Investing Port RSS Feed All the latest news from Investing Port https://www.investingport.com Video: How to Short Stocks, Benefits, and The Danger of Shorting stocks. Shorting stocks come with a lot of risks and if it pulls off well, you can take advantage of stock prices falling and make money from it. If only you are willing to accept the risks.Maybe you have heard someone mention some time ago, that they wanted to short a stock, and you have either been wondering what that meant or how you could go about it. First of all, let’s get clarity on what a stock is.What is a Stock?A stock is likened to a collection of a corporation’s shares which define the proportion of ownership of that establishment by investors. When it comes to the stock market, one may either choose to go long or short. To go long is to speculate a rise in the price of stock in the future, thereby buying such stock in order to sell back when the price eventually goes up. On the other hand, going short is the complete opposite. The trader sells a stock with an expectation that the stock price would fall in the future. When the price finally drops as expected, he buys back the stock. In either way, the goal of going long or short is to make profit from the trading.Understanding How to Short a StockBasically, shorting stock or short selling has to do with selling borrowed stocks by a short seller to make profits. Short selling is a popular trading technique used amongst traders, speculators, hedge fund managers, individual investors, arbitrageurs, and gamblers, who are willing to risk capital loss to make profit.The basic idea behind short selling is that short sellers believe that if they sell a stock at a current price, in hope that the price would decline soon, they would be able to buy back the stock at a lower price if eventually, it falls as expected. If all goes well, the short seller would make a profit generated from the difference between their selling price and buying price. Some other traders short stocks for hedging their portfolios while others simply do it for speculation.One way to take advantage or capitalize on plunging stocks is by ‘selling short’. Usually, investors buy shares and stocks with the hope that these stocks would rise in value with time. However, this is not the case with some, as the establishment may record a decline in profit and net worth, thereby resulting in a corresponding fall in the market value of the stock. In this case, a trader may still consider such to be an opportunity, by attempting to short the stock in order to make profit from that decline. This strategy is also referred to as short selling.The basic procedure for shorting a stock is to “borrow” the stock from a shareholder, find a buyer and sell the stock at a particular price. Then, after a period of time, when the price must have fallen as anticipated, the stock is bought back (at a less expensive rate) and returned to the owner. This seems to be a simple process, because much of the work is handled by a stockbroker, who helps in finding a buyer and executing the trade, and does all for a reasonable commission.A more detailed procedure is outlined and discussed below:1. The first step is to identify the stock that you intend to short2. The next step is to find the right broker that will help facilitate the trade. Each broker may have unique requirements and charge commission rates that might differ from the others. You just need to find one that you would be comfortable with.3. You need to ensure that you have opened a margin account with the selected broker. There is usually a minimum amount that this account is expected to maintain in order to keep the trade running.4. Once all requirements are met, you can now borrow the shares/stock from the shareholder, which you would then sell to the stock market through the broker.5. The final major step is to close position and return the stock to the original owner.6. Between the sale time and the time when the stocks would be bought back, the price is expected to have dropped. If that is the case, you will buy the originally sold stock at a price less than the selling price, thereby making some profit. If the price does not rise according to your speculation, it means you will be at loss, at you will have to get extra funds to recover the stock. It is also possible to break even if the closing price is the same as the opening price.Example;If Disney shares are trading for $50 per share, which you may perceive “too high” with a possibility of dropping sometime sooner or later. Through your broker, you can access and borrow a hundred shares from another investor. You will then sell the shares at $5,000 in hope that at your predicted time the prices would fall. Three weeks later, it was reported that the company was experiencing a financial decline for whatever reason and its stocks drop to $30 per share. At this point, you buy back hundred shares of Disney