CFA Economics

Challenges in Data Forecasting

Problems encountered in producing forecasts are (1) limitations to using economic data, (2) data measurement error and bias, (3) limitations of historical estimates, (4) the use of ex-post risk and return measures, (5) non-repeating data patterns, (6) failing to account for conditioning information, (7) misinterpreting of correlations, (8) psychological bias, and (9) model uncertainty Data … Read more

CFA Economics

Framework for Developing Capital Market Expectations

Cross-sectional consistency refers to consistency across asset classes regarding portfolio risk and return characteristics. Intertemporal consistency refers to consistency over various investment horizons regarding portfolio decisions over time The following is a framework for a disciplined approach to setting CME. Specify the set of expectations needed, including the time horizon(s) to which they apply.  Research the historical … Read more

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Week in Review 6/12/2020

S & P 500 saw a pretty dramatic reversal on Thursday, though it bounced off the 3000 price level Friday. Similar story across global equity indices. US CPI flattened out in May, potentially marking an end to deflation concerns. US Initial Claims at 1.5 million, bringing total unemployed to 44 million even as reopening continues. … Read more

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Week in Review 4/24/20

Equity markets not moved much on week, as economic releases are relatively on par with expectations. Risk seems to settle on current levels. US to begin moving towards a reopening in May. Headlines to start the week were on certain oil contracts closing negative before rolling. Opec prices dipped below $15 a barrel on the … Read more

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Week in Review 4/3/20

Equities leveled out or dropped this week. OAS recovery slows as COVID responses shift up another gear in US and Europe. Agricultural commodities hit new lows, cattle futures hitting limit downs as trade downturn continues pricing in.

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Week in Review 3/27/20

Markets continue to settle. Global equity saw growth for most of the week with momentum dying on Friday close. Credit spreads tighten, but remain at high levels. Dollar experiences continued decline after a strong first half of march. Commodities continue rebound as well, with Wheat futures breaking January highs. Oil drops below $30 a barrel … Read more

CFA Economics

Module 12.3 LOS 12.i: Classical growth theory, neoclassical growth theory and endogenous growth theory

Classical Growth Theory Based on the concept of a mean-reverting subsistence level, this theory from Malthusian economics contends that there is no such thing as permanent growth in real GDP. When GDP per capita rises about subsistence levels, an ensuing population explosion will create lead to diminishing returns on labor and productivity until GDP falls … Read more