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One Of The World’s Biggest Funds Is Slashing Its Exposure To Stocks - Bloomberg

One Of The World’s Biggest Funds Is Slashing Its Exposure To Stocks - Bloomberg

Release Date:  Friday, November 17, 2017

Gold ended on a positive note this week with prices up for the second week in a row.

“Gold prices stayed on track for a second straight weekly gain early on Friday as they crept up on a weaker dollar, although trading remained in a tight range amid expectations of a U.S. interest rate hike next month.” (“Precious-Gold prices inch up, head for second weekly gain.” Rueters  11.16.17)

Some analysts believe precious metals are getting short term support from a stock market that has hit all-time highs multiple times this year.

“There's also a lot of concern that the equity market rally is possibly becoming a little exhausted for now, and that should be supportive of gold in the short term(“Precious-Gold gains as dollar dips on uncertainty over Trump tax bill.” Rueters  11.17.17)

Gold ended the week up $18.50, closing at $1,294.40. Silver prices closed at $17.38, up $0.42.

One Of The World’s Biggest Funds Is Slashing Its Exposure To Stocks - Bloomberg
The largest U.S. pension fund, California Public Employees’ Retirement System, is looking to more than double its bond allocation to reduce risk and volatility.

“’The markets have had a pretty good run and it’s possible Calpers staff is thinking this might be a good time to lock in some of the gains,’ Keith Brainard, research director for the National Association of State Retirement Administrators, said in a phone interview.

“Bond yields remain at low levels because of persistent weak inflation, central bank easy money policies and global investors chasing income. Raising the allocation would reduce the fund’s discount rate, or average expected return, to 6.5 percent from the 7 percent annual target adopted last year. A lower target would probably require bigger contributions from taxpayers and public agencies to cover pension obligations, a shift that board member JJ Jelincic said he would oppose.

“The average allocation for public pensions is about 23 percent to fixed income and 49 percent to stocks, according to Nasra data.

“The Calpers board is scheduled to vote on the allocation in December. Almost all of the fixed-income and stock holdings are managed in-house while more complex assets, such as private equity and real estate, are overseen by outside consultants. Allocations to private equity and real assets would stay at 8 percent and 13 percent, respectively, under all scenarios under consideration.

“The allocation revisions occur every four years. Calpers is working to provide for a growing wave of longer-living retirees." (“One of the World’s Biggest Funds Is Slashing Its Exposure to Stock.” Bloomberg  11.13.17)

Bill Gross: The Stock Market Is Like ‘An Old-Age Retirement Community’ - CNBC
Bill Gross, normally known for his bond expertise, speaks to CNBC about the stock market with a pessimistic view of the landscape.

“The stock market's best days are likely behind it as central banks around the world take away the high levels of stimulus they've provided over the past decade, Janus Henderson portfolio manager Bill Gross said Wednesday.

"’I'm not supporting a bear market, but sort of a market where you move into an old-age retirement community where the pace of activity and prices behave more maturely,’ he told CNBC's ‘Power Lunch’ program. ‘So I think sort of the halcyon days are over.’

“Gross spoke as the bull market that began in March 2009 has hit a bit of a soft patch lately. The S&P 500 and Dow industrials are down narrowly in November after enjoying a powerful and almost uninterrupted run through most of 2017.

“The culprit, he said, is the Fed and its global cohorts finally pulling back on stimulus after years of bargain-basement interest rates and trillions in money printing. With that support fading, investors are going to have to get used to lower returns, he said.

"’I think double-digit increases are over, simply because the credit cycle itself is pulling back,’ Gross said. ‘The Fed is raising interest rates, the Fed is reducing its balance sheet, the ECB is reducing its balance sheet by half and ultimately raising interest rates. These are slight negatives that argue against a continuing bull market.’" (“Bill Gross: The stock market is like ‘an old-age retirement community.” CNBC 11.15.17)