One of the largest educator pension funds in the U.K., the Universities Superannuation Scheme (USS) is implementing significant changes to the plan benefits as it becomes increasingly under-funded, just like its peers in the United States. The changes are drastic, and are meant to keep the fund solvent in order to at least pay some benefits rather than none over time. Additionally, the plan, which represents 330,000 members, will transition from defined benefit to defined contribution leaving members at the mercy of the performance of the money managers handling their investments.
Given that we all have to eat and that there are some concerning environmental developments out there, here’s an interesting question: has global warming led to higher or lower food prices (thus far)?
How the Chinese central bank derailed the yuan and help Donald Trump rose to power.
Another index bites the dust of the deflationary spiral...
Wall Street’s proclivity to create serial equity bubbles off the back of cheap credit has once again set up the middle class for disaster. The warning signs of this next correction have now clearly manifested, but are being skillfully obfuscated and trivialized by financial institutions. Nevertheless, here are ten salient warning signs that astute investors should heed as we roll into 2016.
The point is, if you are going to attempt to catch a proverbial falling knife on a chart, at least do so only at a point you deem to be a “make or break” type level. Whether or not you can likely accurately identify a “make or break” level is another matter. The point is that, should that level fail, like it did on the CRB Index a year ago, you know the security is broken and it is time to walk away.
If you think you're fighting the market, or the banks, or the Fed, you're dead wrong!
Importantly, while the "bias" of the market is to the upside, primarily due to the psychological momentum that "stocks are the only game in town," the mounting risks are clearly evident. From economic to earnings-related weakness, the "bullish underpinnings" are slowly being chipped away.
The sums in play are so staggering (an estimated $11 trillion in emerging market debts denominated in other currencies) that even the Fed won't be able to stop the meltdown.
If the Fed raises the short-term interest rates next month, it will do so only as a token. And it will continue doing so only as long as it has no negative effect on asset prices. Higher rates, in other words, will only happen as long as – and only insofar as – they are irrelevant. Should higher rates begin to do the work of tightening credit, as they are supposed to, the Fed will back off and fly to the aid of Wall Street and fellow bankers coast to coast. They have rigged the system to function on fraudulently low interest rates; now the fraud has gotten into its bones. The economy – especially the Wall Street economy – depends on cheap money. It will fall in a heap without it.
The odds of a December rate hike have slipped in recent days from over 70% intraday to 64.0% today as, while economists remain convinced that rates will rise in December, traders appear a little less confident. One of the most outspoken - having doubted The Fed (and questioned the economy's ability to handle even a 25bps rate hike) since Spring - DoubleLine Capital co-founder Jeffrey Gundlach said on Sunday that the Fed may hesitate to raise rates given rocky economic and financial conditions making it clear, as Reuters reports, "certainly [a Fed] No-Go is more likely than most people think. These markets are falling apart."
It is important to note that the current weakness of gold is primarily in dollar and sterling terms. For investors in Canada, Australia, New Zealand and the EU gold is once again acting as a hedge.
The torrid October, with its historic S&P500 point rally, is finally in the history books, and at least for a select group of hedge funds such as Glenview, Pershing Square and Greenlight and certainly their L.P.s, a very scary Halloween couldn't come fast enough, leading to losses between 15% and 20%. How did everyone else fare? Below, courtesy of Deutsche Bank's Jim Reid, is a summary of what worked in October (and YTD), and what didn't.
"It’s different this time works very well if you need to rationalize how to beat your return benchmark next quarter or win an election." The truth is that central banks cannot manipulate raw supply and demand the way they can financial assets.