at $30 per share (100 x $30 = $3,000). You are buying hundred shares at a profit. Once you buy back the hundred shares, you will sell them back to your borrower at $3,000 and keep the $2,000 profit for yourself.This is a basic example of how short selling works but extra costs and charges apply. Many brokerages charge extra fees for borrowing or demand a certain percentage of the profit you make. All charges and dividends would be paid from the profit made. The downside to shorting stocks is that whether or not the seller makes any profit they are responsible for dividend payments.Major Risks Associated with Shorting StocksShort selling is targeted at short-term stock investments or other investments that are on the verge of a price decline or are suspected to decline in a little while. Many investors consider shorting stocks risky because the value would eventually increase and could result in a loss for the seller. There is no determining the potential price of a stock and the potential loss of a short position per time.The first thing to know about short selling is that there is always a high probability of capital loss. Therefore, short sellers are always exposed to high financial risks. There is no guarantee that sellers will be able to buyback or repurchase stocks at their desired price and the time they deem fit. Price movements in the market are unstable and uncertain, therefore, short sellers must be ready to take the risk and prepared to change with the tides at all times. Asides the uncertainty of the markets, short sellers can also be at risk when some traders or investors see that a stock has a high short interest, which means that a stock has the possibility of bringing in large returns. These traders make an attempt to drive up the stock price. By doing this, investors with short positions would have to quickly buy back the shares before the price jumps higher. This would cause huge losses among short sellers who expected the prices to drop instead of sky-rocketing.Also, short selling can cost the seller more if there has been a wrong prediction about the price movement. If a stock moves to zero, a buyer can lose 100% of their outlay. A short seller can also lose 100% and more of their original investment as there can be an unlimited increase in a stock’s price. There is also no telling how long a stock price would remain low.Shorting also has to do with margin. In an event where the stock price increases contrary to what the short seller expected, the seller would be subject to a margin call. Through the margin call, the short seller would be required to make a deposit of additional funds into the account equal to the original margin balance. Traders must also learn to calculate the cost margin interest per shorting while calculating their profits.There is also a possibility of short sellers getting stuck in a short squeeze. This happens when a short seller has difficulties in finding shares to buy when it’s time to close a position. This usually occurs when there are a lot of traders selling short or when a short it thinly traded. The major cause of this is when a certain stock begins to surge or when the market experiences an increase.There are other risks associated with shorting stocks such as;Using borrowed money to investWrongly predicting price movesGetting stuck in a short squeezeSEC short selling regulatorySelling contrary to the trendBenefits of Shorting StockContrary to the risks associated with shorting, there are also quite a few benefits for short sellers if they play their cards well. Most times, high-risk investments offer high-yields and short selling belongs to this category of high-risk high-yield investments. If a short seller is able to rightly predict the price moves of the market or particular stocks they can make a good ROI; especially if they use margin to run the trade. Margin helps the short seller secure leverage, that is, the seller didn’t necessarily have to put in so much of their personal capital as an initial investment.Many short sellers also use short selling as a strategy to hedge their investments. By hedging, short-sellers or investors encounter lower risks. They are also able to protect their profits or mitigate losses in their portfolio. Hedging may seem like a good strategy for investors avoiding losses, however, it comes with its own costs. First, there is the cost of setting up the edge. This cost includes payments for short sales and/or protective options contract premiums. Next, there is the opportunity cost associated with the capping of a portfolio’s upside if the markets continue to surge. For example, if 50% of a short seller’s portfolio is hedged and correlates with the S&P 500 index. If the S&P 500 climbs 17% over the next 12 months, the portfolio would record half of the gain or 8.5%.Terminologies Associated with Short SellingOpening Position: This is the point at which you initiate the trade. The price