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Meriden Retirement Funds
February 10, 2009
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Overview
It appears that President Obama’s political honeymoon was measured in days, not months. Arriving in Washington with broad support, the new administration faced a massive economic crisis, with accelerating layoffs and rising debt. While voters agreed that Change was needed, there were few specifics or policy precedents, creating a major challenge for the new president. Congress launched an $819 billion stimulus plan, embracing a wish list of priorities stalled over the past eight years. Emphasis on government spending spooked the markets, which retested the November lows in late January. Public opposition to the initial plan caused a redrafting of the bill in the Senate, but revisions grew the package to $838 billion and were coupled with warnings that
more may be needed. Last week the markets rallied on signals that bank guarantees could finally mop up the so-called “toxic assets” that triggered the crisis last year. But the Financial Stability Plan bombed today on Wall Street – seen as a confusing public/private partnership that relies on trillions in new debt. Lacking clarity, the markets sold off dramatically.
As we have written before, inflection points are difficult to identify under a microscope. Data are inconsistent, while the markets trade on emotion. On a cyclical level, we believe a bottom has developed in the investment markets, but quick action is needed to promote a restored flow of capital. Even with new lending and stabilized markets, a reversal of the employment trend isn’t likely before the end of the year. And global monetary policy remains a wildcard.
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Meriden Retirement Funds
Meriden fared relatively well in January, but once again the key word is relatively. The stock market began the new calendar year with its worst January in history. The Dow Industrials lost 8.8%, the S&P was down 8.6%, the NASDAQ fell 6.4%, and some long duration US Treasury bonds fell in value by double-digits during the month. Meriden’s City Employee Retirement Fund closed the month with a 1.4% decline, and the Police/Fire pension plans dropped 1.5%. As agreed last month, $23.3 million was recommitted from the Board-directed accounts to managers of equity and fixed accounts by Inauguration Day and additional assets are positioned for second- and third-stage transfers in March and May. Through last night, the City Employees fund totaled $104.7
million, and the Police/Fire funds, $81.9 million – with asset allocation at 50% equities, 31% fixed income, 13% in real estate and managed futures partnerships, and 6% in money funds.~
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DJIA: 7888.88
February 10, 2009
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