Daily Links Archives: June, 2019

Bloomberg writes "Money-Market Funds Contemplate a Return to Abyss of Low Rates," which tells us, "The specter of a return to ultra-low U.S. interest rates is haunting money-market funds. Cash is flooding into these highly liquid vehicles for investing in short-term debt for now, and the amount of assets held in taxable money-market funds this year poked back above $3 trillion for the first time in close to a decade. But there is growing disquiet among those who run and invest in them about the problems that might be caused by potential rate cuts from the Federal Reserve." The article continues, "Treasury yields that veer closer to zero could prompt those with spare cash to seek out alternatives, and may also make the job of actually running the money that remains in such funds more difficult, according to investors and strategists at a conference in Boston earlier this week.... If the Fed does ease, prime retail funds are most vulnerable to outflows, according to Mark Cabana, head of U.S. interest-rate strategy at Bank of America Corp. That's because money funds “will be seen as less desirable” amid a re-steepening of the Treasury yield curve, he said during a panel discussion at the Crane's Money Fund Symposium. Alex Roever, JPMorgan Chase & Co.'s head of U.S. rates strategy, said that money funds have historically tended to suffer from outflows around one-to-two years after Fed reductions, and the low overall level of rates plays a greater role in driving that than the actual process of easing. Of course, the problem of low yields is just one of the many challenges facing the short-end of the U.S. interest-rate market. While that topic dominated discussion at this year's Crane's conference, attendees also grappled with issues ranging from America's debt ceiling to the Secured Overnight Financing Rate and sponsored repurchase agreements."

A Bloomberg Opinion piece, entitled, "Money-Market Fund Bonanza Nears a Tipping Point," tells us, "'This may be the peak before it all falls apart again.' So said Peter Crane, president of Crane Data, on Monday, the first day of the Crane's Money Fund Symposium, which bills itself as the largest meeting of money-market fund managers and cash investors in the world. He added that he was putting a positive spin on the industry by noting that assets were rising when balances typically fall. The amount of money in government and prime funds has soared in 2019 to more than $3 trillion, the most since the financial crisis, driven by U.S. short-term yields exceeding those of longer-maturing bonds." The piece explains, "On its face, the impetus to park money in ultra-safe money-market funds makes a lot of sense. After all, equities are at or near all-time highs, corporate-bond spreads have tightened across the board, and, again, the yield curve is inverted, inevitably raising the specter of a coming recession. In fact, I posited in late March that inversion would most likely accelerate the dash for cash, after noting that during January and February, individual investors bought $39 billion of Treasury bills at auctions, the most since at least 2009." But with lower rates, it adds, "Make no mistake: Such steep cuts would most likely roil money-market funds. Crane and others at the industry gathering in Boston are putting on brave faces, but the simple truth is that a return to the post-crisis policy of pinning short-term interest rates near zero would force many investors to withdraw their money and seek higher yielding alternatives."

Pensions & Investments writes that "Managers find money market funds no longer a drain." It says, "Money market funds are rebounding after years of being unprofitable for managers, due in part to rising short-term interest rates and recently implemented regulations. And thanks to those regulations put in place a few years ago, managers and other industry observers remain optimistic that money market funds will be a good source of revenue in the years to come -- provided, of course, that the industry doesn't enter another zero-rate environment." It quotes Callan LLC's Nathan Wong, "As recently as a few years ago money market funds were negative yielding. So, to hear them come around so soon is a bit surprising.... We could all speculate on how long this could last but we're in a Goldilocks environment for money market funds. Yield is more attractive." The article adds, "Analysts with whom P&I spoke remain bullish on money market funds even with increased expectations the Federal Reserve will cut interest rates this year."

