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A look at how trade wars could affect the market Managing director at Direxion Sylvia Jablonski discusses with Yahoo Finance’s Seana Smith and Dion Rabouin.
A look at how trade wars could affect the market Managing director at Direxion Sylvia Jablonski discusses with Yahoo Finance’s Seana Smith and Dion Rabouin.
(Bloomberg) -- Once again, the U.S. stock market suffered a major dip. And once again, buyers arrived on the scene right on time to stop the bleeding.Was that the right call this week, given the shocker of an inflation report that roiled markets on Wednesday? While only time will tell for sure, a chorus of analysts and strategists are defending their bullish positions and recommending clients take advantage of cheaper prices to buy stocks -- especially in the battered technology industry.The rationale for many echoes the Federal Reserve’s take on hot inflation reports in 2021: Price pressures will be temporary as the economy works its way back to normal following the pandemic. Victoria Fernandez, chief market strategist at Crossmark Global Investments, said the consumer-prices report did little to alter her belief that above-normal inflation will be fleeting and the fundamentals in technology stocks remain attractive.“The question is, 12 months from now are we going to see a big jump in consumer prices? And I think most people will say probably not,” she said. “When you’ve had a pullback like this for some of these big tech names, to me that is an opportunity to go in and add to them.”Inflation concerns reached a climax on Wednesday when the government reported the consumer price index jumped 4.2% year-over-year in April, the fastest rise since 2008 and well above most economists’ estimates. That can’t be written off entirely to fuel prices and base effects from suppressed prices last year. Core CPI, excluding food and energy prices, rose 0.9% from the prior month, the biggest such increase since 1982.The initial reaction was brutal: By the end of Wednesday, the S&P 500 was down as much as 4% from its last record on May 7, poised for its worst week since October. It recouped more than half the losses on Thursday and Friday to close 1.4% lower on the week, still its worst drop in almost three months. The Nasdaq 100 Index plunged 2.6% on Wednesday, extending its retreat from an April record to 7.4%, then rebounded 3% in the last two days of the week. “That just shows there is a lot of cash on the sidelines and this weakness in the market is being met with a lot of demand,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management.Treasury yields, closely watched by equity investors for signs that inflation will lead to higher borrowing costs, marched upward. The 10-year yield ended the week up five basis points at 1.63%One interesting dynamic at play: Dip buyers in tech stocks appear to be mainly day traders and other individuals, rather than hedge funds and other professional investors. Retail traders bought a daily average of $300 million in tech stocks and related exchange-traded funds, according to data from Vanda Research.Meanwhile, JPMorgan Chase & Co.’s hedge-fund clients boosted bearish wagers against growth stocks while adding money to value sectors like banks. Semiconductor stocks in particular saw cooling interest amid production constraints, with net exposure falling to the lowest level since at least the start of 2020, according to JPMorgan’s prime broker data. Software was the focus of many dip-buying calls this week. Some of the group’s formerly hot stocks like Coupa Software Inc. and Alteryx Inc. have tumbled more than 30% from highs notched earlier this year.That’s creating great opportunities for investors to buy the highest-quality software-as-a-service and cloud-computing stocks that are poised to rebound, according to Evercore ISI analyst Kirk Materne.“Each time we have seen a big valuation-induced software sell down, the returns over the next six, 12 and 24 months trounce the S&P 500,” he wrote in a note this week. “While we expect the sector to remain choppy near-term, we believe that picking away at leading SaaS/Cloud franchises makes sense for those investors taking a 3-6 months view.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The group of rich government creditors known as the Paris Club is willing to delay a $2.4 billion debt payment from Argentina due this month if the nation meets certain conditions, potentially averting a damaging default, according to three people with direct knowledge of negotiations.The club will spare Argentina from default if it misses the May 31 payment in the hope that the country can rework a $45 billion credit with the International Monetary Fund, said one of the people, who asked not to be named because the talks are private. An agreement with the IMF may not come until after Argentina’s midterm elections later this year, the person said, declining to specify the conditions that the group is demanding.The Paris Club secretariat declined to comment, citing its policy not to publicly discuss ongoing negotiations. Argentina’s economy ministry press office didn’t reply to a request of comment.Argentina’s President Alberto Fernandez extended his European tour to meet IMF Managing Director Kristalina Georgieva in Rome on Friday in a bid to drum up support for a delay and renegotiations with the IMF. Argentina has formally asked the Paris Club for more time to make the payment and is expecting to receive a response by the end of the month.Georgieva said in a statement that the face-to-face gathering was “very positive” and that she will consult IMF members on the country’s request for a reform to the organization’s surcharge policy.