South Coast Air Quality Management District

REPORT: 

Investment Oversight Committee

SYNOPSIS: 

The Investment Oversight Committee met Friday, November 15, 2002 and discussed various issues detailed in the Committee report. The next Investment Oversight Committee meeting is scheduled for Friday, February 21, 2003 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTION:

Receive and file this report.

Gary Burton,
Investment Oversight Committee

Attendance: Present were Committee members Gary Burton, David E. Ertel and Paul Sundeen. Absent were Committee members Michael Antonovich, William A. Burke and Norma J. Glover.

Investment Committee Action Items:

Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of September 2002, the AQMD’s weighted average yield on total investments of $266,138,372, from all sources, was 2.67%. The allocation by investment type was 85.8% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 11.4% in the State of California Local Agency Investment Fund (LAIF); and 2.8% in Federal Agency securities. The Committee discussed AQMD’s diversification goals and what effects corporation credit quality has on commercial paper investments. The Committee approved the quarterly report.

Investment Committee Discussion Items:

Financial Market Update: Terry McGuire (Sperry Capital) briefed the Committee on the current interest rate market. In summary, Mr. McGuire stated that sweep, an aggressive 50 basis point cut in policy rates and the quarterly refunding auctions left a resulting decline in Ten-year yields to 3.84% by mid-day Friday. Initial jobless claims fell eight thousand to 388,000 and retail sales for October came in at flat levels overall but were up 0.7% when excluding auto sales. Business inventories rose 0.3%, as sales fell 0.5%, to result in a slightly higher 1.36 inventory/retail sales ratio. This was the 4^th monthly increase after 15 straight monthly declines in the ratio. Expectations are that it will be mid-2003 at the earliest before there will be any consideration for a rate increase. The economy is stumbling along, and there will continue to be great uncertainty related to Iraq and terrorism that will impact the stock and bond markets. The entire yield curve is likely to remain in a relatively tight trading range around current levels.

Other Business: None

Public Comment: None

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