News

  • Do Properly Anticipated Prices Fluctuate Randomly? Evidence from VIX Futures Markets
    According to Marketwatch, Goldman Sachs strategists just issued a warning regarding the volatility index, VIX,Goldman analysts Rocky Fishman and John Marshall said that the VIX, which uses options bets on the S&P 500 to reflect expected volatility over the coming 30 days, has been hovering at or below 13, marking its lowest level since around January (though it is tipping up in Monday trade). Its current level takes the gauge of implied volatility, which tends to rise when stocks fall and vi [...]
  • Overnight Index Swap Discounting
    The overnight index swap (OIS) has come into the spotlight recently, due to the widening of the Libor-OIS spread. For example, the Economist recently reported:WATCHING financial markets can be like watching a horror film. A character walks into the darkness alone. A floorboard creaks. The latest spooky sign is the spread between the three-month dollar London interbank offered rate (LIBOR) and the overnight index swap (OIS) rate. It usually hovers at around 0.1%, but has recently climbed to 0.6% [...]
  • Can a Horse Racing System be Applied to the Stock Markets?
    Bill Benter is one of the most profitable professional gamblers in the world. According to WikipediaWilliam Benter was born and raised in Pittsburgh, Pennsylvania.[2] As he grew up, he wanted to use his mathematical talents to make a profit so immediately after finishing a university physics degree in 1977,[3] he went to the blackjack tables in Las Vegas and used his skills to count cards. He came across the book, Beat the Dealer, by Edward O. Thorp, which helped him improve his methods.[4] Seve [...]
  • U.S. bank stock gains may stall after two-year rally
    (Reuters) - After two years of sharp gains for U.S. bank stocks, investors betting on another big boost for 2018 may be disappointed unless loan growth accelerates or regulations slacken considerably.
  • Ackman says Pershing Square Holdings up 0.1 percent this year
    BOSTON (Reuters) - Two days after billionaire investor William Ackman told clients that he was making money across all his funds again, he said on Thursday that his publicly traded Pershing Square...
  • Remedy for high drug costs: Let Medicare negotiate
    CHICAGO (Reuters) - (The writer is a Reuters columnist. The opinions expressed are his own.)
  • Hedge fund Pagoda Asset Management shutting after four years -source
    BOSTON (Reuters) - Hedge fund Pagoda Asset Management is shutting down at the end of the month, becoming the latest casualty in the $3.2 trillion industry after a period of sluggish returns, a source...
  • BlackRock may keep fees despite executive's U.S. campaign donation: SEC
    NEW YORK (Reuters) - BlackRock Inc can keep fees from the state of Ohio despite a donation one of its top executives made to Governor John Kasich's U.S. presidential campaign, according to a...
  • Cboe and BlackRock to launch corporate bond index futures
    (Reuters) - Exchange operator Cboe Global Markets Inc said on Wednesday it has collaborated with the world's largest asset manager, BlackRock Inc, to develop U.S. corporate bond index futures.
  • Parents inch closer to college saving goals, study says
    NEW YORK (Reuters) - When optimism and realism about college savings collide, you get parents who are confident that they will meet their goals - as long as they reduce the amount of money they save,...
