Author: Mary Pat Campbell

EXPLAINER: Why rising rates are unsettling Wall Street

Mary Pat Campbell

Link: https://apnews.com/article/coronavirus-pandemic-financial-markets-stock-markets-inflation-prices-96e01a1db876bd4ad7e183e8cb4874e8

Excerpt:

WHY ARE INFLATION AND GROWTH EXPECTATIONS RISING?

Coronavirus vaccines will hopefully get economies humming this year, as people feel comfortable returning to shops, businesses reopen and workers get jobs again. The International Monetary Fund expects the global economy to grow 5.5% this year following last year’s 3.5% plunge.

A stronger economy often coincides with higher inflation, though it’s been generally trending downward for decades. Congress is also close to pumping another $1.9 trillion into the U.S. economy, which could further boost growth and inflation.

Author(s): STAN CHOE and ALEX VEIGA

Publication Date: 26 February 2021

Publication Site: Associated Press

More Rate Scares Ahead for Stocks

Mary Pat Campbell

Link: https://www.wsj.com/articles/more-rate-scares-ahead-for-stocks-11614772800

Excerpt:

Expectations of a stronger economy count as a positive development for companies’ earnings prospects, but they are pushing long-term interest rates higher, with the 10-year Treasury recently yielding 1.41% versus 0.93% at the start of the year. That isn’t unusual, since long-term rates typically go up as the economy’s prospects improve, but then again stocks haven’t tended to be as expensive at the start of recoveries as they are now.

The S&P 500 trades at about 22 times analysts’ expected earnings over the next year, according to FactSet, which is close to its highest forward price-earnings ratio in 20 years. In December 2009, six months after the last recession ended, the S&Ps forward P/E ratio was about 14.

As a result, even relatively modest moves upward in Treasury yields, and therefore the relative attractiveness of bonds to stocks, can cause market spasms. This is particularly true of the richly valued technology shares that have been among the biggest market winners since last spring.

Author(s): Justin Lahart

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

The Culture Wars Are Coming to the SEC

Mary Pat Campbell

Link: https://www.wsj.com/articles/the-culture-wars-are-coming-to-the-sec-11614813925

Excerpt:

At Tuesday’s confirmation hearing, Sen. Pat Toomey pressed Gary Gensler on the scope of the SEC’s authority to regulate politics. Let’s say “a publicly-traded company spends a financially insignificant amount of money on, let’s say, electricity,” Mr. Toomey proposed. “Is it material whether that electricity came from renewable sources or not?”

Mr. Gensler resisted answering, saying “it may not be material or it may be material.” This isn’t reassuring. The concept of materiality is crucial to securities regulation because it defines the transparency required for investors to make prudent decisions. The SEC is supposed to protect investors from fraud by making sure they have access to accurate information about a firm’s performance.

But progressives want to use the agency’s watchdog responsibilities as a guise to bend finance in service of unrelated political goals, like climate. Mr. Gensler seemed to reserve the right to impose such politicized disclosure requirements, even when the information is “financially insignificant.”

Author(s): Editorial board

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

New U.S. Cases Ease, but Deaths Tick Higher

Mary Pat Campbell

Link: https://www.wsj.com/livecoverage/covid-2021-03-03/card/18LFgjsjQkJOdGZpqjYK

Graphic:

Excerpt:

There were 55,071 new cases reported in the U.S. for Tuesday, according to the latest data compiled by Johns Hopkins University. That was down from 58,810 a day earlier, and 71,436 a week earlier.

Reported U.S. deaths related to Covid-19 increased Tuesday to 1,924, from 1,566 a day earlier, according to the latest Johns Hopkins data.

While both new cases and deaths are down from January’s highs, deaths have begun to trend upward in the past week. The seven-day moving average of daily reported deaths, which smooths out irregularities in the data, was 2,046 as of Monday, according to a Wall Street Journal analysis of Johns Hopkins data. The 14-day average was 1,984. When the seven-day average is higher than the 14-day average, as it has been since last Wednesday, it indicates deaths are on the rise.

Author(s): Adam Martin

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

MoneyPalooza Monstrosity — The Return: Multiemployer Bailout

Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/moneypalooza-monstrosity-the-return

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Excerpt:

Now, you can say that they are just about to add $2 trillion to the federal debt, so what’s $2 trillion more? (and yes, people will be saying that – we shall see how much that money printer can go BRRRRRR)

In my own opinion, the standard measures for DB pension shortfalls greatly underestimate the cash flows needed, given this time of extremely low interest rates. But still, let’s pretend.

The public pension bailout would be at least 20 times the amount of a MEP bailout. Just because you bailout a set of pensions that would have pulled down a federal guarantee fund (the PBGC) does not mean you’re going to bailout other pensions that are much bigger and that you never guaranteed in the first place.

Author(s): Mary Pat Campbell

Publication Date: 3 March 2021

Publication Site: STUMP on Substack

Canada: An Official Strong Recommendation for First Doses First

Mary Pat Campbell

Link: https://marginalrevolution.com/marginalrevolution/2021/03/canada-an-official-strong-recommendation-for-first-doses-first.html

Excerpt:

Canada’s National Advisory Committee on Immunization (NACI), a scientific advisory group to the government, has made a forceful and dramatic statement strongly favoring First Doses First (delay the second dose.) This is a very big deal for the entire world. Basically NACI have endorsed everything that Tyler and I have said on First Doses First since my first post tentatively raised the issue on December 8. I am going to quote this statement extensively since it’s an excellent summary. No indentation.