of this position is the opening price.Closing Position: It is at this point that you exit the trade, and buy back the stock you sold at the opening position. If all goes as speculated, the closing price (price at the closing position) should be less than the opening price, in order to make a profit from the trade.Short Position: This is a technique investors use to anticipate the decline of stock value in the short term. The short seller expects that the price of a stock would drop in a few days or weeks. There are basically two types of short positions: naked and covered. The naked short involves traders who sell a security without having any ownership on it. While a covered short has to do with traders who borrow stocks from other investors through a legal loan department or brokerage.Long Position: This is quite the opposite of shorting. A long position is a technique used by traders and investors who buy stocks and hold for a long time with the expectation that there would be a rise in value. They are mostly used when an investor would like to purchase an options contract. Depending on the underlying asset involved, the trader or investor can either hold a long call or long put option. The call option is reserved for traders who hope to profit from an increase in price movement. While the put option is reserved for traders who anticipate the price drop of an asset, having the right to sell the asset at a certain price. ]]> Sun, 29 Mar 2020 22:04:03 EST https://www.investingport.com/video-how-to-short-stocks-benefits-and-the-danger-of-shorting-stocks/ https://www.investingport.com/video-how-to-short-stocks-benefits-and-the-danger-of-shorting-stocks/ What is Initial Coin Offering? (ICO) Initial coin offering (also known as initial currency offering) is a type of funding that involves the use of cryptocurrencies. It functions like regular crowdfunding except that it is possible to have a private ICO. They are usually conducted when a company wants to launch a new coin or dApp into the market.Understanding ICOsAn Initial Coin Offering (ICO) is used by the cryptocurrency industry to raise funds for a new coin, app, or project. It is the equivalent to Initial Public Offerings (IPO). Investors who seek to invest in an ICO can put their money into the offering in exchange for the new cryptocurrency token or coins offered by the company. The token represents a stake in the project being funded.Basically, in an ICO, offerings are made using cryptocurrencies which would be sold as tokens or coins to investors. In exchange, the token sellers would receive any form of legal tender, specifically Bitcoin or Ethereum. Through ICOs a lot of companies have been able to raise hundreds of millions of dollars to run their projects. There are no formalities in holding ICOs as all that’s simply needed is to submit a whitepaper that is worthy of an ICO to qualify.ICOs hold a number of benefits such as;providing a means whereby dApp developers can raise funds to execute projectsanyone can invest in a dApp project by simply purchasing a particular amount of tokens in an ICOHow it all startedIn 2013, Ripple Labs created a payment system and created nearly a hundred billion XRP token. The company later sold these token to fund its development project. Later that year, another company, Mastercoin created a layer on top of Bitcoin in order to “tokenize” Bitcoin transactions and execute smart contracts. Over a million Mastercoin token were sold against Bitcoin. Ever since then, many companies that create cryptocurrencies token have stepped up.In mid-2014, the Ethereum Foundation sold ETH coins against 0.0005 Bitcoin per coin. It made a total of $20mio. While in 2016, Lisk sold its token in an ICO for almost $5mio. The Ethereum Foundation ICO became the largest crowdfunding in the history of ICOs and paved the way for new generation ICOs.ICOs first came to public knowledge in 2014 as many investors began to see its potentials. By the end of the year, $18.4 million was raised on the ICO Ethereum. Prior to that time, as of 2013 ICOs were often used for funding the development of new cryptocurrencies. These cryptocurrencies were then traded on cryptocurrency exchanges on demand. The 2014 ICO Etheruem successful performance paved way for other investors to come into the big picture of ICOs.]]