Sticking around and backing dissident board candidates worked. Instead of divesting from Exxon Mobil, the US’s biggest oil company, the nation’s three largest public pension funds pursued a successful strategy of advocating for change, and they just helped elect a pair of outside directors. Expect more of this tack against fossil fuel outfits.
Running counter to the trend of pension programs dumping fossil fuel stocks, these giant retirement systems—the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS), and the New York State Common Retirement Fund—believe that, in most cases, working from within is the better way to promote change.
They were key players in electing the two outside directors (a third is still up in the air as proxy ballots are counted), along with huge asset managers BlackRock and Vanguard, plus other pension entities such as the Church of England’s program.
The head the Canada Pension Plan Investment Board (CPPIB) has stepped down in the wake of his journey to the Middle East to receive a vaccination for COVID-19.
CEO Mark Machin, 54, traveled to the United Arab Emirates (UAE) to get the shot earlier this month, as Canada’s rollout of its vaccination program has lagged. Canada’s largest pension fund (US$379 billion) named John Graham, the fund’s head of credit investments, as Machin’s successor.
“After discussions last evening with the board, Mr. Machin tendered his resignation and it has been accepted,” the fund said in a statement. The statement said he had traveled personally to get the vaccine.
Bitcoin has been on a roll lately, rising in price five-fold over the past 12 months. Meanwhile, the US dollar, the world’s reserve currency, has lost 9% of its value.
All this has buoyed talk that someday Bitcoin in particular, or cryptocurrency in general, will replace the buck. Well, forget about that, argues St. Louis Federal Reserve President James Bullard, invoking the lessons of pre-Civil War days to warn about the chaos brought by a world of nonuniform currencies—that would be one where the buck isn’t king.
Appearing on CNBC Wednesday, he predicted that “it’s going to be a dollar economy as far as the eye can see—a dollar global economy really as far as the eye can see—and whether the gold price goes up or down, or the Bitcoin price goes up or down, doesn’t really affect that.”
Collateralized mortgage obligations (CMOs), which are collections of home-loan bonds, have long been a stalwart of insurers. But for other institutional investors, ownership is scant. DoubleLine Capital, the rising fixed-income power, would like to change that.
And it has some interesting research showing that CMOs dedicated to agency-guaranteed bonds, known as mortgage-backed securities (MBS), can book superior performance over time. MBS, of course, are pools of individual mortgages. Those that agencies support—Fannie Mae, Freddie Mac, and Ginnie Mae, chiefly—carry the pledge that Uncle Sam will cover any defaults.
Once-popular non-government-backed mortgage securities, which took a hit in the 2008 financial crisis, have diminished in volume. These so-called “private label” home-loan bonds dropped by half from then to now, to $1 trillion.
Absent that nightmare scenario—and most prognosticators believe science can vanquish any of COVID-19’s shape-shifting—the conventional Wall Street wisdom is for better days ahead on both the health and the economics fronts. And since escalating rates are co-dependent on an improving economy, a sunny thesis appears pretty solid.
Historically speaking, low rates like today’s are an aberration. Thus, at some point, it’s reasonable to assume they will return to normal. Or at least to higher than now, to a degree. A new normal that’s hardly towering.
Investors who sold GameStop short have lost $23.6 billion so far in 2021 through Wednesday, by the count of financial analytics firm S3 Partners. That includes $14.3 billion yesterday, as the retailer’s stock price shot up 135%.
In response to the controversy, Robinhood and Interactive Brokers Group curbed trading on GameStop, AMC, and several others Thursday morning. GameStop shares began to reverse direction. How long the restrictions would last was unclear. Frustrated amateur traders, of course, might just take their business to platforms that don’t limit them.
The pain is intense for these hedge funds. Citron Capital’s Andrew Left, often disparaged on Reddit, just said his firm folded a GameStop short bet, after losing 100% of its money spent on the transaction. Melvin Capital Management has slumped about 30% as the result of GameStop short sales, according to published reports. New York Mets owner Steve Cohen’s Point72 fund and Ken Griffin’s Citadel have stakes in Melvin.