  • World economic growth is slowing. Don’t worry—yet
    IN 2017 the global economy broke out of a rut. It grew by 3.8%, the fastest pace since 2011. Surging animal spirits accompanied a rebound in business investment across the rich world. Global trade growth rose to 4.9%, also the fastest rate since 2011. Emerging-market currencies appreciated against the dollar, keeping inflation low and debts affordable. Financial markets wobbled in February, but only after reaching all-time highs. In April the IMF said that the global economic upswing had become “broader and stronger”.Since then that healthy glow has begun to fade. First, economic surveys in Europe took a turn for the worse (presaging...Continue reading
  • How Turkey fell from investment darling to junk-rated emerging market
    MANY of the most famous hedge-fund trades have been bets that things were about to go wrong. Think of Enron’s bankruptcy or the souring of subprime mortgage bonds in America. The best trade made by “the Professor” was very different. It was a bet that something was starting to go right.A visit almost 20 years ago convinced him that Turkey was serious about fixing its economy. The yield on its one-year Treasury bills was then above 100%. “It was a serious mispricing,” he tells Steven Drobny in “The Invisible Hands”, a book of interviews with pseudonymous hedge-fund managers. The IMF gave its approval to Turkey’s reforms soon afterwards. The price of T-bills surged. The one-year interest rate fell to 40%.The wheel has since turned almost full circle for Turkey, which now seems to attract more sellers than buyers. The lira is sinking. S&P has cut the country’s credit rating from junk to junkier, partly because of concerns about its reliance on foreign capital. The...Continue reading
  • A WTO ruling on aircraft subsidies raises the risk of a tariff war
    THE manufacture of airliners may be the world’s most globalised industry. Only two firms make big civil jets: Boeing of America and Airbus of Europe. Most of their revenues—55% for Boeing and 70% for Airbus—are earned outside their home territory. Both source parts from dozens of countries. But a ruling by the World Trade Organisation (WTO) on subsidies in the industry could deal another blow to the beleaguered international trading system.On May 15th the WTO’s final appeals body upheld parts of a previous ruling, finding that the European Union wrongly provided subsidies to Airbus to develop new aircraft. That, it concluded, had hit sales of Boeing’s jets. As soon as the WTO gives the go-ahead America will have the right to impose retaliatory tariffs on EU imports. Trade experts warn they could be the highest in the WTO’s history.Boeing crowed that the ruling showed that the EU had given $22bn in “illegal subsidies” to Airbus. But Tom Enders, Airbus’s chief executive,...Continue reading
  • The life-insurance industry is in need of new vigour
    LIFE insurance is among the oldest financial products. The Amicable Society, founded in London in 1706, charged members a set contribution and paid out annually to widows and children of those who had died in the previous 12 months. Today it is a vast industry: life and health insurers employ over 800,000 people in America alone. It protects hundreds of millions against the risk of dying early, through death benefits, or the risk of living longer than expected, for example through annuities. According to Allianz, a German insurer, total life-insurance premiums are above 5% of GDP in many rich countries, including Britain, France, Italy and Japan. In America, the world’s biggest market, annual premiums total more than $550bn.But life insurers are struggling as never before. Those parts of the industry that have not evolved fast enough, says Clive Bannister, the head of Phoenix Group, a “closed” life insurer that buys and manages old policies but issues no new ones, have experienced a...Continue reading
  • Award
    On May 16th Callum Williams, our Britain economics correspondent, was named joint winner of the Young Financial Journalist of the Year at the Wincott Awards, an annual set of prizes for British journalists.
  • Lawmakers are trying to curb contracts that make it harder to change jobs
    IN 2011 Kathleen started work at an insurance-and-benefits consultancy in Boston. A couple of years later the firm gave her an ultimatum: sign a “non-compete” agreement within 30 days or wave goodbye. She signed, which meant that, if she left, she would be barred for three years from working for a rival or any firm that had been contacted as a potential client, and from starting a competing business. In 2015, when she accepted a new job in a different industry at an unrelated company, her former bosses threatened to sue. The job offer was withdrawn, and reinstated only when she offered to pay any legal costs that resulted. The matter never came to court, but the fear of legal action has kept her out of her old industry ever since.Non-compete agreements are widely used to stop ex-employees walking out of the door with valuable know-how, or poaching suppliers and customers when they move jobs. Sometimes a great deal of money and intellectual property is at stake. When Paul English, an entrepreneur,...Continue reading
  • Pension bonds are an ingenious idea for providing retirement income
    WHEN people stop working, they need a retirement income. Some are lucky enough to have an employer-provided pension linked to their salary. Everyone else faces a difficult choice.Some keep their pension pot in cash and watch as it is eroded by inflation. Others use savings products with high fees and risk being hurt by a stockmarket downturn. A third option is an annuity, which guarantees a lifelong income but vanishes at death, even if that is a week after retirement.Lionel Martellini of EDHEC, a French business school, and Robert Merton of the Massachusetts Institute of Technology (a Nobel laureate in economics) have come up with an alternative. Workers would buy government-issued bonds while in employment; these would pay no interest until retirement. Over the next 20 years (the typical life expectancy on retirement) bondholders would receive payments comprising interest plus the return of the capital. These would be linked to inflation, or another measure such as average...Continue reading
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