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Pension funds especially Public Pension funds are in deep do do*...they have been trying to keep solvent by investing in Equities. Which since the 08 debacle the FED has been accommodating with the FED policy of easy money and printing...You have seen the rise in Equities as a result.

Now the tenor of FED policy has changed to one of tightening interest rates which has changed the psychology of Equities. The break came apx at the end of July 2018. Couple that with Trade War tensions and the Equity traders have become nervous. The result has been a correction or decline in Equities which is now becoming quite pronounced. Equities are now in retreat.

The upshot is that when the Pension Fund managers see their returns they are not going to like it..and will put pressure on the FED to loosen up a bit. The FED with Powell the HAWK as Chairman has apparently been TONE DEAF to the concerns of Investors. If this state of being tone deaf continues Pension Funds will start to face bankruptcy. Once that starts you had better grab your gonads.

So as of now it is too early to batten down the hatches as one is waiting to see if the dynamic established in 2012 still holds, but the red storm warning flags have gone up...I just do not like what I see...

Another suspicion that I have now is why has the FED become so Hawkish? Is there something that is not apparent to the eye or in the FED's articulated rational? Perhaps the rise in interest rates is being used to maintain the USD or Treasury Bond equilibrium in the global economy? In essence that they are being forced by exigencies to raise rates, which if that is the case shows a deterioration in the standing and or viability of those instruments. This would stand to reason as you continue to increase debt loads you are undermining the sustainability of said instruments. You are in essence debasing them. This situation then would sooner or later be an inevitable part of what amounts to the script for catastrophic failure.


*Watch PBS Frontline 10/23/18 about Public Pensions particularly in KY.