“The goal is to reach an agreement as soon as possible, though we can’t be thinking of an accord that demands greater efforts from the Argentine people,” Fernandez said after the meeting, which lasted over an hour at the Sofitel hotel in Rome.Argentina dollar-denominated bonds due 2030 edged up 0.4 cents to 35.2 cents on the dollar and bonds due 2038 rose 0.6 cents to 37.3 cents on the dollar, the most in two months. The Argentine peso, which is managed by authorities through capital controls, lost almost 11% this year in the second biggest depreciation among emerging market currencies.Read More: Argentina Urges IMF to Suspend Surcharges on $45 Billion LoanThe deadline comes at a difficult time for the administration in Buenos Aires, with the country in its third year of recession, inflation approaching 50% and unemployment over 10%. While analysts’ estimates of its cash reserves vary, some calculations have put them near zero since September of 2020, limiting Argentina’s capacity to meet its international obligations.International PariahThe temporary Paris Club waiver aims to ease the economic ravages wrought by the pandemic, but it needs to be tied to conditions so it doesn’t turn into a habit, said one of the sources. Argentina has defaulted on its overseas debt nine times in its history.“Nobody wants Argentina to become an international pariah again,” said Rodrigo Olivares-Caminal, a professor in banking and finance law at Queen Mary University of London. “A default would be negative for Argentina and its creditors. But I’m concerned about Argentina’s endemic balance of payment problem.”In May 2014, Argentina reached a deal with the Paris Club to repay a $9.7 billion debt after 13 years in default. The debt was supposed to be repaid over a five-year period, but the country’s latest financial troubles delayed the final payments due this month. Creditors include the U.K., Italy, Spain and Canada.A Paris Club rule known as a “conditionality principle” states that the group only negotiates debt restructuring with debtors that have “a demonstrated track record of implementing reforms under an IMF program,” according to the group’s website. Argentina ceased following guidelines from a program with the IMF after a change of administration in late 2019, and talks for a new plan have stalled.Read More: Paris Club Seizes Pandemic Opportunity to Reclaim Lost Influence(Adds comments from the IMF’s Georgieva in fifth paragraph, updates market reaction in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The U.K. is set to start its own carbon market with the aim of putting a price on polluting that it hopes will help achieve the country’s ambitious climate goals.The first auction of emission permits on May 19 is the latest test of how the country copes with the separation from the European Union, its largest trading partner.Until January, Britain was part of the EU’s emissions trading system, the world’s largest cap-and-trade program and the centerpiece of the bloc’s efforts to limit climate change. By going it alone, the U.K. is forgoing a 16-year-old market that helped cut EU emissions by almost a quarter in the past two decades.The U.K. auction will be keenly watched to see how close prices will be to those in Europe, where emission costs have doubled in the past six months to a record. Too high a price could tilt the economic playing field against U.K. companies by overburdening them with permit costs, while one too low diminishes the incentive to invest in low-carbon technology.While the U.K. market was designed to be almost exactly like the EU system, there are a few key differences.The main one is that it’s much smaller. That means there are far fewer industrial and power-sector emissions that need permits. The U.K. is set to auction about 83 million permits this year, compared to more than 700 million for the EU.It’s an issue market participants are concerned about. Earlier this year representatives from industry groups in the U.K. and Europe wrote to Prime Minister Boris Johnson to urge him to link the carbon trading system with the larger EU system. That would mean permits from both the U.K. and EU could be used to account for emissions in either.The smaller market size also raises the risk of bigger price swings. An emissions trading system is meant to give businesses an indication of when is a good time to invest in lower-carbon alternatives. A high degree of volatility could hurt confidence that the emissions price is a reliable figure.