What we’re reading (10/22)
“How Institutions Game Benchmarks” (Institutional Investor). “In a new paper cheekily entitled ‘Lies, Damn Lies and Performance Benchmarks: An Injunction for Trustees,’ Ennis concludes that the benchmarks that institutions use to judge their returns underperform gauges that are far more representative of the actual market exposures and risks in their portfolios by 1.4 to 1.7 percentage points annually. Not surprisingly, a majority of pensions, endowments, and mutual funds have beaten the benchmarks they devise. By using flawed benchmarks, pensions and endowments are painting a picture that shows that they’ve beaten a low-cost, passive portfolio, when in fact they’ve dramatically underperformed it.”
“Apple, Amazon, McDonald’s Headline Busy Earnings Week” (Wall Street Journal). “Nearly a third of the S&P 500, or 161 companies, are slated to report earnings in the coming week, according to FactSet. Twelve bellwethers from the Dow Jones Industrial Average, including Boeing Co. and McDonald’s Corp., are expected to report as well.”
“How Binance CEO And Aides Plotted To Dodge Regulators In U.S. And UK” (Reuters). “A plan to "insulate" itself from the SEC. A backdated document. An exodus of compliance staff. The world’s biggest crypto exchange and its billionaire founder swerved scrutiny by regulators, Reuters found. Now there are signs the strategy is fraying.”
“Wall Street Warns Of Trouble Brewing In Auto Loans As Prices Dip” (Bloomberg). “Wells Fargo & Co. said that higher loss rates for loans it originated late last year contributed to an increase in write-offs for the period. Ally Financial Inc., the country’s second-largest auto lender, saw charge-offs for retail auto loans quadruple in the third quarter. And Fifth Third Bancorp said it’s pulling back on originations.”
“U.S. Home Prices Could Fall As Much As 20% Next Year” (CBS News). “Home prices have plunged during the second half of 2022 with demand for residential real estate cooling off in a number of states and cities across the U.S.. And prices could continue to fall by as much as 20% next year as mortgage rates climb and the housing market normalizes in wake of the pandemic, according to a noted Wall Street economist.”
