Macro Indicators in the Aftermath
The current status of the economy of the US is relevant for many other countries; thus, it is important to understand the strength and resiliency of its economy.
Naive Principal Component Analysis
Behind the Principal Component Analysis there is a geometric interpretation of the data; specifically, a principal component is a direction in which the data has the largest variation.
Sentiment Analysis
In finance, sentiment refers to the measurement of the excessive confidence, either positive or negative, of investors in a specific situation. The fundamental reason why it is studied is because psychologists determined sentiment as a relevant factor affecting the judgement and decisions of investors.
The Geopolitics of Currencies
The 1944 Bretton Woods agreement jumpstarted the dollar into its reserve currency status. While economists proposed global trust and confidence in the US ability to pay its obligations, a more compelling justitification has its roots in United States’ political influence.
Assessing the Impact of Modern Monetary Policy on Citizens and Small Businesses
With respect to the COVID-19 impact, it has not passed unobserved that the $3.3 trillion issuance of debt securities in the first half of 2020 has been purchased only by the U.S. Federal Reserve (46%) and national/international private investors (40%); instead, foreign central banks, already holding trillions of dollars of U.S. Treasuries, did not acquire a significant amount. In other terms, it seems the U.S. is substantially moving to own its debt in what we can define a Japanese way of managing the economy; probably, other developed countries will soon engage in similar practices.
Entering Recession with Covid-19 and Deflation
Epidemic models may help in assessing the impact of COVID-19 on the economy as well as to understand the market’s interpretation of the virus impact. In this respect, Shiller’s narrative economics may provide insights with wider practical implications than behavioral economics.
Finally Sector Rotation?
Between the practice of trading and the academic empirical studies lies the sector rotation. On on hand, most evidence about business-cycle rotation suggests it doesn’t work whereas, on the other, practitioners have employed value-based sector rotation with some success. After a short review, my suggestion for the coming months…
Where is the Equity Risk Premium in the Stock Market Cycle?
The fluctuations of equity prices are attributed to the competition of firms for the limited funds of investors; as a result, demand and supply achieve the equilibrium summarized in the most competitive expected rate of return adjusted for risk.
Economic Indicators: Forecasting Bad Weather
The US markets are moving out of a distribution phase consisiting of lateral movements and indecision in market sentiment: will it result in a mark-down and in a recession?
Protecting Portfolios with Options Strategies
Options are often used to reduce or eliminate the risk of holding one particular investment position by taking another position. In general, a long option position is a speculation that something will happen (bear, bull, lateral) whereas a short option is a speculation that something will NOT happen (not bear, not bull, not lateral).