Bloomberg writes "Money-Market Fund Assets May Increase by 20% in 2019, Crane Says," which explains, "Money-market assets, which are already up about 13% in 2019 on a 52-week rolling average, will likely end the year up 20%, given that funds are seeing inflows at a time when balances typically fall, Peter Crane, president of Crane Data, said. Crane, speaking at the Crane's 2019 Money Fund Symposium in Boston, cited quarter-end and corporate quarterly tax payments as reasons why fund flows tend to be weak around this time of year. 'The craziest part of it is, it's not market-related,' because stock and bond markets are up, Crane said. 'This is all cash coming from new money or bank deposits.' 'I'm putting on a positive spin because this may be the peak before it all falls apart again,' Crane said." Bloomberg also wrote earlier yesterday, "Money Markets Are Thriving in an Uncharacteristic Sweet Spot." This article stated, "In a global financial environment dominated by negative interest rates and central banks signaling even more accommodative policies, the U.S. money-market industry is thriving. Normally seen as a place to park cash during times of uncertainty, taxable funds have seen roughly $136 billion of inflows this year even with U.S. equity markets surging and bonds posting positive returns, Investment Company Institute data show. Overall assets have swelled to more than $3 trillion, the highest level since the financial crisis.... While the specter of Fed rate cuts is not perceived as an imminent threat, it will be a topic among attendees at the Crane's Money Fund Symposium in Boston beginning Monday. Other issues likely to come up include the drop in yields and narrowing spread between government and prime money-market funds, as well as the post-reform growth of the market for repurchase agreements and popularity of sponsored repo." The piece quotes State Street Global Advisors' Pia McCusker, "Money fund yields are still above 2 percent, whether it's government or prime.... That's still attractive to investors today. If people are looking for a safe haven, cash is still a great place."

Reuters writes "Flows into Asian money market funds jump on trade, growth worries." The story tells us, "More money is flowing into safer assets such as money markets and bonds in Asia, data shows, as investors worry over slowing global growth, trade frictions and easier monetary policies. Data from Refinitiv Lipper showed investors bought $30 billion of Asian money market funds and $10 billion of the region's bond funds in the past two months. However, they sold $3 billion of equity funds. Their investments in money market funds in the first five months of this year stood at $34.7 billion, the highest in four years, the data showed." The piece quotes Paul Sandhu, Head of Multi-Assets Quant Solutions at BNP Paribas Asset Management in Hong Kong, "We have seen a lot of investors in a wait-and-see mode pushing into cash and short-term deposits, while they wait to see what happens with the trade war talks right now."

Earlier this week, The Wall Street Journal wrote, "Warning Lights Are Flashing in China’s Money Market." The article says, "While the world has been focused on the U.S.-China trade conflict, another threat -- potentially just as large -- has been brewing beneath the surface of China's financial system. On Sunday, the country's securities regulator convened a meeting asking big brokerages and funds to support their smaller peers, according to a meeting summary circulated among industry participants Monday. The briefing cited rising risk aversion in money markets after defaults in the bond repurchase market. Some interbank lending rates have moved sharply higher in recent weeks. China's short-term lending market for banks and other financial institutions has for years operated under the assumption that Beijing wouldn't allow big losses in the event of defaults or insolvencies. That confidence has been shaken by regulators' unusual public takeover of a small, troubled bank in northern China last month -- and the even more unusual public admission by the central bank that not all of Baoshang Bank's liabilities would necessarily be guaranteed." The Journal adds, "Worryingly, problems appear to be migrating from the relatively small market for negotiable certificates of deposit (NCDs) -- used primarily by small banks -- into the much larger bond repo market. Although key one-day and seven-day weighted average borrowing rates remain low, thanks to huge central bank cash injections, longer tenors have marched sharply higher."

The Federal Reserve's latest "FOMC statement" says, "Information received since the Federal Open Market Committee met in May indicates that the labor market remains strong and that economic activity is rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although growth of household spending appears to have picked up from earlier in the year, indicators of business fixed investment have been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent.... Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased. In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective. In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments."

