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Registered Investment Adviser Caleb Lawrence

The major averages enter the final hour with modest gains as they look to put a volatile week behind them. Since Monday the Standard and Poors 500 Index has lost 8 points or .3% while the NASDAQ is down 26 points or .4%. Homeowners equity is one of the few remaining metrics missing from the recovery narrative. Recent FRED data shows that it too is about to reclaim its previous high water mark on a nominal basis.

The Bureau of Labor Statistics or BLS report on state level employment continues to improve as April saw 10 states with lower unemployment rates, 1 higher and the rest unchanged. The 3 lowest states include Colorado 2.3% followed by Hawaii and North Dakota at 2.7% each. At the other end of the spectrum New Mexico had the highest rate at 6.7% followed by Alaska 6.6% and Washington DC 5.9%, California is #14 at 4.9%.

The Hoover Institute took a look at State and Local Government pension plans and came to a similar conclusion as the Pew Charitable Trusts. Significant levels of underfunding in the 649 plans covered by the study using 2015 data totaling some 1.4 trillion Dollars. Assumed rates of return averaging 7.6% for the plans in question, a tough objective given the current 10-year Treasury rate of just 2.25%. The study adjusted the numbers based on market valuation techniques, as an aside CalPERS achieved a return of just .6% last year, and figured that the true unfunded liability owed to workers based on their current service and salaries is $3.8 trillion or a figure some 2.7 times the official estimate.


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