Crypto News: Pensions have a lot riding on Tesla

Critics of Elon Musk's efforts to cut the federal government have turned their ire to his car company, Tesla, and owners of its stock. Shruti Singh is here today to explain what happens when politics collides with the financial reality of a pension fund. Plus: A close-knit California neighborhood has its advantages when facing wildfire, and the economics of baseball don't work for small-market teams.

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At a town hall event in Wisconsin on Sunday night, Elon Musk was candid about the effect his White House work is having on his car company, Tesla Inc. "It's costing me a lot to be in this job," he said, referring to his leadership of the so-called Department of Government Efficiency. "My Tesla stock and the stock of everyone who holds Tesla has gone, went roughly in half. I mean it's a big deal."

It's a very big deal, indeed, for the former teachers who wonder how a swoon in stocks, and specifically a plunge in Tesla shares, will hit their already underfunded pensions.

Tesla stock was down as much as 56% earlier this month, plunging from a record $488.54 a share on Dec. 18. The shares spiraled as Tesla's sales slumped, the threat of tariffs set off panic and Musk forged ahead to meet President Donald Trump's goal to downsize the federal government. This week will be crucial for Tesla, as it's poised to announce sales figures for its most recent quarter on Wednesday, and Trump's 25% tariff increase on imported cars is set to go into effect on Thursday. The company has also been the target of "Tesla Takedown" protests that call on Musk's opponents to sell their cars and dump their stock.

The Chicago Teachers' Pension Fund posted a statement on its website on March 14 explaining its Tesla stock ownership after seeing "social media outreach" about the retirement plan's holdings. As of a day earlier, its asset managers had held 209,744 Tesla shares worth about $50.5 million, or 0.4% of the portfolio, with most in passive funds.

"These 'indexed funds' rise and fall with the market," Carlton W. Lenoir Sr., CTPF's executive director, said in the statement. "That can be seen as both a strength and a limitation because we own the market, and do not get to select individual stocks with these investments."

While asset managers oversee investment decisions and serve as fiduciaries who manage the portfolio in the best interests of members, CTPF is dedicated to "a well-diversified and financially sound investment portfolio, ensuring the long-term financial health of the Fund," Chief Investment Officer Fernando Vinzons said in an emailed statement.

Teachers in the Windy City aren't alone in questioning the holdings. American Federation of Teachers President Randi Weingarten in a letter last month asked the country's biggest money managers to immediately review investments in Tesla. The California State Teachers' Retirement System (CalSTRS) has received more than two dozen emails since January asking it to divest from Tesla.

Weingarten at a rally outside of the US Department of Education headquarters in Washington on March 13. Photographer: Al Drago/Bloomberg

Weingarten—who's traded a few personal barbs with Musk—noted in her letter that Tesla's lower profits, pricing power and stock pose a risk to pensions. Public school teachers across the country are concerned about DOGE potentially cutting funding or dismantling the Department of Education completely. They also worry about who's accessing their private data.

The Chicago teachers' fund got a couple of direct inquiries about the holdings in addition to the social media posts but no demands to divest, according to a statement.

Still, a key difference between the Chicago teachers' fund and the likes of CalSTRS is the funding—or more precisely the lack of funding—and the significance of returns. At yearend, CalSTRS owned about $1.12 billion in Tesla shares as part of a massive $350 billion pension fund with enough assets to cover 75% of its liabilities.

Meanwhile, the Chicago Teachers' Pension Fund ratio of assets to liabilities stands at 48%. Its unfunded liability stands at nearly $14 billion. That's largely because of decades of anemic contributions and volatile returns. Assuming statutorily required contributions and a 6.5% investment return, the fund is expected to reach a 90% funded ratio by 2059.

"This is a severely underfunded plan," according to its most recent actuarial report, which included the results of a stress test to show the impact of various levels of returns. The total amount of required employer contributions will depend on the returns, according to the report.

While concerns voiced about a particular stock are common among public employees or retirees when it's in the news for a negative reason, no single stock will impact pension portfolios as much as the sweeping impact that policies such as tariffs by the Trump administration are having on market and portfolios, said Anthony Randazzo, the executive director of Equable Institute, a bipartisan nonprofit focused on pensions. Similar concerns had popped up a couple of years ago regarding Silicon Valley Bank and now-defunct crypto exchange FTX Trading Ltd., he said.

The situation at the Chicago teachers pension "speaks to the potential focus on particularly poorly funded systems when the stock market is going down," Randazzo said.

