At the end of the week, the five year constant maturity Treasury yield continued to rise; but after accounting for the estimated term premium and liquidity premium (h/t Bob), the increase since the Georgia elections is much more modest. Figure 1. Five year inflation breakeven calculated as five year Treasury yield minus five year TIPS yield […]
Tag: financial markets
Public and Private Money Can Coexist in the Digital Age
By Tobias Adrian and Tommaso Mancini-Griffoli We value innovation and diversity—including in money. In the same day, we might pay by swiping a card, waving a phone, or clicking a mouse. Or we might hand over notes and coins, though in many countries increasingly less often. Today’s world is characterized by a dual monetary system, […]
No to: “the stock market which doubled under Trump”
There are many people whose brains are “data-free zones”, and this comment is one example of the resulting exposition. For completeness, here is a plot of the S&P500 (expressed relative to 2017M01). Figure 1: S&P 500 index as ratio to 2017M01 (blue, left scale), and 10 year constant maturity Treasury yield, % (brown, right scale). […]
Brokers and dealers
In the WSJ, Alexander Osipovich writes, The practice, in which high-speed trading firms pay brokerages for the right to execute orders submitted by individual investors, has long been controversial. Some say it warps the incentives of brokers and encourages them … Continue reading →
Guest Contribution: “What the GameStop Bubble Says about Financial Markets”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. Whether one thinks that the overall equity market is currently valued properly or not, something very unusual happened in the […]
Grumpy on GME
John Cochrane and Owen Lamont discuss the GameStop situation. “You do not have a robust, liquid market.” In a liquid market, any investor (or group of investors) faces a very elastic demand curve if he wants to sell and a … Continue reading →
EMH and GameStop
A reader emails, It seems to me that even if markets are only semi-efficient, then the trading curbs imposed by Robinhood and other firms should not have had an adverse impact on GME’s share price. 1. I do not believe … Continue reading →
Flash-mob finance
Modern communication infrastructure can facilitate swift simultaneous action by a large number of people. If used to coordinate a surprise attack, an organized mob can overcome a store or even the capitol building. Is Wall Street the next target? GameStop is a brick-and-mortar retail chain that was losing money even before the pandemic. Yet the […]
Conspiracy or kludge?
The unfortunately named Anthony Denier says, in reality, what’s going on is that there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with … Continue reading →
Guest Contribution: “The Impact of COVID-19 on Emerging Financial Markets”
Today, we are pleased to present a guest contribution by Steven Kamin (AEI), formerly Director of the Division of International Finance at the Federal Reserve Board. The views presented represent those of the authors, and not necessarily those of the institutions the authors are affiliated with. The eruption of the Covid-19 pandemic early last year […]