Bloomberg wrote recently that "Wall Street's Big Moneymaker Isn't Sexy," explaining, "Cash management may not have the whizz-bang appeal of fintech. But there's plenty of disruption in this staid corner of the financial industry." They tell us, "As investment-banking revenues slumped in the wake of the global financial crisis, traditional broker-dealers found that trading and deal-making weren't cutting it. Steadier money could be made in cash management, the humdrum business of assisting multinational companies with daily liquidity, and getting the most out of idle deposits by deploying them in global markets." The Asia-focused piece adds, "JPMorgan Chase & Co.'s treasury-services business, its lingo for cash management, hit a 20% return on equity last year, compared with 15% for its corporate and investment bank. Citigroup Inc., a global leader in this area, posted a return on equity from transaction banking (which is dominated by cash management) in the mid-20% range, according to a 2017 investor presentation. These sort of results underpin Goldman Sachs Group Inc.'s recent decision to use technology to make a splash in cash-management -- in Japan, among other countries -- as part of a global push later this year. The country's appeal is two-fold. Corporate treasuries everywhere seek yen assets when they want to hide from global turmoil. Meanwhile, Japan could also support Goldman's fledgling ambitions in online retail banking, which requires reliable access to liquidity. Taking a digital platform to cash-rich, yield-hungry Japanese companies -- and snagging even a sliver of their deposits -- would mean cheaper funding than the wholesale market."

With less than a week to go before our 11th Annual Money Fund Symposium, we thought we'd give some "know before you go" advice to those planning on attending and encourage those registering last minute to do so ASAP. Registered attendees should have received an e-mail with the conference binder and login information yesterday, and Crane Data subscribers and conference attendees may now access the conference materials via our Money Fund Symposium 2019 Download Center. We're still accepting registrations ($750) for our June 24-26 conference at The Renaissance Boston Waterfront, and are expecting around 550 attendees in total. The conference lineup features a keynote from Crane Data's Peter Crane, SSGA's Pia McCusker, and J.P. Morgan's Alex Roever, and a 'who's who' of speakers in the money market mutual fund industry. We to see you and hope you'll join us in Boston next week! (See here for the latest agenda, and see here to register.) Also, we're making plans for Crane's 7th annual "offshore" money fund event, European Money Fund Symposium, which will be held in Dublin, Ireland, September 23-24, 2019. This website (www.euromfs.com) is now taking registrations and the preliminary agenda has been posted, and we expect a robust turnout in Ireland due to recent regulatory reforms and Brexit. (Contact us to inquire about sponsoring or speaking. A couple slots are still available.) Finally, our next Money Fund University "basic training" event is scheduled for Jan. 23-24, 2020, in Providence, R.I. The MFU website, as well as our Bond Fund Symposium site, will be taking registrations soon, and we'll be publishing these agenda late this summer. Our 4th Bond Fund Symposium will be March 23-24, 2020, in Boston, Mass. Watch www.cranedata.com for more details on these events, and please let us know if you have any questions or feedback on our growing conference business.

A press release entitled, "Credit Suisse issues inaugural Green Certificates of Deposit," tells us, "Credit Suisse today announces the successful inaugural issuance under its green finance framework, raising USD 200 million in proceeds in the form of green Yankee Certificates of Deposit ('YCD'). Given the growing interest from responsible and sustainability-driven investors in short-term money markets, Credit Suisse has issued green YCD in order to (re-)finance a portfolio of eligible green assets, while providing its investors with a debt instrument in the green finance space. This issuance builds on Credit Suisse's long-standing commitment to sustainable finance, exemplified by the establishment in 2017 of the Impact Advisory and Finance ('IAF') department. IAF aims to facilitate projects and initiatives that have a positive economic and social impact and generate a financial return. Reporting directly to the Chief Executive Officer, it coordinates activities across the Group. By enabling and advancing impact investing and sustainable business activities, IAF seeks to benefit wealth management, institutional and corporate clients." Marisa Drew, CEO, Impact Advisory and Finance department at Credit Suisse, comments, "Our inaugural green YCD issuance represents another exciting milestone for Credit Suisse in the green finance market and underscores our ambition to play a meaningful role in helping the world transition to a low-carbon economy. We are firmly committed to applying our expertise and innovation in the capital markets to help tackle climate change, all while helping our clients 'Generate returns. Sustainably'."

