One of the more annoying things that investors do when they have been in the game for a really long time is to pooh-pooh market skirmishes.
“You think this is bad? Pah! You should have seen Black Monday/Soros taking down sterling/the dotcom crash,” etc. If this happens to you, my advice is to change the subject at precisely this point, before the segue into how much more fun markets were “back in my day” and how young people nowadays “know nothing”.
The veterans do have a point: a generation of traders and fund managers have never seen full-blown inflation and are accustomed to the mantra that stocks only go up (or to central banks saving the day if they stumble). But even the old-timers accept that right now we are at a historic juncture.
In part, that is because of the sheer scale of some of the market moves. The S&P 500 benchmark index of blue-chip US stocks has fallen by 19 per cent already this year. This pace may not continue. But if it does, it will be heading towards 2008’s 38 per cent fall. More tech-heavy indices like the Nasdaq Composite have fared even worse — it is down 27 per cent. Pass the smelling salts.
Individual stocks are taking a beating, particularly when companies release iffy numbers. Pandemic lockdown-era favourites such as Peloton have gone into meltdown. The manufacturer of domestic perspiration is down 90 per cent over the past year. Coinbase, Robinhood . . . take your pick. It is a mess.
But what has really spooked investors now is US retailer Target, which suffered a 25 per cent cratering in its share price just in one day this week when it said profits had halved in the first quarter and warned that profits in future quarters would suffer as a result of rising costs.
Fellow retailer Walmart had sounded a similar alarm on the previous day, driving its shares down by 11 per cent — not to be sniffed at. Still, for some reason Target cut through. Suddenly investors accept that the slide in asset prices triggered by the US Federal Reserve’s arguably belated response to soaring inflation will prove deep and broad.
Possibly most alarming, though, is the nature of the reckoning. Hedge fund group Man wrote this week that since 1960, there have been 44 times when the S&P 500 has fallen for five or more consecutive weeks. US government bonds, meanwhile, have dropped in the same way just 31 times since 1973.
“Yet these prolonged sell-offs had never coincided — until the start of May,” number crunchers at the Man Institute wrote. Adherents to the classic portfolio split — 60 per cent stocks, 40 per cent bonds — have not had it so bad in half a century. So now what? “As it has never happened before, we cannot look back for historical guides to what happens next,” Man said. Oh.
This is seriously unsettling stuff. Bank of America described the mood in its latest monthly investor survey as “extremely bearish”. It found the highest allocations to cash — the ultimate hiding place from trouble — since 9/11 and the biggest negative view on big tech stocks since August 2006, beyond what was seen in the financial crisis or the height of the pandemic. Fund managers also reported their biggest underweight position on equities since May 2020.
“The challenge for us is not one sector but the change in market regime,” said Hendrik du Toit, chief executive at asset manager NinetyOne, this week. “It’s so volatile right now . . . that it’s very difficult to apply a systematic process and get an expected result.”
He added: “I think with central banks being behind, we are in for quite a painful period and that means . . . the little bubbles that existed all over the place are going to be squeezed out brutally.” Crypto is just the start here, he suggests.
For investors with a mandate that allows them to do it, one of the few mainstream ways to avoid a battering is commodities, an asset class that has lain unloved for years. In part, that is because returns have been drab. But avoiding commodity stocks or bets on the direction of fossil fuels or metals also has been an easy way to burnish sustainable investment credentials.
Now we are seeing some verbal acrobatics, along the lines that there’s no point buying stocks in electric vehicle makers while refusing to buy the miners that get the metals those carmakers need. This sounds bonkers but does make sense.
In any case, driven desperate by inflation, investors do appear willing to jettison or tweak their principles and jump in. Commodity specialists who have barely been able to get asset allocators to take their calls for the past decade are suddenly in demand. “Performance has been really bad for the last 10 years. We didn’t raise a dime in the asset class,” says Hakan Kaya, a senior portfolio manager focused on commodities at Neuberger Berman. Now he’s seeing lots of interest, from investors as diverse as pension funds and wealthy individuals.
“We are not living in a nice period like 2008 to 2020 where stocks and bonds are doing fine,” he says. “Instead they are doing badly because inflation is resurfacing. No surprise there, right? People are looking for buffers against inflation.”
Shoppers Astonished As Price of Lurpak Butter Soars to Eye-watering Sum
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Key Passages From the US Supreme Court on Abortion Rights
The US Supreme Court on Friday struck down Roe vs Wade, the 1973 ruling that guaranteed a constitutional right to abortion, in one of its most consequential decisions on civil rights in years.
