AI and Geoeconomics

The graph below is automatically updated on a daily basis using Google Spreadsheet combine with Google Finance API #FinTech - Access File  here Fed Rate Hike Not Seen Til 2016, Cheap Money Fueling Stocks - April 18th, 2015 Equity-bonds correlation has move up from -70% on Feb 5th, 2015 to -17% this week. Increasing likelihood  of a rate hike by the Fed this year but also uncertainties about inflation may explain this rapid variation. #GoldmanSachs : "We do not have much confidence in the inflation outlook"  http://ow.ly/LMlUg #inflation #uncertainty High valuations represent a risk both on Equity and Bonds - April 5th, 2015 “We believe that the biggest risk is valuation risk : the risk of loss that is realized when expensive assets revert to fair value. This risk is critically important today as we believe stocks and bonds are expensive globally,” Catherine LeGraw, a member of GMO’s asset allocation team, wrote in a recent white paper . Are y...

Myron Gordon at the University of Toronto in 1982 For the last 13 years and until recently (see Bonds/Equity Positive Correlation: For How Long ?) correlation between US stock and bond returns have been negative. As presented by Hasseltoft (2009) , the correlation between US stock and bond returns has varied substantially over time (puzzle 1), reaching highly positive levels in the late 1970s and early 1980s while turning negative in the late 1990s.   US strock and bond returns correlation  Henrik Hasseltoft 2010 Several statistical models have been put forward to model the time variation but little work has been done on explaining the phenomenon within an equilibrium model. A second feature (puzzle 2) of data that has been considered puzzling is the highly positive correlation between US dividend yields and nominal interest rates , a relation often referred to as the Fed-model . From the Gordon (1962) growth formula, dividend yields are given by the real...

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