CalPERS Former No. 2 Investment Official Hires Employment Lawyer After Resigning

Elisabeth Bourqui hires lawyer who represents workers in their disputes with employers, including wrongful termination cases.

The former No. 2 official in the investment office of the California Public Employees’ Retirement System (CalPERS) has hired an employment lawyer who specializes in wrongful termination and other employment discrimination cases.

Elisabeth Bourqui, who was the system’s chief operating investment officer (COIO) until her sudden resignation two weeks ago, was a surprise visitor Tuesday at the pension plan’s semiannual retreat meeting in Rohnert Park, California.

She sat quietly in a middle row of a hotel ballroom as Ben Meng, the pension plan’s new chief investment officer, detailed his investment visions for the largest US pension organization.

Sitting next to Bourqui was Elisa Stewart, a partner in the Emeryville, California, law firm of Stewart & Musell, which specializes in employment law issues for workers.

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The firm’s website says it handles wrongful termination, sexual harassment, and age discrimination cases, among other employment issues.

Bourqui introduced Stewart to a reporter during a break at the CalPERS meeting.

“This is my lawyer,” she told the reporter. She would not answer any other questions as to why she had left CalPERS just seven months after she moved from Zurich, Switzerland, to the Sacramento area to take the CalPERS job.

Meng announced Bourqui’s departure in a staff memo on January 7, just five days after he assumed the investment leadership of the largest US retirement system.

It is not clear if Meng requested Bourqui’s resignation so he could place his own candidate in the spot, or whether she was having a conflict with CalPERS CEO Marcie Frost. CalPERS spokesman Wayne David said he could not discuss Bourqui leaving because it was a personnel matter. CalPERS officials announced in April that Bourqui had been selected to become the COIO after a global search. Bourqui led the investment office’s business and operations functions, including managing investment compliance, operational risk, and audit-related functions.

She was also a key advisor on investment policy.

“Elisabeth brings a tremendous depth of global experience to CalPERS,” said Ted Eliopoulos, CalPERS’s then CIO, in a statement at the time of her appointment. “Elisabeth will strengthen our efforts to innovate, and to integrate business practices across our global investment platform. She will also be instrumental in the implementation of business strategies particularly in private equity and asset allocation.”

CalPERS sources have questioned if Bourqui’s detailed presentations on the potential investment returns but also risks of CalPERS’s planned direct investment-style private program in closed session meetings upset Frost, a big advocate of the program.

Most CalPERS investment officials had been telling board members in closed sessions the advantages of the program in terms of helping the system’s investment returns. Boruqui did so too, but she also expressed what she felt some of the risks of the program are, including potential millions of dollars in start-up costs.

Bourqui started on May 14. The same day, CalPERS officials announced that CIO Ted Eliopoulos would be leaving by the end of 2018 because of family matters. It is unclear if Bourqui was informed of his decision before taking the job. Eliopoulos left in November.

Bourqui had applied for the CIO job, which was ultimately given to Meng in September.

She was a frequent speaker at CalPERS investment committee meetings, offering details on investment issues and policies.

Bourqui had been head of pension assets and liabilities management at ABB Group prior to joining CalPERS. Before ABB, Bourqui worked as an investment consultant in Canada for Mercer, specializing in public and private pension funds.

Bourqui replaced Wylie Tollette in the CalPERS spot. Tollette left CalPERS in January 2018 to rejoin money manager Franklin Templeton Investments.

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Monetary Policy Keeping Dalio Up at Davos

The founder of the world’s largest hedge fund expresses concerns about interest rates at global annual summit.

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates ($160 billion), is getting nervous about monetary policy.

Dalio, speaking at a Fox Business panel at Davos, Switzerland’s global annual summit, lamented that interest rates had been lowered too much for too long by central banks in a stimulus campaign to combat the 2008-09 economic downturn. This led to investors flooding into riskier assets like stocks, he noted.


Compounding that was the Federal Reserve’s recent push to jack interest rates back up, but they did it too fast, he said.


The Fed moved “to tighten monetary policy at a level that was faster than the capital markets could handle and, as a result, we had a correction,” he said, pointing to its four hikes in 2018. Only lately has the Fed indicated it might ease off in 2019.


“We had an important change in Fed policy regarding what the direction of Fed policy will be in that tightening,” he said, adding that the “growth rate will slow, probably in a self-reinforcing process.”


At the same time, he added, rates aren’t high enough to give the Fed room to then lower them significantly as a tool to fight the next recession.


Fellow panelist and UBS Group Chairman Axel Weber agreed, saying that rates “in most of the western world were very low for very long, and markets have gotten used to that.” Weber added that rates may have been “too low” for the economic environment for the “better half” of the past five years. “When they started lifting rates, they tightened rates in a late-cycle stage,” he said.


Weber said that we might be going through a “soft spot” in the economy and that monetary policy normalization should come later. “They won’t get it done this time because the economy is weakening, and so I think it will be ‘mission aborted,’” he said. “They will look at normalizing rates in the next cycle, and then react to a slowing economy in the next year or two by a more muted, more cautious, more data-driven approach.”


Weber still has “one or two” rate hikes penciled in.


According to Dalio, China “has the power” to handle the slowing of its growth rate and the impacts of that cycle, but he is wary of how the US and Europe will be able to deal with the issue when it hits.

Next year, with presidential elections in the US, he also noted the proposal by Rep. Alexandria Ocasio-Cortez (D-New York) for a 70% maximum income tax, which aims to hit the ultra-wealthy, will be an issue.

 “What scares me the most longer term is that we have limitations to monetary policy which is our most valuable tool at the same time we have greater social and political antagonism,” he said. “The next downturn in the next economy worries me the most.”

 Since our rates are still low, albiet rising, Dalio is concerned they are still too low where the Fed would not have enough time to give the US economy the shot in the arm it would need by dropping those rates if there were an economic problem.

He compared the current state of affairs to the environment of the late 1930s.

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 “[In] 1929-1932, we had a debt crisis. Interest rates hit zero. Then there was a lot of printing of money. Purchases of financial assets drives financial prices higher. It creates also, a polarity, a popularity, and an antagonism,” Dalio said. “We also had then at that time, the phenomenon of a rising power, like China, dealing with the conflict of an existing power. These types of political issues are now very connected to economic issues and policy.”

In an interview on CNBC’s Squawk Box, Dalio said there is “significant risk” of a recession in 2020.

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