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MARKETS
Profit Margins: The
Death of a Chart – Philosophical
Economics
Killing a chart, but
not the margin question – FT
What does the chart suggest for future equity earnings growth and equity
total returns? High profit margins are obviously a headwind, but the specific
answer depends on your expectations with respect to mean-reversion. If, for example, you think profit margins
will have to contract to the average of the entire data set, or even worse, to
the average seen from 1968 to 2002, then future equity earnings growth is going
to be negative, at least in real terms, and equity total returns will likely be
poor. But those aren’t the only
possibilities–nor are they necessarily the most likely possibilities.
Pivot Points, Tick and Vwap in Day Trading – Fat
Pitch
Simple is essential,
because timeframes are short and decisions have to be made quickly. There are a
lot of ways to day trade; this post is about just one of those. We can do
everything with just three tools: pivot points, tick and vwap.
Transmission of Fed
tapering news to emerging markets – voxeu.org
In 2013, policymakers began discussing when and how to ‘taper’ the
Federal Reserve’s quantitative easing policy. This column presents evidence on
the effect of Fed officials’ public statements on emerging-market financial
conditions. Statements by Chairman Bernanke had a large effect on asset prices,
whereas the market largely ignored statements by Fed Presidents. Emerging
markets with stronger fundamentals experienced larger stock-market declines,
larger increases in credit default swap spreads, and larger currency
depreciations than countries with weaker fundamentals.
Carry Trade: The
Afterlife – WSJ
Carry trade was unprofitable for the last few years due to low rates and
stimulus measures. 2014 could change that.
EM fund flows:
they’re back! – FT
Is this a turning of the tide? After 22 straight weeks of outflows,
dedicated EM equity funds recorded inflows of $2.44bn in the week… EM bond funds, too, had inflows in the week.
The Modern View of
the Stock Market – Morningstar
The great insights of the 1960s, half a century later.
ECONOMICS
Unconventional
Monetary Policies Spell Success in Any Language, Fed Paper Says – WSJ
Central banks in the U.S., Japan, the U.K. and Europe all have resorted
to unconventional policies in recent years to combat the global financial
crisis and recession. The details have differed across international borders,
but in all four cases, they’ve proven successful in terms of easing overall
monetary conditions, according to new research from the Federal Reserve.
Conditionality in
Evolving Monetary Policy Regimes – IMF
With single-digit inflation and substantial financial deepening,
developing countries are adopting more flexible and forward-looking monetary
policy frameworks and ascribing a greater role to policy interest rates and
inflation objectives. While some countries have adopted formal inflation
targeting regimes, others have developed frameworks with greater target
flexibility to accommodate changing money demand, use of policy rates to signal
the monetary policy stance, and implicit inflation targets.
Readings from the
book of Sam – FT
After a half-century with the FT, Sir Samuel Brittan retired last week,
signing off with a valedictory essay and video chat.
Fiscal adjustment,
growth, and credit constraints – voxeu.org
The recent debate on the link between austerity and growth has focused
on the short run. This column discusses recent research into the link between
fiscal consolidation and medium-term growth under different financial
conditions. If credit is not available to consumers and investors, private
demand is less able to compensate for cutbacks in public demand, so large
spending cuts can have a negative effect on growth. Difficult financial
conditions probably explain why fiscal adjustments that worked in the 1990s
have not produced similar beneficial effects on growth in recent years.
Euphemistic At The
IMF
– Krugman
/ NYT
Raise the inflation target to 4 percent, dummies. But the IMF
wouldn’t,and presumably can’t, say that outright. And I suspect that the people
who need to hear that won’t at all get what the Fund is really saying.
The end of human
progress, really? – George
Magnus
Gordon’s proposition is that economic and productivity growth in the US
will be appreciably lower in the next 25-40 years than it has been in the last
century.
Buttonwood: Now you
see them – The
Economist
Central banks will be financing governments on a permanent basis
Long-Term Unemployed
Make for Just as Strong Hires: Study – BB
People who have been
out of work for an extended period, once hired, tend to be just as productive
on the job as those with more typical work histories, according to an analysis
of almost 20,000 employees.