“It’s an emissions trading system for a very small market, which makes no sense,” said Jan Ahrens, head of research at SparkChange, a platform to facilitate investments in carbon markets. “That has the risk of having high price volatility.”Volatility and a surging price could also be affected by how much financial players buy into the market. Demand from investment funds helped drive the gains in the EU carbon price this year. Ahrens said the investors he works with are eager to buy British carbon.So how much will emissions cost in the U.K.? The main indicator is the EU carbon price, which has gained more than 70% this year to a peak of 56.90 euros per metric ton, or 49.01 pounds, on Friday.The U.K. market is set to be oversupplied from the outset, a bearish indicator for prices. The cap for total emissions is about 156 million tons, compared with about 97 million tons of actual emissions estimated by BloombergNEF. That surplus is intentional, allowing market participants to accumulate permits to hedge for future years. The cap will likely be revised in the coming years to shrink with the U.K.’s plans to rapidly cut emissions this decade.There is also a safety net built into the British system. Unlike the EU, the U.K. has a price floor so that permits can’t be auctioned below 22 pounds. But similar to the EU, there’s a mechanism for the government to add permits to the market if prices rise too far, too fast.U.K. Plans Deeper Carbon Cuts to Spur Climate Change FightIt’s a part of the U.K.’s effort to ensure that the system works as planned, that companies that need permits can get them and that prices don’t bounce around too much after the market’s launch.“This is the first year, so they want to make sure the market is effective,” said Bo Qin, analyst at BloombergNEF. “Not too high, not too low,”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- U.S. retail sales stalled in April following a sharp advance in the prior month when pandemic-relief checks provided millions of Americans with increased spending power.The value of overall retail purchases were essentially unchanged last month following an upwardly revised 10.7% gain in March that was the second-largest in records back to 1992, Commerce Department figures showed Friday. The median estimate in a Bloomberg survey of economists called for a 1% April gain.The total value of retail sales was a record $619.9 billion in April, supporting economists’ forecasts for strong household spending for the remainder of the year.While consumers may begin shift more of their spending money to services such as entertainment and travel as pandemic fears dissipate, elevated savings supported by fiscal stimulus should underpin retail demand.“American shoppers took a breather in April after splurging earlier this year after two rounds of big stimulus payments,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note. “But with more than half of the states now fully open for business and more quickly advancing their schedules, shoppers won’t be staying home for long.”Clothing, RestaurantsEight of 13 retail categories registered declines in April sales, with the largest percentage decrease at clothing stores. Purchases at restaurants and auto dealers increased.U.S. stocks rose and Treasury yields declined in early trading Friday.Sales at motor vehicle and parts dealers climbed 2.9% in April, even as automakers faced production constraints due to the global semiconductor shortage.So-called control group sales, which exclude more volatile categories including food services, car dealers, and gasoline stations, dropped 1.5% in April after an upwardly revised 7.6% jump in March.The value of restaurant receipts rose 3% after a 13.5% March gain as states across the country eased restrictions on indoor dining capacity.Digging DeeperClothing-store sales dropped 5.1% after a 22.7% surgeSales at non-store retailers, which include e-commerce, fell 0.6% in AprilGeneral merchandise store sales fell 4.9% and the value of purchases at sporting goods outlets dropped 3.6%Gas station receipts decreased 1.1%. The retail figures aren’t adjusted for price changes, so sales reflect both changes in costs and demand.A separate report Friday showed that U.S. manufacturing output rose in April by slightly more than expected, suggesting further improvement for factories that are otherwise buffeted by supply shortages and shipping challenges.Read More: U.S. Manufacturing Output Increased 0.4% in April(Updates with markets and economist reaction.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Reuters) -Widespread gasoline shortages along the U.S. East Coast began to ease slightly on Saturday as the nation's biggest fuel pipeline said it was back to delivering "millions of gallons per hour" following last week's cyberattack, and ships and trucks were deployed to fill up dry storage tanks. The six-day Colonial Pipeline shutdown was the most disruptive cyberattack on record, triggering widespread panic buying by U.S. motorists that left filling stations across the U.S. Southeast out of gas. The pipeline had begun its gradual restart on Wednesday.