In Brief

Amazon will resume metal-detector screening for employees leaving its warehouses, a theft-prevention measure suspended during the pandemic.
Far-right French politician Marine Le Pen was convicted of embezzlement and barred from running in the next presidential election.
Chaotic US student-loan restart drives a surging delinquency rate.

Building the Block Back, Better

Chien and Kim Yu in front of the ruins of their home in Altadena, California. Photographer: Stella Kalinina for Bloomberg Businessweek

Kim and Chien Yu's love story began with a giant dalmatian costume. Kim was donning the head of a Sparky the Fire Dog suit for a public awareness day at the Pasadena Fire Department when she spotted Chien, a former high school classmate turned firefighter. Kim, who'd recently started a job as a hazardous materials inspector for the city, struck up a conversation—easy to do in the guise of a friendly canine. Their shared history led to a date, and within a few years they married and had two sons. In 2018 they bought a house a few doors down from one of Kim's co-workers, Phyllis Lansdown, who'd always raved about her block on Highview Avenue in nearby Altadena. "I would just joke about how, 'Oh my gosh, it would be so amazing to live on your block someday,' " Kim says. "And then we found ourselves being neighbors, and it was everything that she said it was and more."

What the Yus found was a mix of residents who were old and young, racially diverse and largely middle class. It was a microcosm of Altadena at large and a remarkably faithful reflection of how the block had been envisioned decades earlier. Gregory Ain, a modernist architect who'd trained under luminaries such as Rudolph Schindler and Richard Neutra, had designed the tract of 28 houses after World War II as affordable homes for working families, with fence-free landscaping and mirror-image driveways that nurtured greetings when people came and went. Seventy years later, barbecues and holiday parties still rotated through the shady backyards and open-plan living rooms. Boxes of collard greens, citrus and apples would sit out on neighbors' porches, homegrown harvests offered to passersby for the taking. The identical layouts of the homes put kids at ease on playdates. "It was a cultural utopia for us," says Kim.

Then, a little after 6 p.m. on Jan. 7, a fire ignited in a canyon a few miles to the east. By morning, along with some 9,000 other structures in Altadena, 21 of the 28 homes on the Yus' block were in ruins, including their own.

But that's just the start of the story. Laura Bliss writes about how the block is working on recovering together: LA Fire Victims Are Betting on a Radical Idea to Help Them Rebuild

Baseball Isn't a Fair Playing Field

Illustration: Hunter French for Bloomberg Businessweek

Opening Day for the Pittsburgh Pirates was emblematic of the franchise. Ace starter Paul Skenes struck out seven over 5 1/3 innings and left the game with a lead—only for the team to be undone by sloppy fielding and poor relief pitching in a walk-off loss to the Marlins at LoanDepot Park in Miami. Skenes, 22, is the most exciting young pitcher in the game. The beefy right-hander, last season's Rookie of the Year in the National League, has an electric fastball, a devastating sinker and a celebrity girlfriend in gymnast-influencer Livvy Dunne.

Unfortunately for Bucs fans, the joy of Skenes is undercut by the knowledge that he's toiling for a mediocre team. The Pirates enter 2025 on a streak of six straight losing seasons, with no real reason to believe this year will be different. Baseball Prospectus projects the team will go 75-87, second from the bottom in its division. Last fall, as the Pirates were wrapping up another desultory campaign, ESPN talking head and Pennsylvania native Pat McAfee referred to Skenes on air as "the Bugatti in the trailer park."

For McAfee and many other Pirates fans, the culprit in this situation is franchise owner Bob Nutting. The Bugatti comment came during a guest appearance on McAfee's weekday show by baseball writer Jeff Passan.

Passan was unsparing in his criticism of Nutting. "How do you continue to exist as a Major League Baseball owner, who theoretically wants to win a championship, and do so pinching pennies?" Passan asked in a barrage of rhetorical questions.

Although Nutting is a villain in Pittsburgh, he's also a victim of the increasingly warped economics of baseball, Ira Boudway writes: There's No Easy Way to Fix Major League Baseball's Wealth Gap

A Lot of Loans

$9.4 billion

That's how much online mortgage provider Rocket Cos. will pay to acquire Mr. Cooper Group Inc. in an all-stock deal that will create a mortgage behemoth that handles 1 in every 6 mortgages in the US.

Controversial Alzheimer's Drug

"It's almost like they put her in front of a firing squad."

Valerie Porter

Longtime companion of Susan Aaron

Aaron is one of at least seven people who have died in the US from symptoms linked to the drug Leqembi over the past two years. Despite the known risks of life-threatening side effects, prescribing standards vary widely among medical centers.