The Investment Company Institute's latest weekly "Money Market Fund Assets" shows that MMF assets rose for the 8th week in a row, increasing by $128.6 billion, or 4.2%, since April 17. Money fund assets have increased by $124 billion, or 4.1%, year-to-date, according to ICI's weekly series, rising to MMFs' highest level since February 2010. They write, "Total money market fund assets increased by $8.86 billion to $3.17 trillion for the week ended Wednesday, June 12, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $4.06 billion and prime funds increased by $5.97 billion. Tax-exempt money market funds decreased by $1.17 billion." ICI's weekly series shows Institutional MMFs rising $8.6 billion and Retail MMFs rising $0.3 billion. Total Government MMF assets, including Treasury funds, stood at $2.364 trillion (74.5% of all money funds), while Total Prime MMFs rose to $672.8 billion (21.1%). Tax Exempt MMFs totaled $134.9 billion, or 4.3%. ICI states, "Assets of retail money market funds increased by $277 million to $1.22 trillion. Among retail funds, government money market fund assets decreased by $1.10 billion to $695.67 billion, prime money market fund assets increased by $2.53 billion to $401.22 billion, and tax-exempt fund assets decreased by $1.15 billion to $125.28 billion." Retail assets account for over a third of total assets, or 38.5%, and Government Retail assets make up 56.9% of all Retail MMFs. The release adds, "Assets of institutional money market funds increased by $8.58 billion to $1.95 trillion. Among institutional funds, government money market fund assets increased by $5.16 billion to $1.67 trillion, prime money market fund assets increased by $3.44 billion to $271.56 billion, and tax-exempt fund assets decreased by $16 million to $9.66 billion." Institutional assets accounted for 61.5% of all MMF assets, with Government Institutional assets making up 85.6% of all Institutional MMF totals.

A Prospectus Supplement filing for the $52 million SEI Daily Inc Trust Treasury Fund F (SEPXX) announces the "Liquidation of the Treasury Fund." It explains, "At a meeting of the Board of Trustees (the "Board") of SEI Daily Income Trust (the "Trust") held on April 23, 2019, the Board approved the liquidation of the Fund, a series of the Trust. The decision to liquidate was based on low asset levels in the Fund, which are not expected to increase in the future. Accordingly, the Fund will commence the orderly liquidation and distribution of its portfolio pursuant to a plan of liquidation approved by the Board. Each shareholder will receive its pro rata portion of the Fund's liquidation proceeds. It is currently expected that the liquidation proceeds of the Fund will be distributed to shareholders on or about June 27, 2019." SEI is the 28th largest manager of money market funds with $9.7 billion as of May 31, 2019 <b:>`_. (See also our April 9 Link of the Day, "SEI DIT Treasury Files Form N-CR.")

The Wall Street Journal's CFO Journal writes "U.S. Corporate Cash Piles Drop to Three-Year Low." They tell us, "U.S. corporate balance sheets continue to feel the impact of the 2017 U.S. tax overhaul, as companies pivot their capital allocation strategies in response to the new law. Companies funneled record amounts of cash to stock buybacks, dividends, capital spending and acquisitions last year. As a result, U.S. corporate cash holdings fell to a three-year low of $1.685 trillion in 2018, according to a report from Moody's Investors Service Inc. The drop in corporate cash hoards, the first since 2015, came as companies rushed to take advantage of lower taxes on foreign income." The piece explains, "Apple Inc., again the top cash holder, saw its cash pile drop 14% to $245 billion. Rounding up the top five were: Microsoft, Alphabet and newcomers Amazon.com and Facebook, which replaced Cisco Systems and Oracle in the top five. Combined, the five companies held $564 billion, or 33% of the total nonfinancial corporate cash balance, down from $675 billion, or 34% in 2017, according to the report, which looked at 928 U.S.-based, nonfinancial companies." The CFO Journal adds, "Many U.S. companies, particularly in the fast-growing technology sector, built up massive hoards of cash offshore as they opted to keep profits earned in foreign countries outside of the U.S. That strategy was largely motivated by U.S. tax law, which levied a 35% corporate tax, net of taxes paid in foreign jurisdictions, on money that companies chose to repatriate. But since the 2017 tax-law overhaul, which imposed a one-time tax on accumulated foreign profits, some companies have shifted tactics, bringing some or all of that money home. Companies sent $664.91 billion of their foreign earnings back to the U.S. in the form of dividend payments in 2018, up from $155.08 billion the year before, according to data from the U.S. Commerce Department."