> Fri, 27 Mar 2020 03:39:04 EST https://www.investingport.com/what-is-initial-coin-offering-ico/ https://www.investingport.com/what-is-initial-coin-offering-ico/ FAANG Stocks, What are They? FAANG is an acronym formed by Jim Cramer, TV host of CNBC owned Mad Money. Cramer first formed the acronym in 2013 as FANG until it was later modified to FAANG. The acronym is a combination of the stocks of the five prominent US owned and based tech companies. They are; F= Facebook (FB)A= Amazon (AMZN)A= Apple (AAPL)N= Netflix (NFLX)G= Google (GOOG) (Alphabet Inc.)These tech companies are prominent because they dominate their individual industries. Facebook (FB) dominates the social networking and social media industry in addition to its other social networking platforms, WhatsApp and Instagram. Amazon (AMZN) is the leading e-commerce store and also leads in cloud-computing. Apple (APPL) is the leading mobile phone and computer maker in its industry. Netflix (NFLX) tops the market on online video subscription. While Google tops the search engine market. What’s so important about the FAANG stocks?In America alone, the top five products and services Americans make daily use of involves the FAANG. For example, the average American owns an iPhone and is very likely to log on Facebook to see what family and friends are up to. They would later move on to Google to search for trending topics or look up a product or service in a particular area. Amazon is the go-to for swift online shopping having their goods delivered to their doorstep in no time. And at the end of the day, Netflix is the go-to site for online video entertainment, catching up on all their favorite movies without having to go to the cinema.Out of the 7 billion people on the planet, more than 2.3 billion are active users on Facebook. There are approximately 129 million households in the United States and Amazon has at least 100 million Amazon Prime memberships in the US alone. While half of the American population owns an iPhone. It was reported that about one-fifth of the total internet bandwidth in the US is consumed on Netflix yearly. Also, Google has over 1 billion active users who make use of one of their eight products—Google Search, Google Maps, Gmail, Chrome, YouTube, Google Play Store, and Google Drive—daily.There are other alternatives to the FAANG but on a daily basis, the average American makes use of either of these companies’ products and services compared to any other. They have somewhat, moved pass the best performing tech companies’ stocks to the most patronized tech companies in America.How have these stocks performed over time?The FAANG stocks are not only known for the catchy titles but they are also among the largest companies in the world. Together they have a market capitalization of more than $4.1 trillion as of January 2020.Asides topping their industries and having a large consumer base, the significant growth of these companies can also be attributed to their generous investors. These investors include Berkshire Hathaway, Renaissance Technologies, and Soros Fund Management. Though some investors are more interested in investing in stocks of bankrupt companies that still have potentials. A few investors have picked interest in the FAANG stocks due to their overall performance and consumer base.The FAANG stocks are traded on the Nasdaq and are listed on the S&P 500 index. The FAANG stocks alone make up nearly 15% of the S&P 500. They also largely influence the index. It was reported in August 2018 that the FAANG stocks jumped the about 40% of the index gains from its previous lows in February that same year.In spite of the FAANG stocks' performance in the markets, some analysts are concerned that a bubble could be forming in the FAANG. It would only be a matter of time before the bubble bursts.]]> Fri, 27 Mar 2020 03:35:27 EST https://www.investingport.com/faang-stocks-what-are-they/ https://www.investingport.com/faang-stocks-what-are-they/ Coronavirus Death Toll in the US With China on the verge of reopening the coronavirus hotspot city of Wuhan, Covid-19 infection cases continue to surge globally. As of Wednesday, the number of confirmed global cases is 510,000 and more than 22,000 deaths recorded. In the United States alone, there are over 75,000 confirmed cases with at least 1,000 recorded deaths. According to the worldometer coronavirus statistics for the United States, there has been 78,139 coronavirus confirmed cases, 1,119 deaths, and 1,863 recoveries, as at Wednesday.USA StateTotal CasesNew CasesTotal DeathsNew York37,258+4,292385New Jersey6,876+2,47481California3,243+24568Washington2,588132Florida2,355+37828Louisiana2,305+51083Michigan2,29543Illinois1,86519Massachusetts1,83815Pennsylvania1,687+56016Georgia1,525+13848Texas1,309+15416Colorado1,08619Tennessee9063Connecticut87519Ohio70411Indiana645+16817North Carolina636+692Wisconsin6307Maryland580+1574Arizona508+1078Mississippi485+1085Virginia460+6913Alabama449+631South Carolina4247Nevada420+9910Missouri3568Minnesota346+592Utah3461Arkansas310+302Oregon26610Oklahoma250+867District Of Columbia2313Kentucky1985Vermont158+359Maine155+13Iowa1451New Hampshire1371Rhode Island132Delaware130+111Kansas1263Idaho123+32New Mexico1121Hawaii951Montana71+18Nebraska68+4Alaska59+17Wyoming53+4North Dakota52+7West Virginia52South Dakota411Guam45+81Puerto Rico64+132United States Virgin Islands17Wuhan Repatriated3Diamond Princess Cruise46Total:78,1399,9281,119Source: worldometer]]> Fri, 27 Mar 2020 03:29:45 EST https://www.investingport.com/coronavirus-death-toll-in-the-us/ https://www.investingport.com/coronavirus-death-toll-in-the-us/ Coronavirus Pandemic: China Plans to Reopen Wuhan The past few months have been really difficult for many countries infected with the coronavirus especially hotspots like Wuhan. For the past 11 weeks, the Chinese city of Wuhan has been on lockdown following the coronavirus outbreak. The Chinese authority recently announced its intentions to reopen Wuhan and the rest of the world is concerned. The concern sparks from the fact that the Covid-19 is still on a rampage, daily expanding its reach to many global cities.The Wuhan lockdown would come to an end on April 8. After a long strict lockdown of the city which confined over 11 million people to their homes for the past 11 weeks. Global scientists are working tirelessly to find a permanent cure to the Covid-19 and are afraid that with the reopening of Wuhan new cases of the virus would emerge. Some Chinese experts and Wuhan locals believe that the virus has not been fully eradicated as the Chinese government claims. Some other experts fear a “boomerang effect” might just occur if the Wuhan is reopened.The reopening of Wuhan does not only allow citizens to cautiously resume their daily activities but also allows traffic in and out of the city. Meaning Wuhan would once again become a passage for those outside the province to connect with the rest of China or the world. This may be the case in China, however, there is no assurance yet that other countries would lift the travel ban from all hotspot areas, especially China.Since January 23, residents of Wuhan have been on intense lockdown allowing only special workers like delivery and hospital workers, and the police to roam the streets cautiously. Every 72 hours, only one person from each home is allowed to step out of the house to purchase home supplies and medical supplies. Those infected and in self-quarantine have their food and medications delivered to their doors to avoid spreading of the virus. To ensure that everyone adheres to the lockdown rule, armed police patrol the streets to monitor the lockdown and all authorized movements.Since the outbreak in December, China has recorded over 80,745 confirmed cases of the coronavirus and 3,136 deaths.On Tuesday, China’s President Xi Jinping, for the first time since the outbreak visited the city of Wuhan. During his visit, he inspected the epidemic prevention and control work in Hubei and Wuhan, and declared that the spread of the virus had been “basically curbed.”“Initial success has been made in stabilizing the situation and turning the tide in Hubei and Wuhan,” he added.In addition to his conclusions, the state media also affirmed “that China is ascending out of the darkest moment amid the outbreak.” Also, the state media confirmed that the 14 temporary hospitals built for coronavirus patients had been closed. ]]> Fri, 27 Mar 2020 03:24:39 EST https://www.investingport.com/coronavirus-pandemic-china-plans-to-reopen-wuhan/ https://www.investingport.com/coronavirus-pandemic-china-plans-to-reopen-wuhan/ Who is Qualified for the Coronavirus Stimulus Check? A few weeks ago, the Trump administration agreed to send out direct checks to Americans. This decision was part of the economic stimulus package which is aimed at stimulating and sustaining the US economy. In the early hours of Wednesday, the US Congress came to an agreement on the nearly $2 trillion economic stimulus program which includes sending direct stimulus checks to Americans. The stimulus checks program probably wouldn’t take effect until May and eligible single Americans are to get $1,200, married couples would get $2,400, while individuals or couples with children will receive $500 per child under age 17.Contrary to what many may think, the government isn’t throwing around free money; rather, stimulus checks would aid the government to stimulate the economy by making spending money available to a wide range of consumers. When consumers spend this money, consumption will be boosted and revenues generated for businesses. In effect, the economy would remain in balance.The following people may not receive Coronavirus stimulus check"If you earn more than $75,000 as an individual, $112,500 as the head of household or $150,000 if you are married and filing jointly, the amount of those checks starts to get reduced. Checks will be reduced by $5 for every $100 exceeding those thresholds. It completely phases out at $99,000 in income for individuals, $146,500 for head of household filers with one child and $198,000 for joint filers with no children."Earlier this month, the Trump administration made its plans known of sending out stimulus checks to Americans to help them weather the storm of economic hardships caused by the coronavirus epidemic. On behalf of the President, Treasury Secretary Mnuchin announced that the stimulus checks would be sent out in “two weeks.” Though the stimulus checks still stand, getting