Above the Fold

Pensions Must Again Rethink Strategy to Maintain Baseline

While the struggle for pension managers to maintain a balance of assets on hand and benefits to be paid out has been slowly increasing over recent years, there’s a growing urgency being triggered by the pandemic. With many managers traditionally utilizing more stable, interest-rate-related returns, the ultra-low rate environment and likelihood of continued stimulus/quantitative easing are triggering a dramatic rethink of strategy. Across the board, analysts and managers are lowering their expectations not only for bond market returns, but also for equities. According to the National Association of State Retirement Administrators, U.S. public pensions projected a median long-term return of 7.22% for portfolios in 2018, down from 8.05% in 2002 — those projections continue to decline. 

The large number of Americans forced into retirement has also had an effect on pension economics. Many pensions may now have to explore new strategies, which may include greater risk, or require workers and their employers to contribute more money. But these cost increases would come at a cost, potentially reducing services. Fortunately, the market boom of 2020 and unprecedented stimulus have allowed most pensions to meet this year’s investment targets; the question is whether that will continue. 

Three Things 

1. Texas Gains Another High-Profile Resident – Tesla founder Elon Musk is moving to the Lone Star State. In an apparent jab at Silicon Valley, the tech maven reportedly sees major opportunities in the state’s favorable business climate, less than deplorable traffic, and lack of state income or capital gains tax. The move also puts him closer to his new factory being built near Austin and could pave the way for an even larger tech migration to the state. 
2. American Airlines Helps Prevent Unexpected Quarantines – Through a partnership with LetsGetChecked, the largest air carrier in the world will now offer passengers preflight, at-home COVID-19 test kits for $129. The nasal swab test is done at home, then dropped at UPS, with results expected within a couple days. The company hopes the program will prevent infected users from traveling and prevent quarantine that is mandatory for untested travelers in some areas. 
3. Hey Siri, Drive Me to Vegas – According to Bloomberg, Apple’s self-driving car project is being moved to the company’s artificial intelligence and machine-learning group headed by John Giannandrea, the same executive who oversees Siri. Dubbed Project Titan, little is known about the depth of Apple’s autonomous automotive initiative, but sources say Apple will likely develop software while partnering with automakers to provide the hardware side. 

Did You Know?

The Fin’s Tiny Print

Our currency is quite remarkable. It can be folded forward and backward 4,000 times before tearing and is equipped with some of the most advanced security features, including a blue ribbon with thousands of micro lenses that create a “dancing Liberty Bell” effect on the $100 bill. But one thing you may not have noticed on the humble $5 bill (aka the “fin”) is the fact that the names of 26 states are printed across the Lincoln Memorial depicted on the back of the note. You’ll definitely need a magnifying glass to see them.