The direction of the AUD/USD on Friday is likely to be determined by trader reaction to the short-term 50% level at .7712.
(Bloomberg) -- Bonds in South Korea and Thailand appear to be the most at risk in Asia as U.S. inflation expectations increase, according to a Bloomberg study.Debt from the two nations has been the most sensitive to past episodes when American break-even rates have jumped, based on five past scenarios starting in 2011. Korea’s bonds showed a z-score -- which measures the relationship to the mean -- of 0.81, while Thailand’s is 0.77. That compares with just 0.09 for China and minus 0.01 in India.The vulnerability of Korea and Thai bonds can be attributed to the tight spread of their yields over U.S. Treasuries, and also their susceptibility to imported inflation due to their relatively high reliance on energy imports.Inflation expectations are ratcheting higher around the world as record central-bank stimulus has created a mountain of liquidity that is starting to filter through into consumer prices. The U.S. 10-year break-even rate, which measures expectations for future inflation, climbed to as high as 2.59% this week, from just 0.47% in March last year. Those concerns escalated this week with faster-than-expected U.S. inflation figures for April.“We could get higher break-evens and higher nominals if the Federal Reserve not only lets inflation overshoot, but also allows the U.S. economy to run hot,” said Duncan Tan, rates strategist at DBS Bank Ltd. in Singapore. “This scenario is less clear cut, but should be marginally detrimental to emerging Asia bonds, he said.Real YieldsThe story is somewhat different in terms of real yields. A similar Bloomberg analysis of periods of rising inflation-adjusted yields in the U.S. -- driven by optimism over growth and expectations for Fed normalization -- show Indonesian bonds have been the most vulnerable, with a z-score of 4.51, followed by Thailand at 2.69.A jump in U.S. real yields tends to boost the dollar, which has a relatively large impact on the high-beta rupiah. Indonesia’s currency weakened about 4% on average during the five periods used for the study, compared with an average of 2% for its five Asian peers.It appears therefore that the immediate outlook for emerging Asian bonds will differ depending on whether there is a bigger move in the U.S. in break-even rates or real yields. Whichever it is, all the signs suggest there will still be plenty of focus on CPI data for the foreseeable future.Note: The findings of the study are summarized belowMethodologyThe study measures the impact on emerging-Asia bonds from significant moves in U.S. break-even rates and real yields during five scenarios since 2011A shock move in U.S. asset prices is defined as an average 30 basis-point move in break-evens over a 10-day period, or a 54 basis-point jump in real yields over the same timescaleFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The IRS detailed on how it will handle a mixup involving a tax break for jobless benefits that became law a month after many already filed returns.
Two of the world's most prominent billionaires Tesla Inc.'s CEO Elon Musk and Jack Dorsey are facing off over the merits of bitcoin, with the future of the world's No. 1 crypto likely hanging in the balance.
Institutional investors do not take kindly to inflation and they sold. 1. If indexes fall below their moving averages, take action: Traders and investors alike should watch moving averages, especially the 50-, 100-, and 200-day. When the indexes were sliding a few days ago, the S&P 500 (SPX) for example, did not break its 50-day moving average at 4050.