cash to Americans in two weeks was certainly not going to be feasible as it would take longer than two weeks for the IRS to process the stimulus checks. During the great recession of 2001 and the financial crisis of 2008, it took the IRS six weeks and three months, respectively to send out stimulus checks to Americans.Concerning this, Erica York of the Tax Foundation says that “certainly from what we’ve seen in the past, it’s taken a pretty significant amount of time to get checks out after a policy is put in place.”The delay in sending out stimulus checks vary. In 2008, the delay was caused by the issue on ground ordering Americans to file their tax return before getting the check. Once that was over, it took the next 8 to 12 weeks before the stimulus checks were sent out.Who can qualify?Individuals with an adjusted gross income of $75,000 while those who make over $99,000 do not qualify.Individuals with qualifying income levels based on 2019 federal tax returns.NB: Provisions have been made for individuals who do not earn enough income to file returns. Lower and middle-income individuals would receive only two-thirds of the benefits. About 90% of Americans will benefit from this bill. ]]> Wed, 25 Mar 2020 20:58:16 EST https://www.investingport.com/who-is-qualified-for-the-coronavirus-stimulus-check/ https://www.investingport.com/who-is-qualified-for-the-coronavirus-stimulus-check/ Coronavirus Relief Loan for Small Businesses Many small and medium businesses have wondered if the coronavirus relief loans were applicable to only companies considered “too big to fail.” The good news for small business owners is that they can also apply for relief loans just like their big counterparts. Unlike big companies that have a functional organizational structure, most small businesses do not have a proper organizational structure, therefore, they would not be able to survive the coronavirus impact for a long time. According to CNBC, over 50% of small business owners in the US will not be able to remain functional after three months. 96% of small business owners have said that their businesses have already been affected by the Covid-19, this was stated in a new Goldman Sachs survey.About 30 million American small businesses have made it to the coronavirus crisis list. About half of this figure has declared that their business losses are attributed to the impact of the coronavirus pandemic. Many of these affected small businesses have since been forced into temporary closures.In a bid to salvage crashing small businesses that have been affected by the coronavirus crisis, government and non-government agencies have stepped up to provide relief loans for this category of businesses. The US government has made provisions for small business owners through the US Small Business Administration (SBA). The SBA’s funding pool was recently increased from $20 billion to $50 billion to support small businesses especially businesses like restaurants which would still be required to remain functional amid the coronavirus crisis.Small businesses that are dealing with business losses associated with the coronavirus pandemic will be able to access up to $2 million low-interest disaster loans. The loans can be used to cover payroll, pay debts, or settle other business related bills.Small business owners can apply for this loan once the governor of their states submits a declaration of emergency. The application can either be done online or by mail. There is also the option of reaching out through district SBA offices or local Small Business Development Center (SBDC). The Federal Reserve has also announced a new initiative through the Main Street Business Lending Program aimed at small businesses. This initiative will work hand-in-hand with the SBA to support small business loans.Another Main Street Emergency Grant Program which would allow small businesses access loans through the Treasury Department was proposed by Senators Chris Murphy, Chris Van, and Jeff Merkley.Anna Serio, loan writer at Finder.com advises that small business owners would probably need to “call to get the most up-to-date information since government websites do not always keep up with development.”“Many business financing opportunities available right now are local, so it’s better to stick with resources that serve your area,” she said.]]