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Calpers to invest more than $30bn in private markets

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Calpers to invest more than $30bn in private markets

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Calpers, the US’s biggest public pension plan, is to increase its holdings in private markets by more than $30bn and reduce its allocation to stock markets and bonds in an effort to improve returns.

A proposal to increase the $483bn fund’s positions in assets such as private equity and private credit from 33 per cent of the plan to 40 per cent was approved on Monday, according to an announcement by the fund and notes from its board meeting. 

The formal approval comes two years after Calpers admitted that a decision to put its private equity programme on hold for 10 years had cost it up to $18bn in returns.

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However, a review of its investment policy found that, despite the gains it had already missed, private equity was still the asset class with the highest expected long-term total return.

“Strong and ongoing growth in private equity returns is behind this measured and appropriate increase,” said Calpers trustee David Miller, chair of the investment committee. 

“Market conditions are evolving and the investment team needs latitude to deploy capital intelligently to keep the fund on track for sustainable returns.”

According to analysis published by Calpers alongside its board notes, private equity was the top-performing asset class in the decade to June 30 2023, with annualised returns of 11.8 per cent. That compares with 8.9 per cent from public equities and 2.4 per cent from fixed income. The documents did not disclose if the figures took account of fees.

The portfolio shake-up, which was confirmed after a scheduled asset allocation review, will bring the California-based plan into line with other big retirement systems in the US, including Calstrs, which has just over 40 per cent of its portfolio in private markets.

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As part of the move, Calpers will increase its bet on private equity from 13 per cent to 17 per cent of its portfolio, although this could potentially rise as high as 22 per cent.

At the same time, it is pulling back from investing in stock markets, with its allocation to equities set to fall from 42 per cent to 37 per cent of its portfolio. It will also trim its allocation to fixed income from 30 per cent to 28 per cent.

In 2021, Calpers’ board approved an expansion into private assets including private equity, real assets and private debt, from 21 per cent to 33 per cent of the portfolio, and also gave itself the ability to borrow money to invest in assets that would help diversify its holdings.

Last year the Financial Times reported that Calpers was planning a multibillion-dollar move into international venture capital, as the fund moved towards investing in riskier assets to drive returns.

The fund also reported a return of 10.3 per cent last year. It is yet to announce a replacement for chief investment officer Nicole Musicco, who resigned last year after 18 months in the role.

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Boeing promises to improve training and eliminate defects in FAA performance plan

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Boeing promises to improve training and eliminate defects in FAA performance plan

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Boeing submitted a plan to federal regulators on Thursday promising to improve the safety and quality of its manufacturing through training, simplifying processes and eliminating defects.

Chief executive Dave Calhoun met with Mike Whitaker, head of the US Federal Aviation Administration, to turn in the plan, which the agency had given Boeing 90 days to submit. The aerospace manufacturer is facing multiple investigations since a door panel blew off a 737 Max during a commercial flight in January.

The plan is supposed to show how Boeing will address the problems flagged not only in the FAA audit but also in a congressionally mandated report published in February by an expert panel that criticised the company’s safety culture. The panel called Boeing’s safety processes “inadequate and confusing”, with rank-and-file employees possessing little knowledge of company-wide safety initiatives and exposed to potential retaliation for reporting safety problems.

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Whitaker said Boeing’s plan included six “key performance indicators” to track the company’s progress as it tries to improve quality. He declined to identify the metrics, deferring the question to Boeing, which said it would “share additional information about the plan . . . with more details in the coming days”.

“This is about systemic change, and there is a lot of work to be done,” Whitaker said at a news conference in Washington, DC. “These metrics will provide us a way to monitor their health over the coming months.”

The FAA has capped Boeing’s production of the Max at 38 per month, and it is currently building fewer than that. The company has been burning cash as it slows production to try to improve quality.

Whitaker said there is no timeline or numerical targets tied to lifting the cap.

Senior leaders from the FAA will meet Boeing weekly to review progress on performance metrics laid out in the plan, and Whitaker said he would meet quarterly with Calhoun, with the next meeting in September in Seattle.

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The FAA’s enhanced oversight of Boeing, begun earlier this year with more inspectors in the plane maker’s factories, will continue. The focus will be less on auditing, Whitaker said, and more on inspection — more “hands on, and also talking to folks on the floor and getting a more accurate picture to what’s happening”.

The door panel blowout has drawn scrutiny from regulators, lawmakers, prosecutors and the flying public. Though no one was killed, the incident raised questions about the safety and quality of Boeing’s manufacturing, recalling the twin fatal crashes of Max aircraft in 2018 and 2019.

The US Department of Justice also has determined that Boeing violated its deferred prosecution agreement, established in 2021 to resolve a criminal charge for misleading aviation regulators who certified the Max. Prosecutors have until June 7 to file criminal charges. Boeing disputes the department’s assessment.

