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Data Update 3: Inflation and its Ripple Effects!

Musings on Markets

Inflation: Measurement and Determinants As the inflation debate was heating up in the middle of last year, I wrote a comprehensive post on how inflation is measured, what causes it and how it affects returns on different asset classes. Rather than repeat much of that post, let me summarize my key points.

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Market Bipolarity: Exuberance versus Exhaustion!

Musings on Markets

We started the year with significant uncertainty about whether the surge in inflation seen in 2022 would persist as well as about whether the economy was headed into a recession. The NASDAQ also gave back gains in the third quarter, but is up 27.27% for the year, but those gaudy numbers obscure a sobering reality.

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Convertible Arbitrage Hedge Funds: The Perfect Combination of Investment Banking and Sales & Trading?

Brian DeChesare

But before delving into the best candidates for these roles, typical trades, careers, and more, let’s start with the basic definitions: What is a Convertible Arbitrage Hedge Fund? If the stock price goes up or down by 10%, but the volatility stays the same, you might not earn or lose anything on the trade.

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Data Update 3 for 2023: Inflation and Interest Rates

Musings on Markets

The rise in rates transmitted to corporate bond market rates, with a concurrent rise in default spreads exacerbating the damage to investors. Download data US Treasury rates rose across all maturities, but more so at the short end of the term structure (3 months, 1 year and 2 year) than at the long end (10 year or 30 year).

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In Search of a Steady State: Inflation, Interest Rates and Value

Musings on Markets

In most time periods, those recalibrations and resets tend to be small and in both directions, resulting in the ups and downs that pass for normal volatility. Clearly, we are not in one of those time periods, as markets approach bipolar territory, with big moves up and down.

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Data Update 2 for 2023: A Rocky Year for Equities!

Musings on Markets

I will follow up by looking at the mechanics that connect stock prices to inflation, and examine why the damage from higher inflation can vary across companies and sectors. The Year in Review At the start of 2022, the S&P 500 was at 4766.18, up from 3756.07 at the start of that year. Stocks: The What?

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Data Update 2 for 2021: The Price of Risk!

Musings on Markets

In this post, I offer an alternative, albeit a more complicated, metric that I believe offers not only a more comprehensive measure of pricing, but also operates as a barometer of the ups and downs in the market. Note that nothing that I have said so far is premised on modern portfolio theory, or any academic view of risk premiums.