Crane Data's latest monthly Money Fund Portfolio Holdings statistics will be published Tuesday, June 11, and we'll be writing our normal monthly update on the May 31 data for Friday's News. But we also generate a separate and broader Portfolio Holdings data set based on the SEC's Form N-MFP filings. (We continue to merge the two series, and the N-MFP version is now available via Holdings file listings to Money Fund Wisdom subscribers.) Our new N-MFP summary, with data as of May 31, 2019, includes holdings information from 1,178 money funds (nine fewer than last month), representing assets of $3.585 trillion (up from $3.502 trillion). We review the latest data, which shows that total money fund assets remained above $3.5 trillion and Prime MMF assets remained above $1.0 trillion in May. Our latest Form N-MFP Summary for All Funds (taxable and tax-exempt) shows Repurchase Agreement (Repo) holdings in money market funds totaling $1,178 billion (up from $1,120 billion on April 30), or 32.9% of all assets. Treasury holdings total $850.4 billion (down from $855.3B), or 23.7%, and Government Agency securities total $743.3 billion (up from $734.9 billion), or 20.7%. Commercial Paper (CP) totals $337.2 billion (up from $323.3 billion), or 9.4%, and Certificates of Deposit (CDs) total $242.9 billion (up from $237.8 billion), or 6.8%. The Other category (primarily Time Deposits) totals $129.4 billion (down from $130.2 billion), or 3.6%, and VRDNs account for $103.4 billion (up from $100.6B last month), or 2.9%. Broken out into the SEC's more detailed categories, the CP totals were comprised of: $197.0 billion, or 5.5%, in Financial Company Commercial Paper; $60.9 billion or 1.7%, in Asset Backed Commercial Paper; and, $79.4 billion, or 2.2%, in Non-Financial Company Commercial Paper. The Repo totals were made up of: U.S. Treasury Repo ($702.6B, or 19.6%), U.S. Govt Agency Repo ($434.8B, or 12.1%), and Other Repo ($40.7B, or 1.1%). The N-MFP Holdings summary for the 214 Prime Money Market Funds shows: CP holdings of $332.1 billion (up from $318.1 billion), or 32.9%; CD holdings of $242.9 billion (up from $237.8B), or 24.1%; Repo holdings of $171.9 billion (down from $172.4B), or 17.0%; Other (primarily Time Deposits) holdings of $85.2 billion (down from $86.6B), or 8.5%; Treasury holdings of $109.6 billion (down from $125.0B from last month), or 10.9%; Government Agency holdings of $60.2 billion (up from $55.1B), or 6.0%; and VRDN holdings of $6.1B (down from $6.6B), or 0.6%. The SEC's more detailed categories show CP in Prime MMFs made up of: $197.0 billion (up from $192.1 billion), or 19.5%, in Financial Company Commercial Paper; $60.9 billion, or 6.0%, in Asset Backed Commercial Paper; and, $74.2 billion, or 7.4%, in Non-Financial Company Commercial Paper. The Repo totals include: U.S. Treasury Repo ($65.6B, or 6.5%), U.S. Govt Agency Repo ($65.6B, or 6.5%), and Other Repo ($40.7B, or 4.0%).

