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Showing posts with label May 01. Show all posts
Showing posts with label May 01. Show all posts

Monday, May 1, 2017

The CEO of a $1.5 trillion fund giant wants to set the record straight

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Emmanuel Manny Roman

LOS ANGELES  Manny Roman is spreading the word: Active management pays off, at least for bonds. 

Speaking at the Milken Institute Global Conference held at the Beverly Hilton, Roman, the new CEO of $1.5 trillion fund manager PIMCO, made a case for active management in the bond market. Passively managed exchange-traded funds have been hoovering up assets, helped by the promise of low fees, and the underperformance of active equity managers.

The combined assets of US ETFs stood at $2.7 trillion in February, according to the Investment Company Institute, of which $457.4 billion was in bond ETFs.

“In fixed income, [passive outperforming active] is simply not true,” Roman said. He cited a recent PIMCO study that found that the majority of active bond funds and ETFs beat their median passive peers. The report said: 

“As the chart below shows, the majority of active bond funds and ETFs beat their median passive peers after fees over the past 1, 3, 5, 7 and 10 years, with 63% outperforming over the past 5 years. In contrast, the majority of active equity strategies failed to beat their median passive counterparts during the period. Only 43% outperformed over the past 5 years; in every other period, the percentage is lower still.”

pimcoblogbazapr201751546fig1

Roman cited a bunch of reasons why this has happened, many of which echo those identified in PIMCO’s report. These come from differing investor behaviors, with some bond investors, such as central banks, having different motivations for buying. In addition, bonds come due, meaning that there is a higher degree of turnover in the bond market.

“This has dropped out of the dialogue because everyone focuses on equity,” Roman said. “We’re taking a stand and saying please look at the data.”

SEE ALSO: Mohamed El-Erian just hit on a huge contradiction in the market

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May 01, 2017 at 11:43PM

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from Matt Turner and Rachael Levy

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This VC’s mansion just got a $20 million price chop, but it’s still one of the most expensive homes in Silicon Valley

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Los Altos Hills $80 million

It turns out that a modern California masterpiece of a mansion is a harder sell than previously thought. 

First listed back in 2015 for $88 million, this home in the Silicon Valley town of Los Altos Hills just got a $20 million price cut.

That original number made it “one of the most expensive properties ever to be publicly listed in the area,” listing agent Michael Dreyfus of Sotheby’s International Realty told The Wall Street Journal. It’s important to note, however, that homes in the area have changed hands privately for more.

The home is owned by tech entrepreneur Kumar Malavalli, founder of Brocade Communications Systems and current head of venture capital firm VKRM.

The $68 million compound includes two structures: a 20,400-square-foot main house and a 1,024-square-foot “executive center.” Malavalli uses the compound for both living and working, ensuring a commute as easy as a walk through the property’s meditation gardens.

He and his wife are now selling the home to be closer to their grandchildren.

Michael Dreyfus of Sotheby’s International Real Estate has the listing.

SEE ALSO: Report: ‘Trump whisperer’ Kellyanne Conway just bought an $8 million DC mansion

Hidden in the Silicon Valley enclave of Los Altos Hills, California, lies a huge, eight-acre estate.

This is no mere cookie-cutter McMansion.

The grand entryway is framed by lattice and guarded by a lion statue.

See the rest of the story at Business Insider

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May 01, 2017 at 11:43PM

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from Dennis Green

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The majority of Americans want Trump to do something about prescription drug prices

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Prescription drugs pain medication

Americans are still looking for ways to confront the rising cost of prescription drugs. 

According to a new poll by the Kaiser Family Foundation, 60% of the roughly 1,100 people who responded to the survey consider lowering the cost of prescriptions a priority at the national level. 

One of way to tackle the issue that has overwhelming support: allowing the government to negotiate drug prices with drugmakers for Medicare. According to the poll, 92% of Americans are in favor of allowing the government these Medicare negotiations. That response was consistent across party lines: 92% of Republicans, 92% of Independents, and 96% of Democrats were in favor of drug price negotiations. 