A preliminary investigation by the National Transportation Safety Board found four bolts meant to secure the panel to the fuselage were missing. An audit by the FAA found “multiple instances” where Boeing and Spirit AeroSystems, which supplies the fuselage for the Max, failed to meet quality control requirements.

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Chad Daybell found guilty of murder in deaths of two kids and ex-wife

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Chad Daybell found guilty of murder in deaths of two kids and ex-wife

An Idaho doomsday author who prosecutors say became obsessed with apocalyptic beliefs and labeled people as “zombies” and “dark spirits” was found guilty Thursday in the deaths of his ex-wife and his current wife’s two youngest children. 

The verdict concludes Chad Daybell’s nearly two-month trial in the deaths of his ex-wife, Tammy Daybell, and Joshua “JJ” Vallow, 7, and Tylee Ryan, 16.

Daybell, wearing a blue-collared shirt and yellow tie, stood stoically as the jury found him guilty of all counts against him including insurance fraud.

The children’s remains were found in June 2020 on Daybell’s property in Fremont County, Idaho. Police said they believed Daybell hid the remains between September 2019 and June 2020.

Joshua Vallow and Tylee Ryan.Fremont County Sheriff’s Office

Tammy Daybell died in 2019, weeks before Chad Daybell and Lori Vallow married. Her death was initially considered to be natural causes, but her remains were later exhumed. Following an autopsy, her death was determined to be a homicide by asphyxiation.

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Daybell, along with Vallow, were indicted in 2021 on charges of first-degree murder, conspiracy to commit first-degree murder and grand theft by deception in the children’s deaths.

They were also charged with insurance fraud and conspiracy to commit first-degree murder in connection with Tammy’s death. In addition, Chad Daybell was charged with first-degree murder in her death.

Vallow was convicted in May and received multiple life sentences in prison without the possibility of parole.

Zombies, dark spirits and mysterious deaths

The case began in 2019 after several concerned family members told Rexburg police that they had not seen or talked to Joshua and Tylee. Police formally started looking for the children that November.

Authorities had accused Daybell and Vallow of failing to cooperate with the investigation into the children’s disappearance and lying to police about their whereabouts. They had initially told officers that Joshua, who was adopted and had special needs, was in Arizona with a family friend, but police determined it was a lie.

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The couple abruptly left Rexburg and went to Hawaii. In February 2020, Vallow was taken into custody by police in Hawaii after she failed to produce the children to authorities in Idaho.

As the investigation into the children’s whereabouts continued, police uncovered a trail of mysterious deaths connected to the couple.

Vallow’s fourth husband, Charles Vallow, was fatally shot in July 2019 by her brother, Alex Cox. Five months later, Cox died from a pulmonary embolism, a condition that causes one or more arteries to become blocked by a blood clot. (Lori Vallow and her brother had initially said that Charles Vallow was shot in self-defense. Lori Vallow was later charged in Arizona, where she and Charles lived, with conspiracy to commit murder in the first degree. Cox was never charged.)

In October 2019, Daybell’s ex-wife, Tammy Daybell, was found dead of what was believed to be natural causes at the time.

Chad Daybell and Vallow married two weeks after Tammy’s funeral, NBC affiliate KSL of Salt Lake City reported. In December 2019, investigators exhumed Tammy’s body and conducted an autopsy that ruled her death a homicide.

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In opening statements in Chad Daybell’s murder trial, prosecutors said that Lori Vallow and Daybell, a self-published author of more than two dozen books about doomsday and near-death events, had become obsessed with apocalyptic beliefs and labeled people who stood in the way of their dreams as “zombies” and “dark spirits.”

“You’ll hear in the world Chad and Lori planned for themselves, they identified those who stood in the way of their dream as dark,” Madison County Prosecutor Rob Wood said.

“Their spouses, Lori’s own children and anyone who opposed them were labeled sometimes as dark spirits or even zombies,” he added.

Vallow’s niece, Melani Pawlowski, testified that the couple believed people could be possessed by evil spirits and that “zombies” would eventually be overcome by a dark spirit and die.

Prosecuting Attorney Lindsey Blake reiterated Wood’s remarks, insinuating in closing arguments Wednesday that Daybell was the mastermind behind the couple’s scheme and decided who was “dark.” 

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“Chad has the answers, Chad has the knowledge, Chad has that special ability,” she said.  

Once he deemed a person dark, they had to be killed, she said. 

Children’s remains found in pet cemetery and fire pit

Rexburg Police Detective Ray Hermosillo testified at Daybell’s trial about the moment officers found the children’s remains.

Court documents revealed that Joshua had been buried in a pet cemetery on the property and Tylee had been dismembered and burned in a fire pit. 

