Pension Pulse

Will Martin of Business Insider reports, Europe is back in deflation : The eurozone slipped back into deflation in April, according to the latest numbers released by Eurostat on Friday morning . Eurostat’s latest flash data showed that consumer prices in the single currency area fell by 0.2% in April. Economists had expected inflation to fall by 0.1%, slipping from the 0.0% at March’s reading, so the reading is troubling. The number means that prices are once again falling, having come out of deflationary territory in March, and are well behind the 2% target set by the ECB for inflation. On a year-to-year basis core consumer prices grew by 0.8%, against a forecast of 0.9% and a previous reading of 1%. Core prices are an important measure because they strip out the most volatile items — things like fuel and food prices, which are subject to massive variations. It is worth noting that Friday’s data is just a flash reading, meaning that it could be revised when the final ...

Hema Parmar and Saijel Kishan of Bloomberg report, The Hedge Fund Manager Betting Soros Is Wrong About China : Bob Bishop, who once ran investments for billionaire George Soros, is betting his former boss is wrong about China. The world’s second-biggest economy has had its hard landing and is on its way up, according to Bishop. Rising infrastructure spending, steel production and demand for metal and heavy-duty trucks are signs of improvement for the nation’s industrial and manufacturing sectors , said Bishop, a former chief investment officer at Soros Fund Management who runs $2.2 billion hedge fund Impala Asset Management. Soros said last week that China resembles the U.S. in 2007-08, when credit markets froze and triggered a global recession, and that its banking system is increasingly unstable. “China already had the crash,” Bishop said in an April 18 interview. “It bottomed at the end of 2015. It’s going to feel like a much better economy in China over the next two yea...

Andy Blatchford of the Canadian Press reports, Pensions should brace for new normal of lower neutral interest rates : Bank of Canada governor Stephen Poloz is recommending pension funds get ready for a new normal: neutral interest rates lower than they were before the financial crisis. Poloz told a Wall Street audience Tuesday that the fate of neutral rates — the levels he said will prevail once the world economy recovers — remain unknown, but they will almost certainly be lower than previously thought . The central banker made the comment during a question-and-answer period that followed his speech on global trade growth. Among the reasons, Poloz pointed to the more-pessimistic outlook for potential long-term global growth. The forecast was lowered to 3.2 per cent from four per cent, he said. "That downgrade means the neutral rate of interest will be lower for sure — for a very long time," said Poloz, who added it could go even lower if economic "headwinds...

Andy Blatchford of the Canadian Press reports, Liberal government to consider public pension funds to help bankroll mounting infrastructure costs : The federal government has identified a potential source of cash to help pay for Canada’s mounting infrastructure costs — and it could involve leasing or selling stakes in major public assets such as highways, rail lines, and ports. A line tucked into last month’s federal budget reveals the Liberals are considering making public assets available to non-government investors, like public pension funds . The sentence mentions “asset recycling,” a system designed to raise money to help governments bankroll improvements to existing public infrastructure and, possibly, to build new projects. For massive, deep-pocketed investors like pension funds, asset recycling offers access to reliable investments with predictable returns through revenue streams that could include user fees such as tolls . “Where it is in the public interest, ...

Will Wainewright and Nishant Kumar of Bloomberg report, Hedge Funds Suffer Worst Outflows Since Financial Crisis Era : Hedge funds suffered the worst withdrawals last quarter since the tail-end of the financial crisis as wild swings in stocks and commodities caused losses at some of the best-known firms. Investors pulled a net $15 billion between January and March, reducing assets under management to $2.86 trillion from $2.9 trillion, Chicago-based Hedge Fund Research Inc. said Wednesday. The last time outflows were higher was in the second quarter of 2009, when $43 billion was redeemed . Clients are redeeming after many hedge funds failed to protect them during market turmoil in the second half of last year and again at the start of 2016. Managers including John Paulson, Chase Coleman, Andreas Halvorsen, Ray Dalio and Bill Ackman posted losses in some of their funds last quarter, even as global stocks edged out a small gain with dividends reinvested . Hedge funds follow...