Mid-Year 2022 Capital Markets Update

Link: https://content.naic.org/sites/default/files/capital-markets-special-reports-mid-year-2022-update.pdf



The shape of the Treasury yield curve generally provides insight into the market’s expectations for
interest rates, as well as economic activity. As of June, the yield curve has shifted higher and flattened
compared to the beginning of the year and the last year. The Federal Reserve’s recent aggressive actions
have resulted in the higher Treasury rates and a flattening of the yield curve, as many investors believe
higher rates will push the U.S. economy into a recession. The yield curve also inverted briefly in midJune, which market participants view as a recession signal.

As of year-end 2021, U.S. insurers had exposure to about $316.3 billion in U.S. government bonds across
various maturities, or about 6% of total cash and invested assets. This was an increase from $280.6
billion at year-end 2020, but it was unchanged as a percentage of total cash and invested assets.

Author(s): Jennifer Johnson and Michele Wong

Publication Date: 23 June 2022

Publication Site: NAIC Capital Markets Special Report

Pension Funds Plunge Into Riskier Bets—Just as Markets Are Struggling

Link: https://www.wsj.com/articles/pension-funds-plunge-into-riskier-betsjust-as-markets-are-struggling-11656274270



More than 100 state, city, county and other governments borrowed for their pension funds last year, twice the highest number that did so in any prior year, according to a Municipal Market Analytics analysis of Bloomberg data. Nearly $13 billion of these pension obligation bonds were sold last year, which is more than in the prior five years combined.

The Teacher Retirement System of Texas, the U.S.’s fifth-largest public pension fund, began leveraging its investment portfolio in 2019. Next month, the largest U.S. public-worker fund, the roughly $440 billion California Public Employees’ Retirement System, known as Calpers, will add leverage for the first time in its 90-year history.

While most pension funds still avoid investing borrowed money, the use of leverage is spreading faster than ever. Just four years ago, none of the five largest pension funds used leverage.

Investing with borrowed money can juice returns when markets are rising, but make losses more severe in a down market. This year’s steep slump in financial markets will test the funds’ strategy.

It’s too soon to tell how the magnified bets are playing out in the current market, as funds won’t report second-quarter returns until later in the summer. In the first quarter, public pension funds as a whole returned a median minus 4%, according to data from the Wilshire Trust Universe Comparison Service released last month. A portfolio of 60% stocks and 40% bonds—not what funds use—returned minus 5.55% in the quarter, Wilshire said.

Author(s): Dion Rabouin, Heather Gillers

Publication Date: 26 Jun 2022

Publication Site: WSJ

Hospitals Are Flouting — And Fighting — Price Transparency Rules

Link: https://www.levernews.com/hospitals-are-flouting-and-fighting-price-transparency-rules/


The vast majority of U.S. hospitals are ignoring a new bipartisan federal law that requires the facilities to make their service prices available to the public, new research shows, and the Biden administration is facing growing criticism for not doing enough to enforce compliance with the landmark rule.

Now one state, Colorado, has taken matters into its own hands, passing an innovative law to bring its hospitals into compliance with the federal price transparency requirements — despite health care lobbyists’ efforts to sink the legislative effort.


Against the backdrop of limited federal enforcement, Colorado is leading the charge on creatively bringing hospitals into compliance, thanks to a new state law: House Bill 1285.

The law, recently signed by Gov. Jared Polis (D) and effective starting this August, has dual goals of accelerating the timeline on which hospital systems must meet the federal mandate, and curbing the crippling medical debt that plagues more than 100 million Americans.

The measure adds a state-level enforcement mechanism by requiring that hospitals be in compliance with the federal pricing transparency act in order to send Coloradans to collections for medical bills.

David Silverstein, founder and chairman of patient advocacy organization Broken Healthcare, wrote the bill and spearheaded the effort to get it across the finish line.

