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COVID-19 Monitor: Staying safe and sidelined

I believe the market has been shrugging off mounting risks, climbing to positive territory for 2020 before faltering today. As discussed previously, I am avoiding the market as it is not adequately discounting risks. The market tends to trade on changes in newsflow rather than on levels, so it is not unusual for a market to rebound sharply on slight improvement in data. However, eventually levels do matter, and sharp distortions arise (such as a market in positive territory in the midst of a global crisis). One clue as to when the market has gone too far is when it reacts to not-so-positive data, like last week’s jobs report, in an excitedly bullish manner. It is a sign that bears have capitulated, and with positioning increasingly driving much of the market action, this serves as a signal that there is trouble for the market.

The primary risk not being adequately discounted is the potential for a resurgence in COVID-19 cases. Nearly every state has now reopened in some capacity, and yet, basically none of them have even met the criteria for reopening set by the CDC (or the Administration for that matter). And not surprisingly, we are starting to see cases bounce in many of these states.

With that in mind, I’m introducing a COVID-19 monitor in the form of a “bounce chart.” It basically shows the evolution of positive coronavirus cases as states reopen. You can access the monitor on either Daddy.Finance or Tabs.Live (our sister site). It is updated daily.

View the bounce chart.

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Monitors Themes

The Financial Health of Every University in the US

We’ve done an in-depth analysis of every university in the Unites States with a look at their financial health. You can access the monitor on either Daddy.Finance or Tabs.Live (our sister site).

Find Your University and see how it compares to others.

Some general conclusions:

Those with the largest endowments have had much stronger returns. We also break down the growth in endowments and find that for the largest endowments most of the growth comes from investment returns rather than contributions. For smaller endowments, a larger portion of endowment growth comes from contributions (so contributions do matter!).

With coronavirus throwing the state of classes into question, we look at who is open for in-person classes. We find that universities in weaker financial positions are more likely to be planning for in-person classes in Fall 2020 than those better positioned.

Lastly, new funding is badly needed. Nearly a third of universities cannot cover a year’s worth of expenses with their net assets (in the absence of revenues).

So Find Your University and click on the donate link to help support!

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Monitors Themes

Introducing real-time pension monitor with Tabs.Live

We’re pleased to announce our first real-time monitor is now ready and can be accessed on either Daddy.Finance or Tabs.Live (our sister site). We’ll be adding more monitors soon.

What’s In This Monitor?

A snapshot of pension underfunding at the national, state and plan level. We show aggregate data on pension underfunding, funding ratios, number of states and plans underperforming etc. We also provide detailed state-by-state and plan-by-plan real-time data.

Why This Is Important?

As discussed in our prior post, the US has gone from fully funded back in 2001 to now under 70% funded, with the average American on the hook for about $5,000. The funding status of pensions is very vulnerable to market moves given aggressive target returns, and this tool enables people to monitor the status real-time.

Description Of Key Items

Underfunding: Gap between liabilities and assets, which is effectively debt.

Burden on Average Resident: The underfunding on a per capita basis. The underfunding will have to be made up in some way and constitutes a burden on taxpayers.

Funded %: This is the ratio of assets to liabilities. Basically it shows for every $100 owed to plan beneficiaries how money there is actually.

Target return: This is set by the plan as an investment return they need to achieve to fund their plans. On average, these are 7-8%.

Returns: Actual returns on the plans assets (which are invested in stocks, bonds, etc.).

Returns versus target: We show the actual returns versus the target. For example, if a plan has an 8% return target, but it has only returned 5%, it is underperforming its target by 3%.

Historical underlying data from publicplansdata.org. Real-time calculations powered by Daddy.Finance.