In “Among the Bankers: A Journey into the Heart of Finance,” Dutch journalist Joris Luyendijk delves into the intricate psyche of bankers, questioning how they come to terms with the destruction their industry has caused. Originally released overseas as “Swimming with Sharks,” this book reveals not only the technical workings of a notoriously secretive industry but also the ethical and emotional dilemmas faced by its participants. Luyendijk, a seasoned reporter for The Guardian with a background in anthropology, repeatedly poses a compelling question: how do bankers reconcile their conscience with the consequences of their actions? To address this, he conducted hundreds of interviews with various professionals from the City, London’s financial hub.
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Volatility Managed Portfolios
Alan Moreira and Tyler Muir (Yale University)
June 18, 2016
Research indicates that managed portfolios that reduce risk during periods of high volatility can yield significant returns, enhancing factor Sharpe ratios and generating substantial utility gains for mean-variance investors. This holds true across various factors including market, value, momentum, profitability, return on equity, in equities, and even the currency carry trade. Timing volatility enhances Sharpe ratios because fluctuations in factor volatilities are not entirely countered by proportional shifts in expected returns. Our approach challenges the conventional belief that one must take on greater risk to achieve high average returns, particularly during economic downturns and crises.
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Recent observations indicate an upward trend in correlations among different asset classes, a development that has raised concerns among market analysts.
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Utilizing historical comparisons of the current yield curve reveals varying interpretations. Over the past 30 trading days, the curve has shown relative stability, while evaluations over longer durations hint at a gradual flattening.
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While projections for U.S. economic growth in the third quarter have been slightly reduced recently, most analysts anticipate a robust rebound. If these forecasts hold true, the economy is set to show its strongest growth in two years, as reported by the Bureau of Economic Analysis in next month’s “advance” report for Q3 GDP.
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All major asset classes recorded gains in the past week, based on a review of various ETF proxies. The bullish investor sentiment, bolstered by the Federal Reserve’s recent decision to forgo an interest-rate hike, resulted in price increases during the five trading days leading up to Friday, September 23.
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● The Wealth of Humans: Work, Power, and Status in the Twenty-first Century
By Ryan Avent
Summary via publisher (St. Martin’s Press)
For the first time, we are experiencing a true industrial revolution, one powered by digital technology that is reshaping every facet of the economy. In “The Wealth of Humans,” Ryan Avent, editor at The Economist, explores cutting-edge research addressing a crucial question: can our modern society navigate the monumental technological changes that are transforming the economic landscape similarly to those seen in the 19th century?
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According to Morningstar, attempts to manage volatility within a multi-asset class framework often yield inconsistent outcomes across publicly traded funds. A recent analysis of 60 funds labeled “multi-asset volatility-protection funds” highlights that while these funds do provide some refuge during negative equity market conditions, the added cost and complexity might not be justified. As outlined by Morningstar, a simple blended index comprising 40% equities and 60% bonds can often outperform these complex funds in managing downside risk during declines in the S&P 500.
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In August, the U.S. economic output remained stable but below the trend rate, as indicated by the latest update to the three-month average of the Chicago Fed National Activity Index (CFNAI-MA3). The index recorded a slight improvement to -0.07, the highest reading since September 2015, reflecting modest economic activity that aligns with recent data trends.
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The Federal Reserve opted to maintain interest rates in its recent decision. Chair Janet Yellen emphasized that this choice does not suggest a diminished confidence in the economy. “Our decision does not reflect a lack of confidence in the economy,” she stated in a press conference on Wednesday. Yellen characterized economic growth as persisting at a “moderate pace.” However, the Treasury market appears skeptical, possibly due to the Fed’s economic forecasts being adjusted downwards compared to previous projections in June.
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These articles provide a fascinating insight into the current economic landscape. From the psychological aspects of banking to trends in volatility and asset performance, they highlight the complexities and dynamics of modern finance. Understanding these topics is crucial for anyone interested in navigating the ever-evolving world of investments and economic trends.