Author(s): Alex Tabarrok

Publication Date: 4 March 2021

Publication Site: Marginal Revolution

Illinois’ record-setting pension debt jumps to over $300 billion – Wirepoints

Mary Pat Campbell
Illinois’ record-setting pension debt jumps to over $300 billion – Wirepoints

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Excerpt:

The state assumes the pension funds will continue to earn an average of nearly 7 percent a year, while Moody’s lowered its assumptions for 2020 to just 2.7 percent: “the FTSE Pension Liability Index, a high-grade corporate bond index Moody’s uses to value state and local government pension liabilities, fell to 2.70% as of June 30, 2020, from 3.51% the prior year.”

Moody’s also reported that the asset-to-payout ratio for the state’s funds are now equal to about seven years’ worth of payouts.

That’s down compared to Wirepoints’ report on asset-to-payout ratios we released last year in this report: COVID-19 pushes nation’s weakest public pension plans closer to the brink: A 50-state survey. 

Author(s): Ted Dabrowski and John Klingner

Publication Date: 4 March 2021

Publication Site: Wirepoints

Forecasters Predict COVID-19 Case Counts Will Keep Falling

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2021/03/04/forecasters-predict-covid-19-case-counts-will-keep-falling/

Excerpt:

Forecasters are predicting that U.S. COVID-19 case counts and the U.S. COVID-19 death numbers will continue to improve over the next four weeks.

Most of the forecasters in the COVID-19 Forecast Hub system say weekly new case counts will be somewhere between 350,000 and 450,000 over the next four weeks, compared with an actual number of about 477,000 recorded during the week that ended March 1.

The forecasters are predicting the number of deaths per week will fall to about 6,000 to 8,000, from about 14,000 per week, over that same four-week period.

Author(s): Allison Bell

Publication Date: 4 March 2021

Publication Site: Think Advisor

The Covid-19 Baby Bust Is Here

Mary Pat Campbell

Link: https://www.wsj.com/articles/the-covid-19-baby-bust-is-here-11614853803?mod=hp_lead_pos10

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Excerpt:

A year into the pandemic, early data and surveys point to a baby bust in many advanced economies from the U.S. to Europe to East Asia, often on top of existing downward trends in births.

A combination of health and economic crises is prompting many people to delay or abandon plans to have children. Demographers warn the dip is unlikely to be temporary, especially if the pandemic and its economic consequences drag on.

“All evidence points to a sharp decline in fertility rates and in the number of births across highly developed countries,” said Tomas Sobotka, a researcher at the Wittgenstein Center for Demography and Global Human Capital in Vienna. “The longer this period of uncertainty lasts, the more it will have lifelong effects on the fertility rate.”

Author(s): Margherita Stancati

Publication Date: 4 March 2021

Publication Site: Wall Street Journal

The ‘COVID Relief Bill’ Is Mostly an Expensive Bundle of Politically Motivated Giveaways

Mary Pat Campbell
The ‘COVID Relief Bill’ Is Mostly an Expensive Bundle of Politically Motivated Giveaways

Excerpt:

A sizable portion, about $500 billion, is a bailout of state and local governments that for the most part do not need one. While state tax revenues took a small hit from the pandemic and associated economic lockdowns, the damage is far smaller than was once feared. States should handle their own finances.

But it’s not just a bailout; it’s a bailout in which the funding is allocated based on the size of each state’s unemployed population. In other words, states that imposed draconian and unnecessary economic lockdowns during the past year are going to get a larger share of the federal cash than states that managed to balance public health needs and the economy—an arrangement that New Hampshire Gov. Chris Sununu rightly calls “outrageous.”

Author(s): Eric Boehm

Publication Date: 3 March 2021

Publication Site: Reason

$350 Billion Covid “Bailout” To States, Cities, And Counties – Here’s What You Need To Know

Mary Pat Campbell

Link: https://www.forbes.com/sites/adamandrzejewski/2021/03/03/350-billion-covid-bailout-to-states-cities-and-counties–here-are-the-details/?sh=626de35e661c

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Excerpt:

This week, the U.S. House passed, along party lines, the $1.9 trillion American Rescue Plan Act of 2021. A vote in the U.S. Senate is expected soon.

Buried within the 591-page bill is a $350 billion bailout for 50 states, tribal governments, U.S. territories, and more than 30,000 cities and counties.

Our auditors at OpenTheBooks.com finally located the $350 billion allocation, line-by-line, in a supplemental database hidden on the back end of the House Oversight Committee’s website.

Map Link: https://www.openthebooks.com/maps/?Map=90043&MapType=Pin

CBO data: https://www.openthebooks.com/assets/1/6/CD13263501.pdf

Author(s): Adam Andrzejewski

Publication Date: 3 March 2021

Publication Site: Forbes

Pritzker must provide discovery in COVID-19 challenge or face sanctions

Mary Pat Campbell

Link: https://www.thecentersquare.com/illinois/pritzker-must-provide-discovery-in-covid-19-challenge-or-face-sanctions/article_41683d52-7b81-11eb-8a54-e391cea9ed33.html#new_tab

Excerpt:

Gov. J.B. Pritzker’s administration has a Wednesday deadline to start turning over documents justifying why it ordered restaurants to limit their operations during the COVID-19 pandemic.

Attorney Greg Earl, with Myers, Earl and Nelson P.C., represents Geneva-based FoxFire restaurant, which sued the governor last fall.

“FoxFire is continuing this fight because what happens if another strain, that’s what we’ve heard of, another strain from Europe or South Africa hits and the governor decides to put in another 30-day window,” Earl said.

The governor has already issued 12 months of executive orders related to the pandemic. His most recent order issued Feb. 5 expires March 7.

Author(s): Greg Bishop

Publication Date: 2 March 2021

Publication Site: The Center Square