likely increased in today’s upcoming July report: WSJ
Pending homes sales in US rise for third straight month in July: Reuters
Eurozone’s economic sentiment improves for third month in August: Reuters
German consumer morale slips, raising questions about recovery trend: Reuters
KC Fed Mfg Index up moderately in August, improves over June and July: KCF
US Q2 GDP loss revised up slightly to still-deep annualized 31.7% loss: MW
US jobless claims increased 1-million plus for a second week: CNBC