I've written in the past about the threat that low market yields and returns pose to pension funds, where managers are setting expectations too high (see here). Now managers face a new threat, the fallout from the Brexit. The Wall Street Journal reports: The retirement savings of tens of millions of people have come under new threat since the surprise U.K. vote to leave the European Union, thanks to a plunge in global interest rates. A post-Brexit scramble for safer bonds pulled yields lower and upended global markets just as many public pension funds wrapped up their fiscal year on June … [Read more...]
Archives for July 2016
The Monday Melee: UFC’s Unbelievable Return
News broke this morning that Ultimate Fighting Championship (UFC) had sold itself to a consortium of buyers led by talent agency WME-IMG. UFC is one of the best known providers of mixed martial arts entertainment. UFC President, Dana White and investors Frank and Lorenzo Fertitta purchased the franchise in 2000 for $2 million. Today they're selling the business for $4 billion, a return of 199,900%! The New York Times explains: It will be a windfall for U.F.C.’s primary owners, the longtime casino entrepreneurs Frank and Lorenzo Fertitta, though they will stay on as minority investors. The … [Read more...]
S&P Hits New Record High
The S&P 500 is hitting new record setting highs today. … [Read more...]
Worthy Reads: Black Hole of Negative Rates Is Dragging Down Yields Everywhere
Black Hole of Negative Rates Is Dragging Down Yields Everywhere (WSJ) Brexit Adds to Pension Funds’ Pain (WSJ) May to Succeed Cameron, Becoming U.K.’s 54th Prime Minister (Bloomberg) Why farmland may become a more popular neighborhood amenity than a golf course (MarketWatch) What Wall Street’s Obsession With Blockchain Means for the Future of Banking (Fortune) … [Read more...]
Survival States: Sales Taxes
If you're looking for the freest, easiest living conditions you can find, be sure to avoid states with high sales taxes. The Tax Foundation has mapped out the best and the worst in sales tax rates here. … [Read more...]
Worthy Reads: Coming to Terms with Low Bond Yields
Coming to Terms with Low Bond Yields (WSJ) Your 401(k) Fees Are Attracting More Attention—From Lawyers (Bloomberg) Canada Banking Regulator Tightens Mortgage-Lending Oversight (WSJ) Fed rate hike back on table (MarketWatch) Stellar jobs data helps Wall Street recoup Brexit losses (Reuters) … [Read more...]
Yellen has Egg on Her Face
The increase in June non-farm payroll employment came in at a blow out 287,000 following May's big miss. The data dependent Fed predictably panicked after last month's report (see chart for summary of their views). The folly of a data dependent approach should now be crystal clear. … [Read more...]
Survival Stocks
You’ll like this story. I was catching-up with a client this morning who had been out in Colorado during and after the Brexit vote. He asked what he missed while he was gone. “Well,” I replied, “as it turns out, not much.” My client already knew that, but he knows I despise using stop-losses so we had a good laugh at the expense of the stop-loss crowd. And a crowd there is in the stop-loss world. As a refresher, a stop-loss is an order to sell a stock when it falls below a certain price. I will not use them. It’s a strategy the hedge funds love, and one that makes me uneasy. What ends … [Read more...]
Worthy Reads: Central Bank Buying Squeezes Bond Market
Bridgewater’s Flagship Fund Falters as Another Thrives (WSJ) Millions of Spenders Are Ready to Come Back From the Mortgage Crisis (Bloomberg) Central Bank Buying Squeezes Bond Market (WSJ) The U.S. doesn’t even enforce trade rules, never mind enact favorable deals (MarketWatch) Deutsche Bank Says the U.S. Is Likely Headed for a Recession (Fortune) … [Read more...]
Rage Gauge: 64 People Shot in Chicago
64 people were shot in Chicago over the Fourth of July weekend. Where’s the outrage? “Through June, there had already been 315 homicides in Chicago this year, which is a 49% increase over the first half of last year,” writes Jason Riley in the WSJ, author of Please Stop Helping Us: How Liberals Make it Harder for Blacks to Succeed. “The political left’s response to gun violence is typically more gun control, even though the places with the biggest problems tend to sport harsher firearms restrictions, and criminals by definition ignore laws.” The article concludes that there is no link to … [Read more...]