Assets of major public pension funds fell 8.5% in third quarter

Most investors dislike rising rates. They make equities less attractive, and they cause instant markdowns to fixed income holdings. But pension fund managers welcome them with open arms. Why? Because companies are required to calculate the present value of their future pension obligations using prevailing rates. When rates rise, their current obligations fall.

While we have often documented the dramatic underperformance by the hedge fund industry over the past decade courtesy of a centrally-planned market in which it no longer pays to "hedge", culminating with countless hedge fund closures and substantial redemptions (mostly by now redundant Fund of Funds managers), today we learn that "vanilla" asset managers were also hurt over the past year in which the S&P went nowhere, and not just in Japan where the gargantuan,

It is no surprise that pension funds in the US are significantly underfunded (median 72% funded). California Public Employees’ Retirement System (CALPERS), specifically, is about 26% short of meeting its long-term commitments. Like most major pension funds, it uses smoke-and-mirrors to avoid this yawning gap by smoothing over a long enough timeframe where 'hope' for growth in assets triumphs over the reality of liabilities (through a 'rolling' 15- or 30-year window - that therefore never comes due).

Rhino Resource Partners, L.P. (RNO) stock plummeted 38.6% during extended trading on the New York Stock Exchange (NYSE). The stock hit a new 52-week low of $7.30 after the Lexington, Kentucky-based company announced 88% drop in its quarterly distribution, from $0.445 per common share to $0.05 per common share.  The company plans to announce third-quarter results on October 30.

One of the few catalyst that had helped maintain a consistent bid under energy names in the first half of 2015, despite the dramatic drop in the price of oil in late 2014 and then again in the last several weeks, was persistent fears of an "unexpected" M&A bid which would crush any new or incremental shorts who would otherwise have been delighted to accelerate the downward momentum in the beaten down energy sector.

Qualcomm, Inc. (NASDAQ:QCOM) reported surprising first-quarter earnings for fiscal year 2015 (FY15) yesterday after market close. The event attracted significant attention; investors closely monitored the earnings results and the subsequent movements in Qualcomm shares. Despite the fact that earnings for the quarter beat analysts’ estimate and were in line with the company guidance, Qualcomm stock plummeted almost 8% in the after-hour trading.