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EQT Partners Private equity company logo seen displayed on a smartphone. Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images
Managers of the trillions of dollars in retirement investment for teachers, firefighters and other government workers in the U.S. and U.K. doubled down on private equity in 2018.
Why it matters: What is essentially public money is now being invested at higher levels than ever in private equity at a time when the asset class may be in for trouble.
Watch out: More private equity managers are holding onto more cash than ever before, and are having to pay more for deals because of increased competition, often diluting returns and leading managers to take riskier bets.
The bottom line: "You have to think, 'Are there enough deals to profitably invest that level of dry powder?'" Byles Williams said. "I don’t know the answer to that question, but I would be skeptical."
Public pension plans announced 954 new private equity mandate awards — essentially buys or allocations to new assets — for 2018. This put private equity investments in the No. 1 spot for new allocations among these public pensions last year.
Jerome Powell finally got the markets on his side. The S&P 500 fell after each of his first 7 FOMC meetings as chairman (by far the longest on record), but the market jolted higher on Wednesday.
Bank of America-Merrill Lynch called it the "Dove Show."
Between the lines: Whether Wednesday was, in fact, a good day depended on who you asked and what they buy.
What's next? Scott Minerd, global chief investment officer at Guggenheim Partners, said the Fed’s pause will allow excesses to continue to build and increase the risks of financial instability. But that's a good thing if you like to party.
Aramark informed managers that the company match on their 401(k) contributions will be cut in half, Philly.com reported Wednesday.
Why it matters: The strange part of the announcement to staff was that it came days after Aramark reported record sales and its highest profit margin ever. GAAP earnings per share rose 53% year over year, partly due to a $38 million benefit from the 2017 tax reform bill. (The record year did include layoffs of about 540 employees and $30-35 million in net severance charges.)
The big picture: Aramark has a long history of battles with this sort of issue. The company provides services that often replace government workers in schools, prisons and at healthcare facilities. That has put it in the middle of scandals over low pay and negligent practices.
The housing market got more bad news on Wednesday. Pending home sales fell 2.2% in December, meaning almost 400,000 fewer contracts were signed to buy existing homes. It's part of an ongoing slump that's seen 12 straight months of year-over-year declines. It's also the lowest December sales reading since 2013.
Existing home sales had been trending higher but also reversed course last month, falling 6.4% from November to a seasonally adjusted 4.99 million sales in December. That's down 10.3% from December 2017's 5.56 million sales when the metric was moving in the opposite direction.
Tesla's CFO Deepak Ahuja is "retiring," CEO Elon Musk said at the end of an earnings call on Wednesday.
Days without a factual error: 3