> Wed, 25 Mar 2020 20:55:19 EST https://www.investingport.com/coronavirus-relief-loan-for-small-businesses/ https://www.investingport.com/coronavirus-relief-loan-for-small-businesses/ Everything You Need To Know About Coronavirus Mortgage Relief Part of the US government moves to sustain the economy also includes providing homeowners with mortgage relief which would help owners who will not be able to pay their mortgage within the next few months maintain their homes for a while. The coronavirus mortgage relief is a move of the US government to help homeowners who may not be able to pay their mortgages within this period. The government, through Fannie Mae and Freddie Mac, has instructed loan providers to assist borrowers with a 12-month mortgage forbearance. This includes waiving of all penalties and late fees while all evictions and foreclosure sales are to be put on hold until May 17, 2020.All negative reports to the credit bureaus will be ineffective until further notice. While loan modification options would be made available to homeowners to maintain their homes until the 12-month period is over. However, borrowers will still have to pay the amount once the forbearance period is over with the possibility of additional help as granted by the servicer.This new policy is only applicable to mortgages under Fannie Mae and Freddie Mac, though the federal regulators are expectant that other mortgage loan providers will put this policy into effect. The mortgage relief is yet, not available to everyone as Freddie Mac expects proof of “decline in income” before qualifying.The forbearance program announcement was made last week by Fannie Mae and Freddie Mac. An FHA loan program was also announced by the Department of Housing and Urban Development. While Fannie Mae and Freddie Mac have put this policy into consideration, the Mortgage Bankers Association have estimated that if loan forbearance is granted to just a quarter of all borrowers within the next six months or more, there would be over $75 billion demand on servicers with a possibility of the amount hitting $100 billion. It will only be a matter of time before the mortgage finance system goes bankrupt. As a result of that, the association sent a letter to the Federal Reserve requesting financial support.Bob Broeksmit, CEO of the Mortgage Bankers Association, said concerning this issue: “Nobody predicted the demand this would place on servicers, so they need an ability to have the liquidity to make it happen, and if there’s not some kind of ability through a liquidity facility, then the servicers won’t be able to meet their obligations to the investors and the whole process will break down.”This creates a hitch in the mortgage relief program as mortgage servicers are obligated to pay investors who own mortgage-backed securities. There’s also the issue of servicers to pay third-party insurers and tax authorities. Under a stable economy, the MBA would be able to grant forbearance for a few borrowers.For the time being, this policy would only apply to mortgages backed by either Fannie Mae or Freddie Mac. FHA backed loans are also included. However, it does not apply to people renting a home, though, some cities have agreed to pause rent evictions until further notice. Also, mortgage lenders are offering homeowners the option to defer their loan payments for up to 90 days. Banks that are allowing homeowners to defer payment due to Coronavirus Bank of AmericaCadence BankChase bankThese are the list of banks that have publicly announced that they would allow homeowners to skip their mortgage payment. ]]> Wed, 25 Mar 2020 20:52:09 EST https://www.investingport.com/everything-you-need-to-know-about-coronavirus-mortgage-relief/ https://www.investingport.com/everything-you-need-to-know-about-coronavirus-mortgage-relief/ US Congress Agrees on Economic Stimulus Package In the early hours of Wednesday, the US Congress finally reached an agreement on the nearly $2 trillion economic stimulus package. The purpose of the stimulus package is to salvage the US economy from ravaging impacts of the coronavirus pandemic.After days of running around the block on finding common ground between the Trump administration and the US Congress, both parties finally arrived at a conclusion, making it the largest US economic stimulus in history.Around 1 am, Eric Ueland, the White House legislative affairs director made it known that a deal was in place and there was a need for the text of bill to be completed.“We have either, clear, explicit legislative text reflecting all parties or we know exactly where we’re going to land on legislative text as we continue to finish,” he said. As at Monday, senators were at logger-heads on passing the economic stimulus package into bill as Democrats felt excess money was allocated to supporting businesses at the expense of public health providers, workers, and families. While the Republicans were upset that there was no time for arguments and playing politics as the coronavirus pandemic continued to ravage the economy. Therefore, this was no time for playing politics.“This is not a juicy political opportunity… This is a national emergency,” Senate Majority Leader, McConnell said in a remark on Monday.Both parties finally came to an agreement and an announcement was made sometime around 1:30 am on Wednesday morning by the Senate Majority Leader Mitch McConnell and Minority Leader Charles E. Schumer. It was a long day of deliberations with the Treasury Secretary, Steven Mnuchin and other Trump administration officials.