The arguments on both sides are lengthy and involved, and the final ruling comprised five separate opinions spanning 213 pages: the opinion of the court, two concurring opinions, an opinion agreeing only with the court’s judgment and a dissenting opinion.
Below are some of the most notable passages from each.
Opinion of the court, written by Samuel Alito
Much of Alito’s majority opinion matched a leaked draft from February 10, which was published by Politico in May.
To begin, Alito argued that the court overstepped when first deciding Roe.
As Justice Byron White aptly put it in his dissent, the [Roe] decision represented the “exercise of raw judicial power”, and it sparked a national controversy that has embittered our political culture for a half-century.
He argued that the case was wrongly decided, and poked at its reasoning. (He also cited Planned Parenthood vs Casey, another abortion case that affirmed Roe.)
Roe was egregiously wrong from the start. Its reasoning was exceptionally weak, and the decision has had damaging consequences. And far from bringing about a national settlement of the abortion issue, Roe and Casey have enflamed debate and deepened division.
Alito argued that there is no right to an abortion rooted in American “history and tradition”.
We hold that Roe and Casey must be overruled. The constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provision, including the one on which the defenders of Roe and Casey now chiefly rely — the Due Process Clause of the Fourteenth Amendment. That provision has been held to guarantee some rights that are not mentioned in the constitution, but any such right must be “deeply rooted in this nation’s history and tradition” and “implicit in the concept of ordered liberty”.
He reiterated the Roe court’s “errors” and lamented that the issue had been taken out of the hands of those who opposed abortion rights.
Roe was on a collision course with the constitution from the day it was decided . . . and the errors do not concern some arcane corner of the law of little importance to the American people. Rather, wielding nothing but “raw judicial power,” the court usurped the power to address a question of profound moral and social importance that the constitution unequivocally leaves for the people . . . The court short-circuited the democratic process by closing it to the large number of Americans who dissented in any respect from Roe . . . Roe and Casey represent an error that cannot be allowed to stand.
Finally, Alito wrote that court does not know, and need not consider, the implications of its decision.
We do not pretend to know how our political system or society will respond to today’s decision over-ruling Roe and Casey. And even if we could foresee what will happen, we would have no authority to let that knowledge influence our decision. We can only do our job, which is to interpret the law, apply longstanding principles of stare decisis, and decide this case accordingly.
We therefore hold that the constitution does not confer a right to abortion. Roe and Casey must be overruled, and the authority to regulate abortion must be returned to the people and their elected representatives.
Concurring opinion by Clarence Thomas
Thomas, widely considered to be the most conservative justice, agreed. He also said the court should perhaps go further and reconsider its decisions on contraception, same-sex relationships and same-sex marriage, citing Supreme Court cases relevant to each issue.
For that reason, in future cases, we should reconsider all of this court’s substantive due process precedents, including Griswold, Lawrence, and Obergefell. Because any substantive due process decision is “demonstrably erroneous,” we have a duty to “correct the error” established in those precedents.
Concurring opinion by Brett Kavanaugh
Kavanaugh, another conservative, wrote to share his “additional views”. He emphasised that the court was returning the issue of abortion to the people, rather than outlawing it.
To be clear, then, the court’s decision today does not outlaw abortion throughout the United States. On the contrary, the court’s decision properly leaves the question of abortion for the people and their elected representatives in the democratic process.
He claimed the constitution was “neutral” when it comes to abortion rights.
In sum, the constitution is neutral on the issue of abortion and allows the people and their elected representatives to address the issue through the democratic process. In my respectful view, the court in Roe therefore erred by taking sides on the issue of abortion.
And he wrote that court itself must be “scrupulously neutral” — a point to which the court’s liberals took exception.
In my judgment, on the issue of abortion, the constitution is neither pro-life nor pro-choice. The constitution is neutral, and this court likewise must be scrupulously neutral. The court today properly heeds the constitutional principle of judicial neutrality and returns the issue of abortion to the people and their elected representatives in the democratic process.
Opinion by John Roberts, concurring in judgment
Roberts, the chief justice, concurred with the court’s specific judgment upholding Mississippi’s 15-week restriction on abortions, but not with the dramatic scope of its decision. He called it a “serious jolt to the legal system”.
I would take a more measured course . . . Our abortion precedents describe the right at issue as a woman’s right to choose to terminate her pregnancy. That right should therefore extend far enough to ensure a reasonable opportunity to choose, but need not extend any further.
He reiterated that overturning Roe was unnecessary to deciding the case.
I would decide the question we granted review to answer — whether the previously recognised abortion right bars all abortion restrictions prior to viability, such that a ban on abortions after 15 weeks of pregnancy is necessarily unlawful. The answer to that question is no, and there is no need to go further to decide this case.