Barron's writes "Say Goodbye to Those 2% Rates on Savings." The article tells us, "Savers and investors can be forgiven if they are suffering from an extreme case of whiplash. Not long ago, they were counting on higher interest rates after years of near-zero returns on cash. Seemingly overnight, the conventional wisdom reversed. Markets are now betting that interest rates are about to fall for the first time since December 2008.... If the markets are right, rates could fall by three-quarters of a point over the next year, taking federal funds to a range of 1.5% to 1.75% from their current 2.25% to 2.5%. That would have wide-ranging consequences for stocks, bonds, and savings vehicles like money market funds." The piece adds, "Money-market funds holding short-term commercial paper and government securities would quickly yield less if the Fed cuts rates. Yields would also fall for checking and savings accounts. Retail money-market funds yield an average of 2%, according to Crane Data. Online savings accounts tend to pay a bit more. Salem Five Direct recently advertised a 2.51% yield.... BBVA Compass accounts yield 2.4%.... Those yields might edge back down to 1% in a falling-rate climate."

The Investment Company Institute's latest weekly "Money Market Fund Assets" shows that MMF assets rose for the 7th week in a row, increasing by $119.7 billion, or 3.9%, since April 17. Money fund assets have increased by $115 billion, or 3.5%, year-to-date, according to ICI's weekly series, rising to MMFs' highest level since February 2010. They write, "Total money market fund assets increased by $14.26 billion to $3.16 trillion for the week ended Wednesday, June 5, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $9.38 billion and prime funds increased by $5.66 billion <b:>`_. Tax-exempt money market funds decreased by $783 million." ICI's weekly series shows Institutional MMFs rising $8.4 billion and Retail MMFs rising $5.9 billion. Total Government MMF assets, including Treasury funds, stood at $2.360 trillion (74.6% of all money funds), while Total Prime MMFs rose to $666.8 billion (21.1%). Tax Exempt MMFs totaled $136.1 billion, or 4.3%. ICI states, "Assets of retail money market funds increased by $5.86 billion to $1.22 trillion. Among retail funds, government money market fund assets increased by $3.12 billion to $696.77 billion, prime money market fund assets increased by $3.56 billion to $398.70 billion, and tax-exempt fund assets decreased by $809 million to $126.43 billion." Retail assets account for over a third of total assets, or 38.6%, and Government Retail assets make up 57.0% of all Retail MMFs. The release adds, "Assets of institutional money market funds increased by $8.40 billion to $1.94 trillion. Among institutional funds, government money market fund assets increased by $6.26 billion to $1.66 trillion, prime money market fund assets increased by $2.10 billion to $268.12 billion, and tax-exempt fund assets increased by $27 million to $9.68 billion." Institutional assets accounted for 61.4% of all MMF assets, with Government Institutional assets making up 85.7% of all Institutional MMF totals.

CNBC writes "There's a drawback to the Fed rate cuts the market so craves: It could wreck bank earnings." The article explains, "Traders are begging the Federal Reserve for several rate cuts this year to salvage an economy they see set to slow significantly because of worsening trade disputes. The market cheered this week when Fed Chairman Jerome Powell opened the door to the possibility. But if the central bank did cut rates, a group of important stocks to the market would suffer. Large-cap banks could see their earnings on a per share basis decline by 10%, on average, if the Fed lowers rates by 75 basis points, according to Bank of America Merrill Lynch." It explains, "Bank margins could take a hit if they are paying out deposit rates at a higher level than market rates. Their earnings are also hurt when the spread between short-term and long-term rates flattens, a phenomenon that could worsen if the Fed cuts.... Traders are pricing in a more than 90% chance of a September rate cut and about 60% probability of three rate cuts this year, according to the CME FedWatch tool. Bank of America's economists believe there will be three reductions by early next year. Barclays now also expects a 75 basis point cut this year."

