Briefing.com - 3:38 PM ET - 20, April 2018
Next week marks the first of three very heavy weeks of earnings reports -- roughly 1/3 of the S&P 500 will report quarterly results.Monday (April 23) Pre-Market: HAL KMB PHG FE AGR HAS LII ALK
After-Hours: GOOG AMTD AMP CSGP WHR CDNS ZION ELS SUI BRO HXL CR
Tuesday (April 24) Pre-Market: VZ KO MMM SAP LMT UTX CAT LLY NEE BIIB SHW TRV FCX PCAR GLW FITB CNC TECK WAT HBAN EDU QSR MAS
After-Hours: AMGN TXN CB COF ILMN EW EQR WYNN BXP TSS PKG WRB TER RHI
Wednesday (April 25) Pre-Market: BA UMC CMCSA TMO GD NOC ANTM BSX NSC TEL SRE SIRI TROW APH TWTR ROK DPS IR DTE HES LH CHKP CVE STM ETR NDAQ VIAB
After-Hours: FB V T PYPL QCOM LVS F EBAY AFL PSA NOW AVB ALGN ORLY XLNX BMRN EFX CTXS
Thursday (April 26) Pre-Market: RDS.A SPIL PEP ABBV AUO MO UNP UPS BMY COP TWX RTN CME ITW GM SPGI VLO PX MMC APD BAX SHPG AEP LUV FCAU RCL ALXN HLT PH XEL ZBH NEM IP AAL MGM
After-Hours: AMZN MSFT INTC SBUX SYK VRTX FTV WDC DFS DLR HIG TS MHK PFG EXPE KLAC MXIM EMN NOV RMD SIVB VRSN AEM RGA TRMB FLEX LUK FBHS FSLR SGEN MSCC NATI X PFPT LOGM CY
Friday (April 27)Pre-Market: SNE HMC XOM CVX SNY CHTR CL PSX CLS SPG D LYB MCO VFC WY COL
United States Steel Exports Report 2017, In light of Trump's policies this is relevant to understanding U.S. involvement in the steel market.
OECD Long-Term Interest Rates by Country
Buffett Partnership Letters
JPMorgan Chase Commercial Mortgage Securities SEC Filings
JPMorgan Chase SEC Filings
The IRS on IRAs
Wikipedia: Mortgage-Backed Securities
Financial Derivatives, Risk Management in Finance
Wikipedia: Credit Spread (options)
Chet Wang, Economics Blog
Approved Credit Line Providers, New York State: From Department of Financial Services
Slate on Blockchain
Simple Interest Formula
I = Prt
- P = Principal Amount
- I = Interest Amount
- r = Rate of Interest per year in decimal; r = R/100
- R = Rate of Interest per year as a percent; R = r * 100
- t = Time Periods involved
Definitions:Personal Consumption Expenditures PCE: Measures price changes of consumer goods and services.
Consumer Price Index CPI: Examination of the wighted average price of a basket of consumer goods and services. Used to assess price changes to the price of living, and used in statistics to identify periods of inflation or deflation.
Formulae:Final Return = [(Final Price - Initial Price/ Initial Price)]
Expenditure Approach to Measuring GDP:
GDP = C + I + G + Xn
Income Approach to Measuring GDP:
GDP = W + I + R + P
GDP Deflator: A price used to adjust nominal GDP to real GDP:
• Real GDP: (Nominal GDP/GDP Deflator)(100)
• GDP Growth Rate: [(Current Year's GDP - Last Year's GDP)/Last Year's GDP)(100)]
Inflation Rate Via Consumer Price Index (CPI): [This Year's CPI - Last Year's CPI)/Last Year's CPI)(100)]
Real Interest Rate = Nominal Interest Rate - Inflation Rate
Unemployment Rate = [(Number of Unemployed/Number in the Labor Force)(100)]
Money Multiplier = (1/RRR)
Quantity Theory of Money: MV = PY, Explains how changes to money supply impact price level assuming fixed levels of output and fixed velocity of money.
