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Trading Now

Monday, August 17, 2009


*imagine the sell off that awaits
Pension funds cut or leave target weightings for equities
The largest pension funds in the world either reduced or left unchanged their stock holdings during the steepest rally in decades. "Given the storm in financial markets that we have seen, the name of the game is risk management," said Dirk Popielas, head of JPMorgan Chase's Pension Advisory Group in Germany. "The majority of pension funds have not finished taking risk off their portfolios. Some have not even started." Bloomberg (17 Aug.)

*PIMCO started to buy mortgage securities in October of 07 and then again in 08. Both times they were too early and lost. PIMCO saved face by buying corporate bonds and holding treasuries. China is just as stupid and not as smart!
Sources: China's SWF to invest $2B in U.S. mortgages
The Chinese government's $200 billion sovereign-wealth fund, China Investment Corp., is putting together a deal to buy as much as $2 billion in U.S. mortgages through the U.S. Treasury's Public-Private Investment Program, sources said. "The Chinese government is always trying to seek a more ideal way to invest in U.S. assets rather than purely buying U.S. government bonds all the time," one source said. "Some might think $2 billion for a $200 billion sovereign fund is not big money, but it can be regarded as an innovative and positive option for Chinese investment." Reuters (17 Aug.)

*yet housing numbers expected to be bullish today
Glut of empty rentals a potential drag on home-price recovery
The decline of U.S. home prices has slowed, the number of houses sitting on the market is down and affordability is better than it has been in years. But many houses do not show up in those figures because they were put on the rental market instead of the sales market. In many areas, that has caused a glut on the rental market, one of several factors likely to prevent a quick recovery for housing prices. The Wall Street Journal (16 Aug.)

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