“After days of intense discussion, the Senate has reached a bipartisan agreement on a historic relief package for this pandemic… I’m thrilled that we’re finally going to deliver for the country that has been waiting for us to step up,” McConnell said.Schumer also added that “help is on the way, big help and quick help… we’re going to take up and pass this package to care for those who are now caring for us, and help carry millions of Americans through these dark economic times.”The next step for the bill is to go to the House and to President Trump for ratification. According to McConnell, the Senate would pass the legislation in the later hours of Wednesday. Though it may take a long while as the House is out of session, and hopefully the lawmakers agree to pass the bill unanimously.As regards President Trump ratifying the bill, Mnuchin is positive that the president would “absolutely, absolutely, absolutely,” ratify the bill. Considering that it was also his intention to ease Americans off every pressure or financial difficulties associated with staying home. The legislation is aimed at sending $1,200 checks to adult Americans and providing $367 billion loans for small businesses with a $500 billion fund for industries and states. The bill also includes other incentives such as $150 billion for state and local government stimulus funds, $130 billion for hospitals, and unemployment insurance.]]> Wed, 25 Mar 2020 11:10:36 EST https://www.investingport.com/us-congress-agrees-on-economic-stimulus-package/ https://www.investingport.com/us-congress-agrees-on-economic-stimulus-package/ US Stock Futures and Asian Markets Surge on Hope of The US Deal US stock futures and the Asian stock market surged after global policymakers announced on Tuesday the economic measures to curb the economic impact of the Covid-19 on the global economy.On Monday, US stocks ended in the red after the failure of the bill to move forward, yet stock futures jumped only after a few hours. The disagreement of the US lawmakers on the $1.7 trillion economic stimulus package created uncertainties among investors, therefore, causing stocks to close in red. As at Monday closing, the Dow (INDU) futures were up nearly 800 points, or 4.2%. S&P (SPX) futures were up nearly 4.4% while Nasdaq (COMP) futures were up 4.3%.However, following the announcement major Asian markets jumped sharply on Tuesday with Japan’s Nikkei 225 (N225) gaining 5.5%, Hong Kong’s Hang Seng gaining 3.7%, China’s Shanghai Composite (SHCOMP) gained 1%, and South Korea’s Kospi (KOSPI) gained more than 6%. Australia’s S&P/ASX 200 wasn’t left out as it closed up 4.2%.Other markets also indicated an improvement with oil prices rising 4% following the price fall of the 10-year Treasury bond.The global policymakers’ decision encouraged South Korea to up its emergency financial business support to 100 trillion Korean won (approx. $80 billion). Prior to this, the US Feds on Monday announced its increased economic salvaging plan of buying three new credit facilities, unlimited bonds, and the upcoming Main Street lending program, all in an attempt to stimulate the economy amidst the Covid-19 pandemic. After the global policymakers’ meeting, there was some hope that the US lawmakers would settle their differences and pass the $1.7 trillion economic stimulation package.On a Tuesday note, Stephen Innes, chief global market strategist at AxiCorp wrote that “Asian investors like what they see from an all-in Fed which is being viewed in a very impressive light for both Main and Wall Street even as the US Congress dithers.”As a means of further stimulating the US economy, the central bank is set to purchase large amounts of investments which also includes corporate bonds to boost trading housing markets. It would also allow state and local governments and businesses to borrow short-term cash to cover payroll. Concerning the Congress’s disagreement over the nearly $2 trillion economic stimulation package, Democrats are of the opinion that the amount is too much for business bailouts only and companies are favored greatly at the expense of workers and public health.James Knightley of ING in a report said concerning this that: “the pressure is now on Congress to get its act together and provide the support that the Fed cannot do – helping the vulnerable people who face the biggest health and economic consequences.”“The risk is that this wall of support from the Fed and the positive reaction in the markets may give congress a sense that it has more time and the pressure to deliver a package is reduced,” he added.As Congress continues to delay, coronavirus cases continue to rise and the uncertainties of the US economy increase.]]> Wed, 25 Mar 2020 03:07:12 EST https://www.investingport.com/us-stock-futures-and-asian-markets-surge-on-hope-of-the-us-deal/ https://www.investingport.com/us-stock-futures-and-asian-markets-surge-on-hope-of-the-us-deal/