Spending Multiplier = (1/1-MPC) OR (1/MPS)
Tax Multiplier = MPCMPS, Tells you how much spending will result from an initial change in the level of taxation. When taxes decrease, spending increases and vis versa.
Velocity of Money: VT = (PT/M)
V T is the velocity of money for all transactions in a given time frame
P is the price level
T is the aggregate real value of transactions in a given time frame
M is the total nominal amount of money in circulation on average in the economy
Thus PT is the total nominal amount of transactions per period
Alternate Calculation: V = (PQ/M)
V is the velocity for transactions counting towards national or domestic product
PQ is nominal national or domestic product
Credo: Always be willing to question your beliefs.
· Scan your "Mental Arsenal" and make Corrections to your heuristic where necessary.
The Crisis: A Classical Financial Panic
· A financial panic occurs when providers of short-term credit (think depositors in a bank) suddenly lose confidence in the ability to repay; providers of short-term credit then quickly withdraw their funds.
Subprime Mortgage Securitization
What Goes Around Comes Around: Sectoral TrendsCyclical Industries: Profits are dependent upon economic strength of the overall market
Food Distribution & Convenience Stores
Beverages - Brewer
Beverages - Non-Alcoholic
Retail - Drugs
Non-Cyclical Industries: Also called defensive stock experience profit regardless of the economic shifts of the overall market
IS-LM Hicks-Hansen Model: Shows the relationship between interest rates (ordinate)
and assets market (also known as real output in goods and services market plus money market, as abscissa). The intersection of the "investment--saving" (IS) and "liquidity preference-money supply" (LM) curves models "general equilibrium" where supposed simultaneous equilibrium occurs in both interest and assets markets.
The Role of Monetary Policy
· Most evidence suggests otherwise:
-International comparisons: For example, the United Kingdom had a house price boom during the 2000s despite tighter monetary policy than the United States.
-Size of the bubble: Changes in mortgage rates during the boom years seemed too small to account for the magnitude of house price increases.
Berkeley: How to Build Economic Models
Elasticity of Demand Coefficient:
= (% change in quantity) / (% change in price)
Income-Elasticity of Demand: Shows sensitivity of product to changes in income:
= (% change in quantity) / (% change in income)
Price increase causes Total Revenue (TR) increase, Price decrease causes Total Revenue (TR) decrease.
Price increase causes Total Revenue (TR) decrease, Price decrease causes Total Revenue (TR) increase.
Utility Maximizing Rule:
[(MUx)/(Px)] = [(MUy)/(Py)]
Report on Predatory Lending Practices Directed at Members of the Armed Forces ans Their Dependents.
Top Notch Economics Schools and Exceptional Papers:
20 Largest Hedge Funds, US
|Rank||Fund Name||City||AUM ($millions)||Strategy|
|1||Kayne Anderson Capital Advisors||Los Angeles||19,357||Private Equity|
|2||Canyon Partners||Los Angeles||19,148||Multi Strategy|
|3||ValueAct Capital||San Francisco||17,581||Long/Short|
|4||Beach Point Capital Management||Santa Monica||13,032||Multi Strategy|
|6||Horsley Bridge Partners||San Francisco||11,172||Private Equity|
|7||Pacific Alternative Asset Management||Irvine||10,053||Fund of Funds|
|8||Rimrock Capital Management||Irvine||8,359||Commodities|
|9||Parallax Fund||San Francisco||8,310||Multi Strategy|
|10||Alder Capital||Del Mar||8,070||Managed Futures|
|11||Coast Asset Management||Santa Monica||6,930||Fund of Funds|
|12||Rockwood Capital||San Francisco||6,850||Real Estate|
|13||Tennenbaum Capital Partners||Santa Monica||6,243||Multi Strategy|
|14||Partner Fund Management||San Francisco||5,758|
|15||Empyrean Capital Partners||Los Angeles||5,054||Fixed Income|
|16||Sensato Investors||San Francisco||4,985||Long/Short|
|17||Ivory Investment Management||Los Angeles||4,388||Value|
|18||Passport Capital||San Francisco||4,295||Long/Short|
|20||Criterion Capital Management||San Francisco||3,374||Long/Short|
Financial Armageddon is near.