The government currently can’t negotiate prices for drugs that are part of Medicare’s Part D program, which covers most prescription drugs. Exactly what it would look like if the government could negotiate prices wasn’t included in the survey.

It’s a topic that’s been on President Donald Trump’s radar. At a January news conference, Trump said drugmakers are “getting away with murder,” and expressed an interest in negotiating drug prices.

In March, the president met with Reps. Elijah Cummings and Peter Welch to talk about drug pricing, where the representatives showed Trump a bill that would allow Medicare to negotiate lower drug prices. 

And it wasn’t just Medicare negotiations that the survey respondents supported. Americans also overwhelmingly supported having drug companies release information on how they set the prices on drugs, placing limits on how much companies can charge, and even importing drugs from Canada. 

9015rx figure 2

SEE ALSO: Here’s who has the most to lose if the government starts negotiating drug prices

DON’T MISS: A city in Illinois realized it was spending a lot of money on one drug, so it sued the maker

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May 01, 2017 at 11:43PM

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from Lydia Ramsey

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The mad scramble to write Trump’s tax plan sounds like it was a mess

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donald trump

President Donald Trump surprised major members of his administration with a promise to deliver a tax plan last Wednesday, according to a new report.

According to Politico’s Josh Dawsey, Tara Palmeri, and Ben White, the Treasury Department and White House officials scrambled to complete the tax plan before the artificial deadline.

In an interview with the Associated Press on April 21, Trump promised to release the tax plan the following week, part of an attempt to show progress on his promised “biggest tax cut in history” before his 100th day in office. But that had not been conveyed to administration officials beforehand, according to Politico, which cited numerous White House and Treasury sources.

According to the report, Treasury officials had wanted to work out a tax plan with more details to unveil sometime over the summer. At the time Trump gave the AP interview, no text of the plan had been written, and officials on both the Treasury and White House side worked through the weekend to get the plan out by the deadline set by Trump.

Nobody wanted to do this now. We weren’t ready to do this now,” an administration official told Politico. “But we weren’t given any choice.”

Instead of a long, fleshed-out plan, Mnuchin and National Economic Council director Gary Cohn rolled out a one-page outline that lacked key details.

According to the report, the push to get a House vote on the GOP bill to overhaul healthcare and a possible executive order on the North American Free Trade Agreement followed similar patterns, with little detail and forewarning given to administration and congressional officials.

Read the full report at Politico»

SEE ALSO: Trump’s tax plan is missing a number of important details

Join the conversation about this story »

NOW WATCH: Watch a Trump surrogate get shut down after calling Trump the ‘Martin Luther King of healthcare’

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May 01, 2017 at 11:43PM

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from Bob Bryan

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A New York Times op-ed just argued for what could become the GOP’s next big lie

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donald trump mike pence paul ryan

In a particularly misguided column in the New York Times this weekend, R.R. Reno, editor of First Things magazine, argued that Reaganism in the Republican Party is dead, and Donald Trump helped kill it.

We’ve heard that before. What Reno goes on to say, though, is that the entire GOP should take up the “America First” mantle that Trump has thrown on. Promising to close off our country to the rest of the world through walls and trade barriers was, after all, what won Trump the election. And Reno wants to win, so he wants to follow the cheers of the masses who delivered victory. It’s a stunning abdication of intellectual leadership.  

Worse than that, his characterization of what globalism has done is simply not true. Here’s Reno:

Globalism poses a threat to the future of democracy because it disenfranchises the vast majority and empowers a technocratic elite. It’s a telling paradox that the most ardent supporters of a “borderless world” live in gated communities and channel their children toward a narrow set of elite educational institutions with stiff admissions standards that do the work of “border control.” The airport executive lounges are not open and inclusive.

John Q. Public is not stupid. He senses that he no longer counts. And he resents the condescension of globalist elites, which is why Mr. Trump’s regular transgressions against elite-enforced political correctness evoke glee from his supporters.

What Reno is doing is something I’m afraid we’re going to start seeing people on the right do more and more — and that’s interchange the issues of globalization and inequality.

Globalization was a factor in creating the wealth gap between classes in this country, but it can’t take the blame entirely. A lack of domestic investment in egalitarian policies benefiting the middle class, which was in part the result of the cult of small government Reagan championed, is also to blame.

In putting the blame solely on globalization, Reno abdicates a great deal of his party’s responsibility for the mess we’re in. What’s more, it leaves him without the correct solutions to the problem. All he’s got are some vague platitudes about putting America first, but doing it more politely than Donald Trump.

That won’t work. The future is coming — a global future — whether we like it or not. Trade and technology grow economies, but not equitably. It is the responsibility of government to blunt their dramatic impacts, and that contradicts Reaganism because it means the government has to get bigger, not smaller. Failing to recognize that will put you in the same camp as Trump — in the camp of a populist demagogue who promises one thing to the masses and does something entirely different in service to the elite.

Trump didn’t invent this, dude 

The funny thing is, Reno stops just short of sounding like a more rabidly nationalist Democrat. Bernie Sanders railed against the violence of free trade throughout his campaign. At this year’s World Economic Forum, Vice President Joe Biden admitted that globalization has not been an unalloyed good.”

Contrary to what Reno writes, the Obama administration didn’t see globalization as “utopian.” His administration just saw it as a reality we have to face — not something we can run away from like our current administration.

Trump can bully and threaten, he can throw up tariffs and rip up trade deals, but that’s not going to grow our economy. In fact, in our already integrated world it will only hurt us.

Take his administration’s 20% tariff on Canadian lumber. Shortly after it was announced, the National Association of Homebuilders started crying foul. Tariffs, you see, tend to just make things more expensive.

“If the 20 percent lumber duty remains in effect throughout 2017, NAHB estimates this will result in the loss of nearly $500 million in wages and salaries for U.S. workers, $350 million in taxes and other revenue for the governments in the U.S. and more than 8,200 full-time U.S. jobs,” according to Granger MacDonald, chairman of the National Association of Home Builders. “Lumber prices have already jumped 22 percent since the beginning of the year, largely in anticipation of new tariffs, adding nearly $3,600 to the price of a new single-family home.”

Get real

The real problem here is the wealth gap. The solution is more investment in programs that level the playing for everyone. That is to say investing in education, healthcare, and in an adequate policing of the corporate sector to make regular Americans feel confident that the rules apply to everyone and to prevent the kind of reckless behavior that precipitated the financial crisis.

Instead, the conversation in Washington is about how many people will go uninsured once Trumpcare is passed (if it ever is). Instead, the Secretary of Education is a novice. Instead, Dodd-Frank financial regulation is being torn apart, and ending the opioid crisis and inflated drug pricing — the two corporate scandals of our current moment — only get lips service from this administration and its party.

As ever, Republicans insist that economic growth will fix everything. Never mind that the wealth gap has widened steadily despite economic booms in the 1980s and 1990s. 

Reno wrote that there are a bunch of Republicans that see his line of thinking as “irresponsible” because its encourages hyper-nationalism. They’re right. As the world, we’ve been down that road before, and it’s an ugly place. We should not succumb to it again.

And again, this rhetoric is also irresponsible because it’s not grounded in reality. The future is coming, and we need a Republican Party that recognizes the challenges at hand, not one going through a nationalist rebranding of the same old tired policies that leave regular Americans behind.

If the GOP takes up this war on globalism, it’ll be the party’s next big lie, and it’s a very dangerous one at that.

SEE ALSO: Trump has turned his back on the one thing that makes the world rich and happy

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NOW WATCH: How the US could prevent a North Korean nuclear strike — according to a former Marine and cyberwarfare expert

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May 01, 2017 at 11:43PM

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from Linette Lopez

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