Author(s): Aditi Ramaswami

Publication Date: 27 Jun 2022

Publication Site: The Lever

The Asininity of Inflation Expectations, Once Again By Powell and the Fed

Link: https://mishtalk.com/economics/the-asininity-of-inflation-expectations-once-again-by-powell-and-the-fed



Common sense and practical examples suggest that inflation expectations theory is ass backward.

So much of the CPI is nondiscretionary that it’s difficult to impossible for CPI expectations to matter. 

Yet, economists focus on expectations that don’t matter and ignore the expectations that do matter, namely asset prices!

I have written about this several times previously, two of them before I even found the Fed study supporting my view. 


A BIS study concluded “Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive.

Indeed, that must be the case as more goods for less money by default improves standards of living.

The Fed was hell bent on reducing standards of living via inflation. Now they struggle to undo the inflation and asset bubble consequences they created. 

The Fed is the problem, not the solution.

Author(s): Mike Shedlock

Publication Date: 25 Jun 2022

Publication Site: Mish Talk

Pensions’ Bad Year Poised to Get Worse

Link: https://www.wsj.com/articles/pensions-bad-year-poised-to-get-worse-11652175002


State and local government retirement funds started the year with their worst quarterly returns since the beginning of the pandemic. Things have only gone downhill since.

Losses across both stock and bond markets delivered a double blow to the funds that manage more than $4.5 trillion in retirement savings for America’s teachers, firefighters and other public workers. These retirement plans returned a median minus 4.01% in the first quarter, according to data from the Wilshire Trust Universe Comparison Service. Recent losses have further eroded their holdings.

“It’s a tough period,” said Jay Bowen, manager of the Tampa Firefighters and Police Officers Pension Fund. “Nobody is immune.”

The declines in stocks and bonds are inflicting pain on household and institutional investors in 2022. The S&P 500 has returned minus 13.5% year to date through Friday, while the Bloomberg U.S. Aggregate bond index — largely U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities — returned minus 10.5%.

Author(s): Heather Gillers

Publication Date: 10 May 2022

Publication Site: WSJ

Tiny Python Projects

Link: http://tinypythonprojects.com/Tiny_Python_Projects.pdf



The biggest barrier to entry I’ve found when I’m learning a new language is that small concepts of the language are usually presented outside of any useful context. Most programming language tutorials will start with printing “HELLO, WORLD!” (and this is book is no exception). Usually that’s pretty simple. After that, I usually struggle to write a complete program that will accept some arguments and do something useful.

In this book, I’ll show you many, many examples of programs that do useful things, in the hopes that you can modify these programs to make more programs for your own use.

More than anything, I think you need to practice. It’s like the old joke: “What’s the way to Carnegie Hall? Practice, practice, practice.” These coding challenges are short enough that you could probably finish each in a few hours or days. This is more material than I could work through in a semester-long university-level class, so I imagine the whole book will take you several months. I hope you will solve the problems, then think about them, and then return later to see if you can solve them differently, maybe using a more advanced technique or making them run faster.

Author(s): Ken Youens-Clark

Publication Date: 2020

Publication Site: Tiny Python Projects

Fentanyl Overdose Rates Are Rising Fast

Link: https://www.wsj.com/articles/overdose-rates-are-rising-fast-cdc-drugs-opiod-crisis-substance-abuse-addiction-fatal-syringe-11652904604


The latest tally of fatal drug overdoses from the Centers for Disease Control and Prevention shows nearly 108,000 fatalities in 2021. This is far more than in 2017, when President Trump declared drug deaths a public-health emergency. Among blacks, the drug mortality rate has quadrupled in less than eight years.

The Trump administration acted aggressively and directed agencies to implement several recommendations from the Commission on Combatting Drug Addiction and the Opioid Crisis. These included changes to prescribing patterns, treatment paradigms and law-enforcement procedures. The rate of deaths from drug overdoses slowed and then dipped. But then Covid hit, with all its mental-health consequences. The addiction and overdose crisis is now the most important public-health issue facing the country.