Commercial Mortgage Numbers
Mortgage Default Rates
XYL: Consumer Discretionary Sector Data
Finance: Beta Equations
Nominal Interest Rates: Either one of two distinct things, 1) the rate of interest before adjustment for inflation (in contrast with the real interest rate), or 2)for interest rates "as stated" without adjustment for the full effect of compounding (also referred to as the nominal annual rate). An interest rate is called nominal if the frequency of compounding (e.g. a month) is not identical to the basic time unit (normally a year). The relationship between the real interest value r, the nominal interest rate value R, and the inflation rate value i is given by: (1 + r) = (1 + R)/(1 + i), When the inflation rate i is low, the real interest rate is approximately given by the nominal interest rate minus the inflation rate, i.e., (r is approximately R - i).
Forrex Currency Correlations:
-GBP/USD (British Pound, sterling, etc...) has a negative correlation to the USD/CHF (Swiss Franc) and a positive correlation to the EURO/USD.
-Base currency is the first currency listed in the pair, the second is the quote currency. The currency pair is an indicator of the amount of the quote currency one must have to purchase one unit of the base currency.
-Purchase of pair on Forrex is simultaneously the purchase of one currency and the sale of another. You are buying the base currency with a sale of the quoted currency. -During a sale, you sell the base currency and receive the quote currency. The ask (sell price) is the amount made on dale of one unit of base.
-Major currency pairs that involve the USD but where the USD is not the base currency include EUR/USD (Euro and U.S. dollar); GBP/USD (British pound and U.S. dollar); and AUD/USD (Australian dollar and U.S. dollar).
Math for Economics:
total cost formulas, average variable, marginal cost, and more, (work out your own algebra to find alternatives):
Average Total Cost (ATC) = Total Cost / Q (Output is quantity produced or ‘Q’)Average Variable Cost (AVC) = Total Variable Cost / QAverage Fixed Cost (AFC) = ATC – AVC
Total Cost (TC) = (AVC + AFC) X Output (Which is Q)
Total Variable Cost (TVC) = AVC X Output
Total Fixed Cost (TFC) = TC – TVC
Marginal Cost (MC) = Change in Total Costs / Change in Output
Marginal Product (MP) = Change in Total Product / Change in Variable Factor
Marginal Revenue (MR) = Change in Total Revenue / Change in Q
Average Product (AP) = TP / Variable Factor
Total Revenue (TR) = Price X Quantity
Average Revenue (AR) = TR / Output
Total Product (TP) = AP X Variable Factor
Economic Profit = TR – TC > 0
A Loss = TR – TC < 0
Break Even Point = AR = ATC
Profit Maximizing Condition = MR = MC
Explicit Costs = Payments to non-owners of the firm for the resources they supply.
Discounted cash flows
The discounted cash flow formula is derived from the future value formula for calculating the time value of money and compounding returns.
Thus the discounted present value (for one cash flow in one future period) is expressed as:
- DPV is the discounted present value of the future cash flow (FV), or FV adjusted for the delay in receipt;
- FV is the nominal value of a cash flow amount in a future period;
- r is the interest rate or discount rate, which reflects the cost of tying up capital and may also allow for the risk that the payment may not be received in full;
- n is the time in years before the future cash flow occurs.
Where multiple cash flows in multiple time periods are discounted, it is necessary to sum them as follows:
for each future cash flow (FV) at any time period (t) in years from the present time, summed over all time periods. The sum can then be used as a net present value figure. If the amount to be paid at time 0 (now) for all the future cash flows is known, then that amount can be substituted for DPV and the equation can be solved for r, that is the internal rate of return.
All the above assumes that the interest rate remains constant throughout the whole period.
If the cash flow stream is assumed to continue indefinitely, the finite forecast is usually combined with the assumption of constant cash flow growth beyond the discrete projection period. The total value of such cash flow stream is the sum of the finite discounted cash flow forecast and the Terminal value (finance).
Continuous cash flows
For continuous cash flows, the summation in the above formula is replaced by an integration: