Wednesday, December 26, 2018

Scheduled, synchronous mark to market

Wells Fargo calculated U.S. defined-benefit pensions fund would need to implement a "giant rebalancing out of bonds and into stocks" - in fact the biggest in history - with the bank estimating roughly $64 billion in equity purchases in the last trading days of the quarter and year, prompting the banks to ask if traders are about to make pension rebalancing "great" again.

Pension funds, like banks, are required to post volatility spikes in the data on a regular basis, like price fixing on an annual basis, about the most idiotic rule invented.

In this case we have the pension funds in large states taking their bear market losses on schedule.  They are buying to replenish value lost, and that is an annual requirement.  It also means cities in California will be hearing some bad news, officially. All the cities, then synchronously, will report hiring freezes for the near future.  But seniors will synchronously enjoy heir cost of living adjustments, as will every other public sector employee.

The cycle is built in, we are required by law to have recessions synchronous to regime change. The method exceeds the bandwidth of the economy, investors get caught and have to retrace some trades, adding a loop to the flow, aliasing we call it, making sidelobes is another name, spinning wheel, snapping the whip, not enough second derivative..

No comments: