Source: Barron's Weekly Author: Ed Lin The second largest public retirement fund in the United States recently made significant adjustments to its stock investment portfolio listed in the United States. The California Teachers' Retirement Fund increased its investment in Chinese e-commerce company, pdd holdings (PDD.US), and bought more shares of Discover Financial Services (DFS.US) and Williams-Sonoma (WSM.US) in the first quarter, while reducing its holdings of American Airlines (AAL.US) stocks. The California Teachers' Retirement Fund disclosed this stock trading information in a report submitted to the Securities and Exchange Commission. "Our public equity investment portfolio uses both passive and active strategies," the California Teachers' Retirement Fund said in a statement responding to a review request. "The portfolio's positions may change for various reasons, including fund managers' realignments of the active or index weights they require, or as a result of corporate mergers, stock splits, name changes or similar company actions." As of April 30, the fund managed assets of about $332.5 billion, making it the second largest public pension fund in the United States in terms of assets under management.
Author: Brian Quint

On Thursday, June 6th, the European Central Bank (ECB) took a bold move to cut interest rates, implementing the first interest rate cut since the outbreak of the coronavirus pandemic led to soaring inflation prior to the Federal Reserve (Fed).

For months, ECB President Christine Lagarde and others have been commenting, expressing widespread expectations for this rate cut. The ECB lowered the deposit rate by 25 basis points to 3.75%.

The European Central Bank is not the first central bank to cut interest rates - Canada launched a rate cut on Wednesday, June 5th, and Switzerland and Sweden took action earlier this year. During this round of cycles, due to higher inflation rates in the United States, which are more sticky, and stronger economic growth than in Europe, the Fed has not yet lowered interest rates.

However, Christine Lagarde, the President of the European Central Bank, said that the European Central Bank will not promise any interest rate path in the future. The STOXX Europe 600 Index briefly touched the intra-day high after the European Central Bank announced the rate cut.But the euro against the dollar also rose, reflecting a change in the market's view of when the ECB may cut rates again.

Lagarde told reporters, "Our determination to address inflation problems and restore price stability is beyond doubt."

At the end of the press conference held at the Euro Building in Frankfurt, Lagarde said," Wishing you a wonderful summer," leaving a hint that she would not seriously consider cutting rates again at the next bank meeting in July.

This leaves an undecided question: what will the European Central Bank, which is responsible for regulating the 20 member states of the eurozone, do next? Today's rate cut was proposed a long time ago, but the reasons for the cut were restrained because of the rebound in economic growth and the overall inflation rate is still far above the European Central Bank's target of 2%.

In updated economic forecasts, the bank, based in Frankfurt, raised inflation expectations this month, predicting that inflation will not return to target levels until 2026. It also raised its forecast for economic expansion. Previous forecasts released in March showed that inflation next year would be well below 2%.

The Council stated in a statement that future decisions will depend on data and that it has not promised a specific interest rate path in advance.

The eurozone's inflation rate rose from 2.4% in April to 2.6% in May. Core inflation (excluding volatile food and energy costs) and service sector inflation accelerated this month. Meanwhile, the unemployment rate in April hit a record low, and first-quarter economic growth exceeded analyst expectations.

Another concern of the European Central Bank is that if it leads the way in interest rate cuts far ahead of the Fed, it may weaken the already weak euro-dollar exchange rate. Although this can promote European exports by reducing costs to overseas buyers, it may also exacerbate inflation and may cause some financial instability.

After the press conference, the euro against the dollar rose 0.2% to 1 euro per 1.0889 dollars.

Editor / jayden