“There were taller shrubs. In the middle of the 6-by-6 section, it looked like there was just a little bit of grass,” Hermosillo said about law enforcement discovering Joshua’s remains under a tree.

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“The ERT team began excavating that site. They removed the top layer of soil. … At that point, you could see what appeared to be three large white rocks,” he told the jury. “As soon as they did that you could start to smell the odor, through my training experiences a decomposing body.”

The detective said officials found a “small body wrapped in black plastic with duct tape around it.”

Hermosillo told the court that Daybell tried to flee “as soon as that was discovered.”

Dr. Garth Warren with the Ada County Coroner’s Office testified that “Tylee was received in multiple” body bags.

One body bag had smaller bags inside that contained “multiple collections of soft tissue, bone and debris including dirt and rock,” he said. The second body bag contained pieces of a “melted green bucket” and a “collection of human remains” and organs including the heart and lungs, he told jurors.

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“This isn’t what heart and lungs typically look like,” he said as jurors were shown photos. “They’re obviously charred, portions of them are burned away and significantly shrunken as well.”

In the third bag was a portion of a “blackened and charred” skull, Warren said, as well as a portion of a jaw with “partially charred” teeth. The remains were identified as Tylee’s through dental X-rays, he said.

Daybell’s children come to his defense

Daybell’s son and daughter testified in his defense, telling the court that he “valued” their mother, Tammy Daybell, and was distraught over her death.

“He was more distressed than I ever seen him in my entire life,” his daughter, Emma Murray, told the court. “I was used to my parents being in control and in charge and seeing him so distressed and emotionally out of control was very scary to me. I didn’t doubt his grief at all.”

Murray said her mother had some health issues and would bruise easily. Before her death, her mother had been working on becoming more physically fit, Murray said.

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At the trial, Murray was questioned about Joshua and Tylee. She told the court that when she asked her father where the children were, he told her that they were in a “safe place.”

Garth Daybell said his mother would “collapse” after coming home from work, had a hard time moving heavy items and had “fainting spells.” On the day of her death, he said he did not hear any sounds of a struggle or fight.

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US seeks to choke off supplies via China for Russia’s war machine

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US seeks to choke off supplies via China for Russia’s war machine

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The US will urge Ukraine’s allies and western businesses to choke off supplies for Russia’s defence industry through China, a vital route to sustain President Vladimir Putin’s war machine.

In a speech to German business leaders in Berlin on Friday, US deputy Treasury secretary Wally Adeyemo will urge western companies to stop Russia importing critical components from or via China.

The US has threatened secondary sanctions against Chinese companies found to have supplied Russia’s defence industry.

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According to excerpts shared with the Financial Times, Adeyemo will say the US and Europe “must make the choice stark for China: Chinese firms can either do business in our economies or they can equip Russia’s war machine with dual-use goods. They cannot do both.”

“The Kremlin knows it can only meet its military goals with China’s assistance,” Adeyemo will say.

“Every country in our coalition and every member of Nato must also consistently and clearly communicate to Beijing that it is unacceptable for the Chinese to abet the Russian military-industrial base.”

Moscow increased its imports of sensitive, dual-use goods — civilian goods that also have military applications crucial to the Russian war effort — from China-based suppliers by 40 per cent last year, according to the US.

While China accounts for almost two-thirds of Russia’s imports of dual-use high-technology goods, as defined by the EU’s trade regulations, almost all of the imported components used in Russian weaponry are of western origin, according to a study by the Kyiv School of Economics.

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The European Central Bank earlier this month told Eurozone lenders with Russian operations to speed up their exits, fearful they could be hit with US secondary sanctions for enabling Moscow’s war effort if they stay.

The ECB’s warnings came shortly after Adeyemo told Austria’s Raiffeisen Bank, the most prominent European bank in Russia, that Washington could restrict its access to the US financial system on national security grounds.

In a roundtable with news outlets during a visit to Kyiv on Wednesday, Adeyemo said the US was seeking to ensure that US microchip manufacturers were “taking steps to look at how their chips are being used” and preventing transshipment through third countries such as China.

Putin’s recent appointment of statist technocrat Andrei Belousov as defence minister indicates the extent to which the war is consuming Russia’s economy, Adeyemo said.

The US has increasingly put banks in its crosshairs as it broadens its focus on countries and companies shipping dual-use goods to Russia, he added.

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“Financial institutions, in lots of ways, can help us enforce our sanctions by doing additional due diligence on the companies that are trying to use them to finance goods that are going into Russia,” Adeyemo said.

“What we’ve seen the Kremlin do is, instead of using the biggest banks in some of these countries they’re now going to smaller institutions that have less sophisticated compliance departments to try and get around our sanctions and export controls,” he added.

The US now wants to “force” banks to “enhance their due diligence, to try and stop Russia from being able to get access to these goods”, he added.

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