DERIVATIVES LEVERAGE RISK Archives - Capital Market Journal

Why Can't the Fed Control Inflation Anymore? The Shocking Flatness of the Phillips Curve.

MUST WATCH VIDEO FOR ANYBODY
"We're living in a new economic paradigm where the old rules no longer apply. The Fed is flying partially blind, and understanding this flat Phillips Curve ...is key to understanding everything from your paycheck to your portfolio."
Why has the Federal Reserve struggled to control inflation in the 21st century? The answer lies in the shocking breakdown of one of economics' most fundamental relationships: the Phillips Curve.

In this data-driven analysis, I use sophisticated economic models and New Keynesian Phillips Curve to reveal why traditional inflation control methods have failed.

🔍 KEY FINDINGS:
• The Phillips Curve is FLATTER than ever (κ = 0.001-0.0447)
• The Fed SECRETLY ignores unemployment in policy decisions
• Hours and wages are the true labor market "shock absorbers"
• Current Fed policy shows extreme gradualism (98% interest rate smoothing)

📊 METHODOLOGY CHAPTERS:
00:01:00 INTRODUCTION, TECHNOLOGY, A.I. AUTOMATION AND LABOUR MARKETS (WHO WILL PAY INCOME TAX?)
00:10:00 INITIAL PHILLIPS CURVE LINEAR REGRESSION FINDINGS. UNEMPLOYMENT & INFLATION
00:20:00 POTENTIAL INFLATIONARY EFFECTS OF TARIFFS
00:30:00 NEW KEYNSIAN PHILLIPS CURVE AND DSGE MODELS, PARAMETERS AND MONETARY POLICY REACTION FUNCTION
00:53:00 M2 MONEY SUPPLY, CREDIT SPREAD AND UNEMPLOYMENT RATE
01:00:00 ROLLING CORRELATION FACTORS
01:14:00 OLS REGRESSION CONFIRMS INFLATION DYNAMICS DEPEND ON LAGGED INFLATION AND INFLATION EXPECTATIONS, LESS ON UNEMPLOYMENT
01:24:00 MORE INFLATION FORECAST WITH DYNAMIC FRAMEWORK
01:32:00 VECM MODEL UNCOVERS THE PARTICULAR FEATURES OF THE LABOUR MARKET DYNAMICS
01:55:00 APPLYING OUR FINDINGS INTO THE TAYLOR FORMULA, 2.3% or 3.1% ?
WHY CORPORATE BOND INVESTMENT GRADE YIELD DEFINES THE EFFECTIVE NEUTRAL LEVEL OF INTEREST RATE IN THE ECONOMY

This isn't just theoretical - these findings explain real-world phenomena like the "missing inflation" of the 2010s and the inflation surge of 2021-2022.

#FederalReserve #Inflation #PhillipsCurve #MonetaryPolicy #Economics
#DSGE #VARModel #VECM #EconomicModeling #Econometrics
#CentralBanking #JeromePowell #InterestRates #MacroPolicy
#Unemployment #EconomicAnalysis #Macroeconomics #EconomicData
#Inflation2024 #EconomicOutlook #Recession #SoftLanding
#FederalReserve #Inflation #PhillipsCurve #MonetaryPolicy #Economics
#CentralBanking #InterestRates #Macroeconomics
#EconomicData #Unemployment #EconomicAnalysis

#οικονομικά
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Why Can't the Fed Control Inflation Anymore? The Shocking Flatness of the Phillips Curve.

MUST WATCH ...

The Ultimate Portfolio Hedge? I Did Backtest Gold & Sector ETFs to Find Out #gold

I spent weeks ...