Dissenting opinion by Stephen Breyer, Sonia Sotomayor and Elena Kagan
The impassioned dissent by the court’s three-member liberal wing begins by pointing to the “half a century” during which Roe vs Wade “protected the liberty and equality of women”.
Respecting a woman as an autonomous being, and granting her full equality, meant giving her substantial choice over this most personal and most consequential of all life decisions.
They said they fear the “draconian restrictions” and punishments that states may now mete out.
Enforcement of all these draconian restrictions will also be left largely to the states’ devices. A state can of course impose criminal penalties on abortion providers, including lengthy prison sentences. But some states will not stop there. Perhaps, in the wake of today’s decision, a state law will criminalise the woman’s conduct too, incarcerating or fining her for daring to seek or obtain an abortion.
And in any case, they wrote, women’s rights have been curtailed.
Whatever the exact scope of the coming laws, one result of today’s decision is certain: the curtailment of women’s rights, and of their status as free and equal citizens.
The dissenters also took a direct shot at Kavanaugh’s neutrality argument.
When the court decimates a right women have held for 50 years, the court is not being “scrupulously neutral”. It is instead taking sides: against women who wish to exercise the right, and for states (like Mississippi) that want to bar them from doing so.
And unlike Alito, they specifically sought to address the real-world implications.
The disruption of overturning Roe and Casey will therefore be profound. Abortion is a common medical procedure and a familiar experience in women’s lives. About 18 per cent of pregnancies in this country end in abortion, and about one-quarter of American women will have an abortion before the age of 45 . . . [P]eople today rely on their ability to control and time pregnancies when making countless life decisions: where to live, whether and how to invest in education or careers, how to allocate financial resources, and how to approach intimate and family relationships.
They warned of the fragility of constitutional protections.
The American public, they thought, should never conclude that its constitutional protections hung by a thread — that a new majority, adhering to a new “doctrinal school”, could “by dint of numbers” alone expunge their rights.
Supreme Court justices often conclude their dissents by saying they “respectfully dissent” or, to hit a stronger note, that they simply “dissent”. On Friday, the court’s liberal bloc dissented “with sorrow”.
With sorrow — for this court, but more, for the many millions of American women who have today lost a fundamental constitutional protection — we dissent.
Original Source: ft.com
US Supreme Court Overturns Roe Vs Wade in Major Blow to Abortion Rights
The US Supreme Court has struck down Roe vs Wade, the legal decision that has enshrined the constitutional right to an abortion for nearly 50 years, in a dramatic ruling by the court’s conservative majority that will shake up American society, politics and jurisprudence for years to come.
In the decision authored by Justice Samuel Alito, the justices of the Supreme Court upheld a state law in Mississippi that bans abortion after 15 weeks. They also went further, saying that the Roe vs Wade ruling of 1973 was incorrectly decided. The court’s three liberal justices dissented.
The court’s ruling was one of its most intensely anticipated in years — even more so after a draft of the majority opinion heralding its final decision to overturn Roe vs Wade was published by Politico in April, triggering a highly unusual probe within the institution into the leak.
In denying a constitutional right to an abortion, the court has effectively given a green light for states to enact abortion laws that can be as restrictive as they wish. Several states run by Republican-led governors and legislatures have already passed laws that mean more restrictions on abortion will be automatically implemented if Roe is overturned.
The sweeping opinion in the Mississippi case was made possible by the appointment of three conservative Supreme Court justices during the presidency of Donald Trump, who secured their confirmation through the then Republican-led Senate. The court’s conservative majority is now so strong that it can afford to lose the support of Chief Justice John Roberts, who is considered a more moderate conservative, and still prevail in key rulings.
Earlier this year, the Democratic-led Senate confirmed Ketanji Brown Jackson, a liberal nominated by Joe Biden, to be a justice on America’s highest court. Since she is replacing Stephen Breyer, another liberal, her appointment will not affect the court’s balance of power.
The Supreme Court ruling on abortion was released with less than five months to go before November’s midterm elections, and may alter the political dynamic heading into the vote, though it is unclear whether it can overpower the impact of high inflation and economic perceptions as a factor for voters.
With polls showing that a majority of Americans opposed to overturning Roe vs Wade, Democrats are hoping that the ruling will trigger outrage, mobilise its base, and attract moderate swing voters who will see Republican positions on the issue as increasingly extreme.
But Republicans believe that disappointment with Biden’s handling of the economy, and high consumer prices, particularly for food and petrol, will still carry the day and give them a strong chance of recapturing control of the House of Representatives and possibly even the Senate.
Original Post: ft.com
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