Coincident with policy changes advertised as civil-rights progress, the comparatively low drug-overdose rate for blacks began to accelerate. It reached the white rate by 2019 and then surged past it during the pandemic to reach 43 annually per 100,000 of the black population by last September.

Rather than gawking at an accelerating overdose crisis, policy makers could benefit people of all races by investigating new sources of demand and supply. Instead, in a world where a single backpack of fentanyl could kill a million people, Mr. Biden eliminates the controls on illegal immigration instituted by his predecessor.

Author(s): Joseph Grogan and Casey B. Mulligan

Publication Date: 18 May 2022

Publication Site: WSJ

Racial Disparities in Maternal Health

Link: https://www.usccr.gov/files/2021/09-15-Racial-Disparities-in-Maternal-Health.pdf



Over the past two decades, the U.S. maternal mortality rate has not improved while maternal
mortality rates have decreased for other regions of the world. Furthermore, the rate at which
women in the U.S. experience short-term or long-term negative health consequences due to
unexpected outcomes of pregnancy or childbirth has also steadily increased over the past few
decades, with nearly 50,000 women in the U.S. experiencing these health consequences in 2014.
Significant racial and ethnic disparities persist in both the rate of women in the U.S. who die due
to complications of pregnancy or delivery and the rate that women experience negative health
consequences due to unexpected pregnancy or childbirth outcomes.


Compared to any other racial or ethnic group,7 Black8 women experience the highest rates of
nearly all of Centers for Disease Control and Prevention’s (CDC) severe maternal morbidity9
indicators.10 Black women in the U.S. are 3 to 4 times more likely to die from pregnancy-related
complications than White11 women in the U.S., and Native American12 women are more than 2
times more likely to die from pregnancy-related complications than White women in the U.S.13
Pregnancy-related mortality is also slightly elevated for Asian women (a 1.1 disparity ratio),14
and for Hispanic women in some geographic areas.15 Moreover, the risk of pregnancy-related
death is so elevated for Black women in certain regions of the U.S. that it is comparable to the

rate of pregnancy-related deaths16 in some developing countries.17 This racial disparity has not
improved in decades,18 and is also seen in other middle to high-income countries with
multiethnic populations.19 According to the World Health Organization (WHO), the U.S.
maternal mortality ratio ranked 56th in the world in 2017.20 According to the National Center for
Health Statistics (NCHS), in 2018, the maternal mortality rate in the U.S. was 17.4 maternal
deaths per 100,000 live births, with 658 women dying of maternal causes.21 In 2019, the
maternal mortality rate in the U.S. was 20.1 maternal deaths per 100,000 live births, with 754
women dying of maternal causes.

Author(s): U.S. Commission on Civil Rights

Publication Date: September 2021

Publication Site: U.S. Commission on Civil Rights

Dissenting Statement and Rebuttal of Commissioner Gail L. Heriot in U.S. Commission on Civil Right Report: Racial Disparities on Maternal Health

Link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3924645

Full Citation:

Heriot, Gail L., Dissenting Statement and Rebuttal of Commissioner Gail L. Heriot in U.S. Commission on Civil Right Report: Racial Disparities on Maternal Health (September 15, 2021). San Diego Legal Studies Paper 21-028, Available at SSRN: https://ssrn.com/abstract=3924645 or http://dx.doi.org/10.2139/ssrn.3924645


On September 15, 2021, the U.S. Commission on Civil Rights published a report entitled Racial Disparities in Maternal Health (the “Report”). This Dissenting Statement and Rebuttal (the “Statement”) is a part of that report.

Among other things, the Statement points out several errors in Report. For example, the Report incorrectly states that maternal mortality has increased 50% over the last generation. What has actually happened is that changes in death certificates have caused more deaths to be classified as maternal in nature. The Report also emphasizes the theory that racism plays a prominent role in causing racial disparities in maternal mortality. The Statement points out in response that maternal mortality rates for Hispanic and Asian American mothers are lower than the rate for white mothers. This tends to detract from the theory that racism is what’s causing the disparities.

