10 BARRON’S February 22, 2021
REVIEW
31,494.
Dow Industrials:+35.
Dow Global Index:-1.
1.34%
10-year Treasury note:+0.
PANDEMIC HAMMERS ENDOWMENTS
A Mixed Forecast
Markets were closed on Presidents
Day, as Arctic cold hugged most of the
U.S., fueling an energy rally. Volatility
was down, and stocks opened on Tues-
day dreaming of stimulus. Bitcoin
breached $55,000 for the first time,
doubling in less than two months. Jan-
uary consumer spending rose for the
first time in three months, but so did
jobless claims. The Dow industrials
notched a high, and for the week rose
0.1%, to 31,494.32; the S&P 500 fell
0.7%, to 3906.71; and the Nasdaq Com-
posite was off 1.6%, to 13,874.46.
The Big Chill
Warm-weather states woke up in the
freezer. In Texas, utilities left millions
without power as they strained to feed
heating systems. The cold sent oil-
fired plants off-line, cut natural-gas
supply, and froze wind turbines. Pipes
burst and 14 million fell under boil-
water restrictions. Farmers struggled
to feed and water livestock and chip
makers shut down, deepening a chip
shortage. (See story, page 12.)
Acquittal
Former President Donald Trump was
acquitted in his second Senate im-
peachment trial, 57-43—the most bi-
partisan of any impeachment verdict in
U.S. history, with seven Republicans
voting with 50 Democrats to convict.
After the vote, Sen. Mitch McConnell,
the GOP leader in the Senate, attacked
Trump for his involvement in the Capi-
tol insurrection, adding that he voted
to acquit because he believed it was
unconstitutional to try a former presi-
dent. Still, McConnell said Trump
could be charged for crimes he had
committed, inflaming GOP infighting.
Vaccine Mobilization
New U.S. Covid-19 cases fell to under
60,000 for the first time since May as
vaccination programs ramped up and
the federal government shipped more
doses. U.S. drugstore chains andWal-
martbegan vaccinating. The World
Health Organization approved the
AstraZenecaand Oxford vaccine for
emergency-use authorization. The
Biden administration extended federal
foreclosure moratorium and mortgage
Schools Take
Hard Knocks
University endowments took a double wallop last year
from the pandemic. First, they had to spend to cover
losses as classes went remote. Second, performance cra-
tered when markets plunged early in the outbreak.
Endowments gained 1.8%, on average, in the fiscal
year through June 30, down from 5.3% in fiscal 2019,
according to an annual study published by TIAA and
the NationalAssociation of College and University
Business Officers. The results are based on 705 pri-
vate and public U.S. institutions with a combined $637.
billion in assets. “Few market sectors were immune to
the steep downturn in early 2020,” and hadn’t fully re-
covered by the end of the fiscal year, says Doug Chitten-
den, TIAA’s head of client relationships.
More than 40% of universities lost revenue from lower
enrollment, housing, dining, and parking—and 70% hiked
endowment spending. Collectively, schools spent $23.
billion from their funds, up 4% from fiscal 2019’s total.
Endowments normally trail the S&P 500, which rose 7.5%
(including reinvested dividends) in the period. The most
common asset allocations were 33% in U.S. and global
stocks, 23% in private equity and venture capital, and 20%
in marketable alternatives, including hedge funds.
Funds with more than $1 billion in assets gained 2.5%,
leaning on private equity and venture capital. Smaller
endowments with big bond positions might need to re-
view strategies to boost returns, says Dimitrios Statho-
poulos, who heads Americas institutional advisory ser-
vices at Nuveen. Other asset classes offer “greater yields
and returns for moderately more risk.”—Mary Romano
25
The number of active stock
funds that doubled in value last
year, almost certainly a record.
47 %
Rise in U.S. lumber prices over
the past three weeks, to $
per thousand board feet, an
unusual rally in winter.
$139 B
Amount of debt with below in-
vestment-grade ratings sold so
far in 2021, at a rock-bottom
average yield of 3.97%
9.4%
Atlanta Fed GDPNow tracking of
first quarter growth last week,
up from 4.5% a week earlier.
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THE NUMBERS
HE SAID
“I’m not going to
say we did everything
perfectly and that
we haven’t made
mistakes...But what
I commit to is making
sure we improve
from this.”