The ASPPA (American Society of Pension Professional & Actuaries) website features the news brief, "Supremes Pass on Stable Value Suit," which says, "It's often said that 'if at first you don't succeed, try, try again.' But that didn't work for the plaintiffs in a suit challenging the use of a money market fund, rather than a stable value option. The plaintiffs here have been 'trying' since February 2016, when they, represented by the St. Louis-based litigation powerhouse Schlichter, Bogard & Denton, first challenged the $19 billion Chevron plan's decision to offer the Vanguard Prime Money Market Fund, rather than a lower-cost and better-performing stable value fund. As other, similar lawsuits have alleged, they also claimed that the plan used more expensive retail share class funds, rather than institutional shares or collective trusts." The piece explains, "In January, they had (unsuccessfully) asked the full Ninth Circuit to consider their case.... The plaintiffs argue that the Seventh and Eighth Circuits hold it is, and that the Fifth Circuit and the Ninth 'agree with the principles underlying those decisions' – and thus that the previous Chevron decision is in conflict, not only with those decisions, but with decisions in the Ninth Circuit itself. 'The panel imposed the wrong standard, an impermissibly strict standard, which the Court en banc should correct,' they argued. However, that argument proved to be unpersuasive – and so, they appealed to the U.S. Supreme Court – claiming that the Ninth Circuit's decision was at odds with decisions of the Second, Fifth, Seventh, and Eighth circuits, not to mention position of the Labor Department. However, the `nation's high court announced May 28 that they wouldn’t be reviewing the case. All of which means, of course, that the Ninth Circuit's rejection of the plaintiffs' case stands – basically a finding that the participants' assertion that Chevron acted in its own interests and Vanguard's interests rather than the participants' interests was 'entirely speculative' and 'unsupported by any facts.' The case is White v. Chevron Corp., U.S., No. 18-1271, certiorari denied 5/28/19."

Yahoo Finance writes "Secure Income for Fidelity Investors," which tells us, "With most things in life, perspective is everything, asserts mutual fund expert John Bonnanzio; here, the editor of Fidelity Monitor & Insight looks at fixed-income funds in the Fidelity family. With the average Fidelity stock fund up almost 19% this year, the 1.3% return of Fidelity Conservative Income Bond (FCONX) doesn't seem particularly alluring. Likewise, Fidelity U.S. Bond Index (FXNAX), up 2.9%, feels like another comparative laggard. While Conservative Income's performance is far from eye-catching, when this ultrashort-term bond fund is used as an alternative to a money market fund (which is how we use it in our Growth & Income and Income Model portfolios), its appeal becomes apparent, especially for income-oriented investors and those who are nervous about stocks and bonds alike." The update adds, "Between December 2016 and December 2018, the Fed raised rates seven times from 0.25% to the current 2.50%. As money market funds only hold very short-term 'paper,' their yields move in near-perfect sync with the Federal Funds target rate. During that same period, for example, the yield on Money Market (Fidelity's only 'prime' fund that's available to retail investors) rose from a bare-bones 0.54% to its current 2.23%. For the foreseeable future, however, yields on both money funds and ultrashort-term bond funds are likely staying put.... While it's the case that yields on money funds and Conservative Income -- and its tax-free counterpart Fidelity Conservative Income Municipal Bond Fund (FUEMX) -- have barely budged, further out on the yield curve fixed-income investors are hardly being paid much of a yield premium for assuming additional interest-rate risk."

AssetTV features the brief, "Is Now the Time to Step Out of Cash?" The description says, "Chris Nicholson, VP of Product Management at PGIM Investments, provides an overview of the firm's investment strategies across the global markets. Nicolson considers the outlook for the Federal Reserve and the ideal timing for adding duration to bond portfolios." Nicholson comments on the video, "Over the last year or so, it's pretty interesting actually. Flows have reversed course from what would have long been considered trend in the industry. Cash and cash substitutes have really garnered a lot of the flows.... For instance, taxable money markets, both Prime and Govt MMFs, as well as ultra-short bond funds, have garnered over $325 billion in flows over the last 12 months.... Intermediate term bond fund strategies have only gathered $28 billion in flows." He adds, "Going into last year and up until the end of the year, Dec. '18, the Fed looked like they were going to continue along their tightening policy.... That's really changed; they reversed course considerably.... Going back in history, if you look at the last 4 hiking cycles … each time where they have paused, within the next 15 months the next move ... was a cut.... Interestingly, post the last hike ... what we've noticed is that long-term interest rates, as well as short-term rates, have both fallen.... As a result, both short-term bonds and intermediate-term bonds, have outperformed cash."

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