Us Equities And Irrational Expectations. The Recent Behaviour

Operation Twist, a plan to buy long-term U.S. debt and sell short-term debt, which will result in a flattening of the yield curve and a drop in long-term debt yields, is a part of the expected future according to the Fed. This means that the historical lows in interest rates that we are seeing will continue in the short run. In the long run however, there looks to be a divergence from that short-run trend. Consumers and businesses in the long-run will get away from the de-leveraging process that we are seeing in the recent past and currently and begin to build up cash that will circulate more unreservedly. This will cause the Fed to set interest rates at higher levels in order to combat against the rise in inflation in the post-deleveraging period.

AGENDA 1. 2. 3. 4. 5. Announcements Financial Markets and Net Present Value Survey Results Optional Material (e.g. Cases, Practical

The “Autobiography of Harkhuf” is a primary source from the collection of readings, Ancient Egyptian Literature A Book of Readings, by Miriam Lichtheim. Essentially it is the obituary of an Old Kingdom official, Harkhuf, who lived during Egypt’s Sixth Dynasty (Lichtheim). The obituary was found carved onto the facade of a tomb in Aswan, with fifty-eight lines inscribed to describe the Harkhuf’s milestones. Harkhuf was an Elephantine native who was appointed governor of the Southern area of Upper Egypt. Appointed by King Merenre, he was in charge of overseeing caravans and trade relations, particularly between Egypt and Nubia. The passage vividly describes four expeditions that Harkhuf had made. The first was from Memphis to the Second Nile Cataract region. This lengthy journey took approximately seven months to complete. The following journey went smoothly, but the third journey consisted of obstacles. This was because, during this journey his route was restricted due to a war between the nation and a Libyan tribe. Harkhuf’s duty was to keep the trade route open and operating. Thus he utilized his knowledge and expertise to negotiate with the warring chief to let him complete his mission. Ultimately, Harkhuf succeeded and was able to return to Egypt, escorted by armed men for protection, with 300 donkeys, incense, ebony, ivory, animal skins, etc.. Harkhuf’s later endeavors pleased succeeding kings, such as Pepi

Michael Hiltzik, a “Las Vegas Times” columnist, is a slap-in-the-face, capital-oriented, theme-based writer that shares many of the same views that I do, politically, economically, socially, and most importantly, entertainmentwise. My favorite part is always the second paragraph, which is generally a flat-out slice of facts with a side of some cold, hard truth that hits people like windshield wipers hit bugs. Believe it or not, Hiltzik, although predominantly economic, also spends time printing articles that have to do with the latest movie or the current sports teams and still manages to tie them into how they fluctuate the stock market. The stock market has always been an interest of mine since my grandfather is a stockbroker, and although

It is often said that perception outweighs reality and that is often the view of the stock market. News that a certain stock may be on the rise can set off a buying spree, while a tip that one may be on decline might entice people to sell. The fact that no one really knows what is going to happen one way or the other is inconsequential. John Kenneth Galbraith uses the concept of speculation as a major theme in his book The Great Crash 1929. Galbraith’s portrayal of the market before the crash focuses largely on massive speculation of overvalued stocks which were inevitably going to topple and take the wealth of the shareholders down with it. After all, the prices could not continue to go up forever. Widespread speculation was no doubt a

The discussion of whether the Federal Reserve should raise the federal funds rate is a highly contentious one. Members of the Federal Reserve (“Fed”) and academic economists disagree about what constitutes appropriate future macroeconomic policy for the Unites States. In the past, the Fed had been able to raise rates when the unemployment rate was under 5% and inflation was at a target of 2%. Enigmatically, since the Great Recession and despite a strengthening economy, year-over-year total inflation since 2008 has averaged only 1.4%—as measured by the Personal Consumption Expenditures Price Index (“PCE”). Today, PCE inflation is at 1-1.5% and has continuously undershot the Fed’s inflation target of 2% three years in a row. (Evan 2015) In the six years since the bottom of the Great Recession the U.S. economy has made great strides in lowering the published unemployment rate from about 10% back down to about 5.5%. In light of this data, certain individuals believe that the Federal Reserve should move to increase the federal funds rate in 2015 because unemployment is near 5% and inflation should bounce back on its own (Derby 2015). However, this recommendation is misguided.

