Many US public sector pension funds are underfunded. This will impact local governments' solvency in the next downturn. It could also threaten the safety and security of the municipal bond market. So the Fed may end up playing a role.
The potential for a state and municipal fiscal and public pension crisis is a defining issue for the next downturn. Underfunding guarantees problems. The question is whether the next downturn crystallizes a crisis.
This month, we have seen an unprecedented increase in volatility. When the fundamentals take a knock, that’s when we should worry though. Let’s wait for the CPI next week and revisit this conversation.
Bridgewater Associates founder Ray Dalio says we are late in the economic cycle and should expect good things from asset markets. But central banks will have a tricky time dealing with the consequences.
2018 has started with a lot of angst about bond yields. And there is some cause to be concerned. But this owes to an economy that is growing more briskly and to the Fed that has been and probably will be more hawkish than you think.
It’s semantics whether 2.50%, 2.63% or 3.00% is the right level to declare a bear market in bonds. What matters is that the two best-known bond market investors are now saying we are in or near a bond bear market.
Recently I have indicated I see a lot of problems in asset markets despite the economic acceleration in Europe, Japan, and the US. Commercial real estate is a problem that I want to highlight briefly since I believe it will be a locus of…
Today’s Wall Street Journal shows that large-cap technology stocks are priced as if economic and earnings growth will continue for the significant future. However, this late in the cycle, the probability of a hiccup increases, making share…