Last week, we witnessed a classic “buy the rumor, sell the news” event with the cryptocurrency Dogecoin (CRYPTO:DOGE). Many Dogecoin enthusiasts were hoping that Tesla (NASDAQ: TSLA) CEO Elon Musk’s stint hosting the television show “Saturday Night Live” would lead to higher prices. After all, Musk has been known to pump the price of this cryptocurrency on Twitter and has been one of its biggest supporters. With so many Dogecoin holders anxious to see what the Dogefather had to say Saturday, the price of cryptocurrency rallied hard into the event to hit a record high of $0.74. Unfortunately, Doge investors learned that sometimes these types of events simply cannot live up to the hype. The price of Doge dropped more than 30% following the premiere of the show after Musk failed to deliver the praise for the cryptocurrency investors were hoping for. Traders can learn a lot from this story, particularly since this “buy the rumor, sell the news” scenario repeats itself time and time again in financial markets. It highlights just how difficult it can be to trade based on the news and should be viewed as a cautionary tale. With that said, perhaps the most important lesson here is that instead of gambling on Dogecoin, why not learn a trading strategy that can deliver real results? For example, Mindful Trader has created a data-driven swing-trading strategy that can potentially help you grow your account. Because he has analyzed and dissected historical stock market price data to test his trading strategy, you won’t have to worry about trying to guess right on binary events like the one mentioned above. Instead, you can use a statistical approach with proven results to take your trading to the next level. Signing up for the Mindful Trader service gives you access to tutorials and all the trading rules he uses for successfully generating returns with stocks and options trading. He also provides data-driven stock picks that he trades himself, which allows you to learn while following his suggestions. Whether you are a beginner trader or a seasoned veteran, Mindful Trader has something for everyone. Since Mindful Trader uses a swing-trading strategy that relies on price movement, not hope, you will always be confident in making a trade. That means you won’t have to trade the news and rely on hype to potentially generate returns like those unfortunate Dogecoin investors mentioned above. Check out this link to learn more about Mindful Trader’s trading strategy and why it’s such a smart alternative to gambling with Dogecoin. See more from BenzingaClick here for options trades from BenzingaThese OTC Securities Had the Most Trading Activity in April3 Advantages to Binary Options Trading with Nadex© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- Chile’s central bank held its benchmark interest rate at a record low and said borrowing costs would stay at that level as long as needed for the economic recovery to strengthen.The bank board, led by its President Mario Marcel, kept the overnight rate at 0.5% on Thursday. In an accompanying statement, policy makers wrote that economic prospects have improved.“The convergence of inflation to the target over the policy horizon still requires the monetary stimulus to be highly expansionary,” policy makers wrote. They added that the key rate “will be kept at its minimum of 0.5% for as long as it is deemed necessary for the recovery of the economy to take hold,” while dropping a previous reference to a time frame of several quarters.“That change is more hawkish, without a doubt,” said Sergio Godoy, chief economist at STF Capital. “While it’s not clear if they will raise rates this year, it’s now more probable that it will happen.”Chile’s central bank is keeping its stimulus in place even amid forecasts of stronger 2021 growth, driven by an effective vaccine roll-out, consumer demand backed by a third round of pension fund withdrawals and higher prices for copper, which is the country’s top export. On the other hand, headwinds include high unemployment and a slower pick-up in sectors including services.What Bloomberg Economics Says“The central bank is more constructive about the economic outlook and still confident that inflation will remain in line with the target. Together with forward guidance the outlook supports expectations for the central bank to hold the benchmark interest rate in the short term and start slowly increasing it early next year.”--Felipe Hernandez, Latin America economist3% TargetPrivate sector economists raised their growth estimate for this year to 6.2%, according to the central bank’s most recent survey published this week. They also see year-end inflation of 3.3%, above the 3% target.Read more: Latin American Central Bankers Stung by Food Inflation JumpIn their statement, policy makers wrote both headline and core inflation have continued to hover around target. Recent prices have been driven by food and gasoline, and board members noted “there has been continued high demand together with production and supply difficulties in several goods.”Rising commodity prices and increasing inflationary pressures have led other emerging markets to raise borrowing costs. Brazil has increased its key rate twice this year and has signaled more increases are ahead.Policy makers are also on hold as Chile enters what many expect to be a period of fraught national politics. On May 15-16, citizens will vote for members of the body that will write a new constitution, as well as governors, mayors and city council members. The result are likely to shape the upcoming presidential elections scheduled to take place in November.Since the central bank’s last rate decision in March, the government has eased some mobility restrictions, including parts of the capital, Santiago. More than 7 million Chileans have already received two doses of vaccines, out of a total population of over 18 million.(Re-casts story, adds economist quotes in 4th and 6th paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Here's how to tell if dogecoin's rebound is more bark than bite, according to technical analysts following the popular crypto.