To begin, the article explains the Federal Reserve’s plan to take a careful approach to enacting contractionary monetary policies, policies used to decrease money supply, in the future. Last December the Federal Reserve raised the interest rates after they had been near zero for years to ensure inflation was kept in check and to promote economic growth. It appeared the economy would be in for another increase in the interest rates sometime this year, but the Feds have rethought that strategy. If the Federal Reserve were to continue to raise interest rates it would have short-run and long-run effects on the Money Market, Goods and Services Market, Planned Investment, Phillip Curve, and Aggregated Supply and Demand. These effects are aspects that have to be considered because they express and explain the effects the increase in interest rates has on the economy and explain if the Federal Reserve is enacting the correct policy to achieve their goal.

On September 18, 2013 the Federal Reserve reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In addition, the committee agreed to continue its monthly $85 billion purchase of Treasury and mortgage-backed securities as long as the unemployment rate remains above 6.5 percent. Inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal and longer-term inflation expectations continue to be well anchored .

Success is something that most people hope for when they begin to work towards a goal. Often times, the same feeling of accomplishment can drive one to seek for more. In the case of Macbeth, what is once looked upon as a prize for hard work, now becomes an addictive drug. In Macbeth, William Shakespeare portrays to the audience that no matter how innocent a person may be, ambition can find a way to poison a person’s mind and make them do unimaginable, evil deeds.

The United States is the leading economy across the globe and experienced several tribulations in the recent past following the 2008 global recession. Despite these recent challenges, there are expectations among policymakers and financial experts that the country will experience solid economic growth. Actually, financial analysts have stated that the U.S. economy will be characterized by increased consumer spending, increased investments by businesses, reduced rate of unemployment, and reduction in government cut. Some analysts have also stated that the country’s economy will strengthen in 2014 with an average of 2.7 percent or more. However, these predictions can only be understood through an analysis of the current macroeconomic

Some experts believe that Trump’s economic policies will increase the inflation rate. Trump’s considered spending on infrastructure will potentially lead to an enlarged employment rate and a larger money supply within the economy. If exchange wars with China and Mexico actually happen, import prices could increase, which will lead to inflation. For example, just after the election results were broadcasted, the Mexican peso plummeted 7.3% opposed to the US dollar. The United States is responsible for a respectable amount of Mexico’s imports. Other countries around the world will be impacted by this. Elevated inflation expectations have induced universal alarm among investors, producing a bond sell-off (specifically for fixed-income treasury bonds whose profit gets consumed with a higher inflation rate.) The selling of bonds has caused a fall in bond prices. Bond yields on the other hand have risen.

For many years America was the lone superpower in the world after the collapse of the USSR in the 1990’s. During this same decade, America saw the internet revolution and a surplus in the budget for the first time in a long time. This meant that the economy was surging, and a lot of internet companies saw their stocks rising rapidly and their shareholders also sharing in the profits. This all came to a quick end in the 1990’s with the “dot.com” bubble popping resulting in a downturn at the end of the decade. This compiled with the events of 9/11 a few short years later created a large amount of instability throughout the economy of the country, with this uncertainty looming it only took a few more years for the housing market to collapse due to oversaturation of the housing market. Then finally in October of 2008, the auto industry took a nose dive along with a banking crisis shortly

The efficient market, as one of the pillars of neoclassical finance, asserts that financial markets are efficient on information. The efficient market hypothesis suggests that there is no trading system based on currently available information that could be expected to generate excess risk-adjusted returns consistently as this information is already reflected in current prices. However, EMH has been the most controversial subject of research in the fields of financial economics during the last 40 years. “Behavioural finance, however, is now seriously challenging this premise by arguing that people are clearly not rational” (Ross, (2002)). Behavioral finance uses facts from psychology and other human sciences in order to

Throughout the last four years of my high school career, I spent most of my time trying and experiencing new opportunities. I love to keep myself busy, and I did so by being actively involved in numerous organizations. Freshman year and still currently, I have been active in Track and Field. Freshman year I received a medal and made varsity. By the end of that year I earned a varsity letter in Track and Field. The following year (sophomore), I had the opportunity to work at my local hospital (Rhode Island Hospital). My job title was a patient transporter, which required me to transport patients to and from their rooms and test sites throughout the hospital. Also, transferring specimen was a regular task throughout the day. I genuinely appreciate the opportunity to work and witness all of the different health fields in the hospital. This job opportunity is so important to my life because it helped me determine that I like working and helping people, but I do not like seeing them sick and gory.

First time this phenomenon was presented by the economists Rajnish Mehra and Edward Prescott in 1985. They discovered that the return from US equity investments in comparison to the return from a risk free government securities had been much far above during the twentieth century to be interpreted by the traditional economic theories (Siegel and Thaler, 1997).