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Asset Managers Are Feeling Leery, BofA Survey Finds

The bank says its survey is the ‘least bullish’ since October 2020.
By Larry Light


The perennial Wall Street question is: What’s next? The answer might be: Nothing good. Asset managers are getting skittish, what with the ongoing pandemic, higher inflation, US-China tensions, and supply chain problems, according to Bank of America’s Global Fund Managers Survey, a widely watched monthly Wall Street barometer.  

The managers’ cash levels leaped to a 12-month high for the first time since April 2020, when the pandemic was getting underway. Such stockpiling is always a sign of getting ready for bad times. Cash lately rose to 4.7% of allocations, from 4.3%, the survey said. Another pessimistic indicator was the dip in the BofA Bull & Bear Indicator, down one-tenth of a percentage point to 5.0, the midpoint of the scale. This gauge factors in cash levels and a comparison between cyclical and defensive stocks.

The backdrop, BofA explained in its report, is that the managers fear inflation and fret that economic growth will cool. This is “the least bullish” set of findings since October 2020, the bank noted. BofA polls institutional, hedge fund, and mutual fund managers.

In terms of asset inflows and outflows, energy and financial stocks, commodities, and cash were the winners this month. Losers: bonds, health care, and consumer staples shares, per the survey. That makes some sense. Oil and gas prices are climbing along with other commodities, which find inflation a boon; financial firms are benefiting from trading and the prospect of increasing interest rates (although inflation could end up hurting them); and cash, also vulnerable to inflation, nonetheless is viewed as a safe store of value if stocks tank. On the minus side, bonds get hurt as rates rise, while health and staples don’t tend to do well amid inflation.

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Global economic expansion was the biggest source of anxiety, with growth expectations turning negative for the first time in 18 months. Moreover, most respondents saw profit growth drooping over the next 12 months, following this year’s robust performance.

How did the respondents rank the perils facing the economy and the markets? Inflation is their biggest “tail risk,” some 48% indicated. China comes in second, at 23%. A mere 3% named COVID-19 as an economic/financial risk.

The managers still agree with the Federal Reserve that the current heightened inflation is temporary, but that viewpoint has fewer adherents than the previous month. In October, the adherents to the temporary outlook were 58%, compared with 38% agreeing that inflation will persist. In September, though, the tally was 69% to 28%, respectively. What’s more, stagflation fears (rising inflation and dropping economic growth) increased to 34%, up 14 points.   

On interest rates, 44% expect the Fed to enact one quarter-point boost next year, as other oddsmakers favor two.

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Home > News > Risk > Missouri Teachers’ Pension Hit by Cyber Attack
Risk

Missouri Teachers’ Pension Hit by Cyber Attack

Accessed files contained personal information such as names and possibly birth dates, but not Social Security numbers.
By Michael Katz


The Public School and Education Employee Retirement Systems (PSRS/PEERS) of Missouri were hit by a data breach in September, according to a notification sent to employees and beneficiaries last week.

The notice said there was a “data security incident” on Sept. 11, and that “as a result, your personal information may have been potentially exposed to an unauthorized individual.”

The hack occurred when an employee’s email account was accessed for less than an hour by someone from outside the retirement system without authorization. The pension fund said its information technology (IT) team disabled the employee’s email account within minutes of being told of the breach and that it alerted law enforcement authorities and took immediate steps to enhance security protocols to prevent a repeat of the incident.

“The accessed email account contained files with personal information relating to you, including your name, and internal PSRS/PEERS account numbers associated with you,” said the notice letter. “It may have also included your birth date.”

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The letter emphasized that employees’ Social Security numbers were not included in the potentially exposed data. PSRS/PEERS has more than 128,000 active members along with more than 100,000 retirees and beneficiaries.

The letter to the retirement systems’ members was sent out the same day that the St. Louis Post-Dispatch reported it had discovered a vulnerability on a website maintained by the state’s Department of Elementary and Secondary Education (DESE) that allows the public to search teacher certifications and credentials. The report said that based on state pay records and other data, more than 100,000 Social Security numbers were vulnerable.

The newspaper said it found that teachers’ Social Security numbers were contained in the HTML source code of the pages involved, and cybersecurity expert Shaji Khan, a professor at the University of Missouri-St. Louis, called the vulnerability “a serious flaw.” The Post-Dispatch said it immediately informed the DESE after discovering the vulnerability and delayed publishing the story to give the state time to fix the problem.

The report angered Missouri Gov. Mike Parson, who accused the newspaper of illegally hacking the retirement systems’ website. He said at a news conference that a prosecutor and the Missouri State Highway Patrol would investigate the matter, and that the Post-Dispatch would be held accountable.

“We are coordinating state resources to respond and utilize all legal methods available,” Parson said. “My administration has notified the Cole County prosecutor of this matter. The Missouri State Highway Patrol’s digital forensic unit will also be conducting an investigation of all of those involved.”

In a tweet, Parson said the reporter “accessed source code and then went a step further to convert and decode that data in order to obtain Missouri teachers’ personal information.”

Post-Dispatch Publisher Ian Caso said the newspaper stands by its reporter “who did everything right,” adding that “it’s regrettable the governor has chosen to deflect blame onto the journalists who uncovered the website’s problem and brought it to DESE’s attention.”

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Your Hacking Risk: What You Don’t Know Really Can Hurt You

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