Barron's - USA (2020-10-12)

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12 BARRON’S October 12, 2020


REVIEW


28,586.


Dow Industrials:+904.






Dow Global Index:+16.


0.78%


10-year treasury note:+0.


ENDOWMENT TOPS 12%


Stimulating Stimulus


Stocks soared as the week began, with


the Dow industrials up 466 on Presi-


dent Trump’s return to the White


House and hopes for a relief bill and a


peaceful election. That ended when


Trump killed relief talks, but the mar-


ket recovered after he seemed to


change his mind. The week ended


with the Dow rising 3.27%, to


28,586.90; the S&P 500 gaining 3.8%,


to 3477.13; and the Nasdaq Composite


surging 4.6%, to 11579.94.


Covid in the House


After a hospital stay, in which he re-


ceived Regeneron ’s unapproved mono-


clonal antibody cocktail, Gilead Sci-


ence ’s remdesivir, and a steroid,


President Trump returned to a White


House besieged by Covid-19. Contention


raged over the details and timeline of


his case, and the White House failure to


contact-trace. Multiple members of


Trump’s staff, two GOP senators on the


Judiciary Committee, and former New


Jersey Gov. Chris Christie tested posi-


tive. Even the Joint Chiefs of Staff went


into quarantine when the Coast Guard’s


No. 2 tested positive. Trump praised the


Regeneron therapy as a “cure,” called


contracting the disease a “blessing from


God” and said the antibody cocktail


would be given free to those who need


it. Regeneron and Eli Lilly sought ap-


proval for their antibody therapies.


Relief’s Random Walk


On Tuesday, Federal Reserve Chair-


man Jerome Powell spoke about the


urgent need for a stimulus package.


Hours later, Trump tweeted to Trea-


sury Secretary Steven Mnuchin to


cease negotiating until “immediately


after I win.” But that night, he de-


manded passage of parts of the bill,


including airline aid. Talks continue.


A Chilly Forecast


The U.S. Covid death toll passed


212,000, and infections topped 56,


on Thursday. Major businesses began


layoffs, many restaurants faced closing


as the weather turns, and Cineworld


shut movie theaters in the U.S. and


U.K., including 500 Regal Cinemas.


New York state closed schools, nones-


sential businesses, and religious gather-


Brown Dons


An Ivy Crown


It’s the little endowment that could. Brown’s $4.7 billion


fund is the smallest of the eight Ivy League schools. Yet its


12.1% return beat its larger peers, including Harvard,


whose $41.9 billion fund gained 7.3%, and Yale, whose


$31.2 billion rose 6.8%. The University of Pennsylvania’s


$14.9 billion was up 3.4%, Columbia’s $11.3 billion re-


turned 5.5%, and Dartmouth’s $6 billion gained 7.6%.


Princeton and Cornell haven’t reported.


While performance of school endowments mostly


trailed the S&P 500’s 7.5% gain (including reinvested


dividends) in the 12 months through June 30, they’re out-


pacing all U.S. endowments, which posted a median


2.6% return, before fees, according to Wilshire Trust Uni-


verse Comparison Service. College-endowment returns


are net of fees. Endowments took baths when Covid hit


and the market plunged. But those with higher equity


allocations fared better oncestocksbounced back.


Brown’s fund had an unusual mix: 37% was in private


equity, 37% in absolute return (usually hedge funds), and


14% in stocks. The rest was in real assets, fixed income,


and cash. “We’re grateful to an outstanding group of ex-


ternal investment managers, who collectively have exer-


cised measured judgment in the face of historic volatility


in the financial markets,” says Jane Dietze, Brown’s chief


investment officer, in a statement.


Of course, many schools are grappling with financial


pressures, which raise the endowment stakes. Brown said


it expects a fiscal 2021 loss of $100 million to $165 million.


Its endowment provided $171 million, or 14%, of the uni-


versity’s operating budget in fiscal 2020.—Mary Romano


12 %


Growth of the CSI 300 stock


index, made up of China’s 300


biggest companies, compared


to the S&P 500 index’s 7.6%.


$130 B


Assets in tax-exempt single-


state muni bond funds, down


10% in the past six months, and


from nearly $500 billion in 2009.


$67 B


U.S. trade deficit in August,


highest since 2006, and ap-


proaching a record.


4 %


Fall in San Francisco office rents


from March to September 30,


more than double any U.S. city.


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THE NUMBERS


HE SAID


“We can do


more and do better


to break down


systems that have


propagated racism


and widespread


economic


inequality.”


JPMorgan Chase CEO Jamie Dimon on


announcing a $30 billion program to help


Black and Latino home buyers


and small businesses


ings in parts of Brooklyn and Queens.


A Deal for Eaton Vance


Morgan Stanley agreed to pay $7 billion


in cash and shares, a 38% premium, to


acquire Eaton Vance. The deal will al-


most double Morgan Stanley’s assets to


$1.2 trillion. Separately, The Wall Street


Journal reported that Advanced Micro


Devices was talking a $30 billion


merger with Xilinx. And Bristol Myers


Squibb said it would buy heart-drug


developer MyoKardia for $13 billion.


Annals of Regulation


A federal court ordered Cisco Systems to


pay up to $3.3 billion for infringing on


four patents held by Centripetal Net-


works. Cisco will appeal...The House Sub-


committee on Antitrust said four tech


companies— Alphabet , Amazon.com ,


Apple , and Facebook —have “monopoly


power” and called for new laws to break


them up...Regulators fined Citigroup


$400 million over risk deficiencies. Illustration by Elias Stein; Marlene Awaad/Bloomberg

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