Author(s): Gail L. Heriot

Publication Date: 13 Oct 2021

Publication Site: SSRN

A Louisiana senator defends his statements on the state’s Black maternal health

Link: https://www.nbcnews.com/news/nbcblk/cassidy-defends-statements-louisianas-black-maternal-health-statistics-rcna30166


Black pregnant women continue to face disproportionately high pregnancy-related deaths, with data from the Centers for Disease Control and Prevention indicating a 26 percent increase in the maternal mortality rate for Black women since the start of the pandemic. 

Though researchers do not have an explanation for the disparities, the research suggests it’s a culmination of institutional racism and other health factors, such as the increased risk of obesity and hypertension in Black women. Howell also added that stress and a lack of access to quality prenatal care further exacerbates this issue. 

“It really does boil down to how public health officials relate to Black women who are giving birth,” Howell said. “Statistics about Black maternal mortality are high across the board, no matter what your educational level is, no matter what your insurance level is.” 

In 2018, tennis star Serena Williams opened up in an interview with Vogue magazine about encountering severe health complications after giving birth because doctors neglected to listen about her existing medical conditions.

“When you have someone like Serena Williams having problems giving birth, and not being treated properly by nurses and doctors when she complains about not feeling well, then you look at the doctor of someone who is poor in Louisiana, and has the same kind of problem — they are probably treated even worse,” Howell said.

Author(s): Tat Bellamy-Walker

Publication Date: 23 May 2022

Publication Site: NBC News

Japan Has Economic Choices, Two of Them are Poison

Link: https://mishtalk.com/economics/japan-has-economic-choices-two-of-them-are-poison



1. Japan can defend its interest rate line by printing more money but at expense of the yen 

2. Japan can defend the yen by hiking rates or by selling its reserves until reserves run out

Japan has a nasty choice 

I received this email reply to the above Tweet from Michael Pettis.

Looks right. I’d add that by weakening the yen, Japan seems always to support their exporters at the expense of their consumers, which may be why domestic demand is always so weak and growth so sluggish.

The smart thing for Japan would be to hike rates and let the Yen strengthen. 

Instead, if they stay on the same path, the yen might blow up.

All of Japan’s efforts to achieve growth by inflation and exports have backfired. One might think that after 40 years they would try something else.

The single worst choice for Japan would be to blow its currency reserves in an attempt to defend both the Yen and its interest rate peg.

Author(s): Mike Shedlock

Publication Date: 22 Jun 2022

Publication Site: Mish Talk

Millions retired early during the pandemic. Many are now returning to work, new data shows.

Link: https://www.washingtonpost.com/business/2022/05/05/retirement-jobs-work-inflation-medicare/



Roughly 2.4 million additional Americans retired in the first 18 months of the pandemic than expected, making up the majority of the 4.2 million people who left the labor force between March 2020 and July 2021, according to Miguel Faria-e-Castro, a senior economist at the Federal Reserve Bank of St. Louis.

The percentage of retirees returning to work has picked up momentum in recent months, hitting a pandemic high of 3.2 percent in March, according to Indeed. In interviews with nearly a dozen workers who recently “un-retired,” many said they felt comfortable returning to work now that they’ve gotten the coronavirus vaccine and booster shots. Almost all said they’d taken on jobs that were more accommodating of their needs, whether that meant being able to work remotely, travel less or set their own hours.

“This is primarily a story of a tight labor market,” said Bunker of Indeed, who added that there was a similar rebound in people returning from retirement after the Great Recession. “For so much of last year, the big question in the labor market was: Where are all the workers? This year we’re seeing that they’re coming back.”

Author(s): Abha Bhattarai

Publication Date: 6 May 2022

Publication Site: WaPo