Found 12 article(s) for author 'Financial Markets'

Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over

Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over. John Coates, December 12, 2018, “Sounding the alarm on index funds. How their runaway success has reshaped power and accountability in boardrooms and on Wall Street. Guests – John Coates, professor of law and economics at Harvard Law School where he teaches corporate governance, mergers and acquisitions and finance. Member of the Investor Advisory Committee of the Securities and Exchanges Commission. (@jciv) Link


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What Next for the US Stock Market?

What Next for the US Stock Market? Martin Feldstein, August 28, 2018, Opinion, “August 22 marked the longest period of rising share prices in US history. But the stock market’s nine-year bull run won’t last much longer, as three factors drive up long-term interest rates, reducing the present value of future corporate profits and providing investors with an alternative to equities.Link

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings. Gita Gopinath, Jeremy Stein, May 2018, Paper, “We develop a model that shows how the currency denomination of a country’s imports influences the funding structure of its banking system, and in turn, the currency composition of its central bank’s reserve holdings. The link between the dollar’s role in bank funding and its role as a central bank reserve currency is stronger when the country’s fiscal capacity is limited, and when exchange rates are volatile. In the data, there is a pronounced cross-country relationship between the fraction of imports that are dollar invoiced, and the fraction of central-bank foreign-exchange reserves that are held in dollars.Link

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Why Financial Markets Underestimate Risk

Why Financial Markets Underestimate Risk. Jeffrey Frankel, September 25, 2017, Opinion, “Today’s economy is in a “risk-on” period, when investors exchange safe-haven assets like US Treasury Bills for riskier ones, from real estate to carry-trade currencies. But when such behavior assumes that economic conditions are more stable than they are, as seems to be the case today, trouble inevitably follows.Link

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Brexit’s Blow To Globalization

Brexit’s Blow To Globalization. Carmen Reinhart, June 29. 2016, Opinion. “The United Kingdom’s Brexit referendum has shaken equity and financial markets around the world. As in prior episodes of contagious financial turmoil, the victory of the “Leave” vote sent skittish global investors toward the usual safe havens. US Treasury bonds rose, and the dollar, Swiss franc, and yen appreciated, most markedly against sterling.Link

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Heed the Fears of the Financial Markets

Heed the Fears of the Financial Markets. Lawrence Summers, January 10, 2016, Opinion, “Often markets are volatile at the end of a year and then settle down as a new year begins. Not this year. US and European markets closed lower on Friday after a very rough week despite a strong US jobs report. The week saw dramatic declines in China’s stock market and currency. Oil prices fell even in the face of major tension between Iran and Saudi Arabia. A week when bad market news makes the front page raises two questions. How much should forecasters and policymakers look to speculative markets as indicators of future prospects? And how alarmed should they be about the prospect of a global slowdown? Markets are more volatile than the fundamentals they seek to assess. Economist Paul Samuelson quipped 50 years ago, “the stock market has predicted nine of the last five recessions.” Former Treasury secretary Robert Rubin was right when he would regularly reassure anxious politicos in the Clinton White House that “markets go up, markets go down” on days when a market move created either joy or anxiety …” Link

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Asset Price Dynamics in Partially Segmented Markets

Asset Price Dynamics in Partially Segmented Markets. Robin Greenwood, Samuel Hanson, December 2015, Paper. “How do supply shocks in one financial market affect prices in other markets? We develop a model in which capital moves quickly within each asset class, but slowly between asset classes. While most investors specialize in a single market, a handful of generalists can gradually reallocate capital across markets. When a supply shock arrives, prices of risk in the impacted market become disconnected from those in others. Over the long-run, capital flows between markets and prices of risk become more closely aligned. While prices in the impacted market initially overreact to shocks, under plausible conditions, prices in related markets underreact …Link

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The Disintermediation of Financial Markets: Direct Investing in Private Equity

The Disintermediation of Financial Markets: Direct Investing in Private Equity. Victoria Ivashina, Josh Lerner, January 13, 2014, Paper. “This is the first large-sample study of direct private equity investments by institutional investors. The analysis uses a proprietary dataset of all such investments by seven large institutional investors over twenty years. Despite the substantial fee discounts, we find little evidence of attractive relative performance by direct investments. In particular, co-investments underperform traditional fund investments…” May require purchase or user account. Link Verified October 11, 2014

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The Rise and Fall of Securitization

The Rise and Fall of Securitization. Samuel G. Hanson, Adi Sunderam, December 2013, Paper. “The rise and fall of nontraditional securitizations—collateralized debt obligations and mortgage-backed securities backed by nonprime loans—played a central role in the financial crisis. Little is known, however, about the factors that drove the pre-crisis surge in investor demand for these products. Examining insurance companies’ and mutual funds’ holdings of fixed income securities, we find evidence suggesting that both agency problems and neglected risks played an important role…” Link Verified October 11, 2014

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