The agency is plagued with setbacks that are causing a major backlog of returns.
The Tesla CEO sent the price of Bitcoin and other cryptocurrencies plummeting. But he may be aiming to turn crypto-mining green in ways that benefit Tesla.
Anyone with a stock account can now make a savvy, albeit risky, bet on GBTC pricing disparities that were previously exclusive to big players.
Dogecoin will likely transition from a proof-of-work protocol to proof-of-stake, speculated Alex Mashinsky, the chief executive and founder of The Celsius Network on Friday during a webcast hosted by his lending platform on YouTube.
Shares of Plug Power Inc. surged Friday, after they hydrogen and fuel cell systems company completed its restatement, removing a "shroud of uncertainty" that has been weighing heavily on the stock the past couple months.
(Bloomberg) -- Stock sales are reaping a windfall for the world’s richest shareholders.Corporate insiders including Amazon.com’s Jeff Bezos and Google co-founder Sergey Brin have ramped up stock sales recently, cashing in on a 14-month long bull market that’s helped boost fortunes to the tune of trillions.U.S. public company insiders offloaded shares worth $24.4 billion this year through the first week of May, with about half sold through trading plans, according to data compiled by Bloomberg. That’s almost as much as the $30 billion total they disposed of in the second half of 2020.Large shareholders frequently sell stock in planned intervals, often through pre-arranged trading programs. Yet the prolonged rally in equities markets has made the value of these disposals, whether planned or opportunistic, strikingly high.There are multiple reasons an investor of any size might be motivated to sell. After the pandemic-defying rally, valuations are increasingly under pressure from rising inflation. Investors are wary the post-Covid recovery could prompt tightening measures from the Federal Reserve. And President Joe Biden’s proposed tax hikes -- including a near doubling of the capital gains rate -- have created uncertainty.Bezos, EllisonWhatever the reason, the sales are flooding the market with yet more liquidity, the consequences of which will ripple through philanthropy, the art market, real estate and other niches.Bezos has sold $6.7 billion worth of Amazon shares this year. While a relative pittance for the world’s richest person, it’s more than two-thirds the value of shares he sold in 2020. Larry Ellison unloaded 7 million Oracle shares in the past week for total proceeds of $552.3 million. Charles Schwab has sold $192 million worth of shares of his eponymous brokerage this year.Brin, who has signaled that he intends to sell as many as 250,000 Alphabet Inc. shares, has disposed of $163 million worth of stock in recent days, his first sales in more than four years, filings show.Mark Zuckerberg and his charitable foundation, the Chan Zuckerberg Initiative, meanwhile, accelerated their sales of Facebook stock in the fall. Zuckerberg or his charity has divested shares at a near-daily clip since November, for a cumulative total exceeding $1.87 billion.The surging markets have exacerbated the concentration risk of the single-stock-dominated fortunes typical of many tech billionaires, said Thorne Perkin, president of Papamarkou Wellner Asset Management.“From a portfolio-management perspective, it makes sense to spread it around,” he said.Covid EconomyAlso among the biggest sellers are some noteworthy beneficiaries of the Covid economy. Zoom Video Communications founder Eric Yuan and used-car retailer Carvana Co.’s Ernest Garcia II have together received more than $1.75 billion from stock sales since March 2020, according to the Bloomberg Billionaires Index. George Kurtz, chief executive officer of cybersecurity firm CrowdStrike, has sold shares worth at least $250 million over that period.Zoom founder Yuan -- the poster child, in many ways, for the coronavirus economy -- has stepped up his sales this year as the firm’s share price slumped. In 2020, he typically offloaded about 140,000 shares a month through a trading plan, which generated more than $350 million over the course of the year.Since March, he’s sold almost 200,000 shares a month on average, yielding him about $185 million. He also donated more than a third of his stake in the San Jose-based company as part of “typical estate planning practices,” according to a spokesman. Some of the cash from his share sales fund donations to unspecified “humanitarian causes.”(Updates with Charles Schwab’s sales in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Lawmakers are looking for quick action to improve an existing forgiveness program.