I spent weeks backtesting 20 years of data (2005-2025) on 35 major sector ETFs and Gold (using the spot price and GLD ETF) to find out once and for all: ...Does adding gold actually improve your risk-adjusted returns, or does it just drag down your performance?
📊 What You'll Learn in This Video:
00:00:02
The session introduces a detailed exploration of various ETFs popular among retail investors, including the S&P 500, TLT, GLD, and QQQ. It covers extensive data analysis on these ETFs alongside time series data for major economic sectors, with a focus on revealing interesting findings related to gold and sector investments.
00:01:11
Gold Price Rally
The significant rally in gold prices has raised eyebrows, with major investment banks predicting targets as high as $4,000 to $4,600 per ounce. This video serves solely for educational purposes, emphasizing the importance of conducting personal research and consulting with financial advisors before making any investment decisions.
00:01:55
ETF Performance Analysis
The analysis highlights that the QQQ ETF has shown the highest cumulative returns, while the TLT ETF, representing long-duration treasury bonds, has lagged due to rising interest rates. Gold has emerged as a strong performer, suggesting potential as a hedge against market liquidity distress and inflation, especially in a low liquidity environment where it can also yield positive returns.
00:04:39
Correlation with Gold
Gold displays an inverse correlation with the S&P 500, indicating that when stock prices decline, gold often appreciates, making it a potential protective asset during market sell-offs. Analysis of various ETFs reveals that while tech sector ETFs like QQQ and XLK are highly correlated with the market, gold maintains a neutral beta with attractive returns and lower volatility compared to these tech funds. Furthermore, the challenges facing long-duration bonds highlight the shifting dynamics of investment preferences amidst macroeconomic uncertainties.
00:28:16
Market Liquidity and Gold
Market liquidity, often measured through bond ETFs or the S&P 500, shows an inverse correlation with gold prices, suggesting that gold can act as a refuge during liquidity stress in the stock market. Historical data reveals that gold has provided positive returns in such times and has outperformed the S&P 500 about 50% of the time, reinforcing its value as a hedging asset against market volatility. Analysis also illustrates that while gold experiences more positive returns when market liquidity contracts, it can also face sell-offs under extreme liquidity crunches.
01:24:13
Portfolio Construction Strategies
Various portfolio structures, including equal weight, tangency, risk parity, minimum variance, and max diversification, were analyzed using 35 ETFs, demonstrating that diversification typically yields better returns, averaging 10.3%, while the minimum variance portfolio performed the worst at about 4%. The tangency portfolio achieved the optimal Sharpe ratio, utilizing a simpler selection of just five ETFs, while the max diversification portfolio was noted for its lack of true diversity. Overall, effective portfolio construction seems to require careful analysis and advice from a financial expert.
01:27:32
Exploring various portfolio strategies, the discussion emphasizes the importance of risk-adjusted returns, particularly highlighting the tangency portfolio and the risk parity portfolio as optimal choices. The analysis incorporates multifactor models and demonstrates how dynamic allocation can enhance performance compared to traditional static strategies. Ultimately, portfolios that adjust for beta tend to yield superior expected returns, emphasizing the need for a nuanced approach to asset allocation.

⚠️ Disclaimer: I am not a financial advisor. This video is for educational and entertainment purposes only. All investing involves risk. Please do your own research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
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#οικονομικά #stockmarket #οικονομικά #Gold #Investing #etf #portfolio #hedges #backtest #riskmanagement #goldetf #gld #diversification #StockMarket #Finance #PersonalFinance #InvestingStrategy #SafeHaven #Volatility #Drawdown #SharpeRatio #SectorInvesting #vgt #xle #growthvsvalue #VGT #GLD #investing #stockmarket #goldinvestment #investingsecrets #wealthpreservation #sharperatio #volatility #gold #portfolio #institutionalinvesting #riskadjustedreturns #etf #portfolio #assetallocation
#portfolio #hedge #assetallocation #gold #beta #riskmanagement #investingstrategy #MPT #goldbug #rationalinvestingShow More

Liquidity Illusion: Systemic Risk, Securitization, and the Shadow Banking Leverage. Quantitative Analysis (1Q-2025)

May 25, 2025 capitalmarketsjournal

This comprehensive analysis examines the paradoxical relationship between apparent market liquidity and underlying systemic risk in the U.S. financial system…

DERIVATIVES LEVERAGE RISK EQUITIES MARKET RISK Fat Tail Risk FINANCIAL RISK MARKET RISKS STOCK MARKET BUBBLE STOCK MARKET CORRECTION Stock Market Crash STOCK PRICE CORRECTION STOCK PRICE OVERVALUATION SYSTEMIC RISK VOLATILITY AND MARKET RISKS

PALANTIR STOCK VOLATILITY: A CANARY IN THE COAL MINE FOR TECH STOCK BUBBLE AND MARKET CORRECTION ?

Feb 24, 2025 capitalmarketsjournal

Palantir Technologies (PLTR) has been one of the most volatile stocks in the technology sector, with its valuation soaring amid…

DERIVATIVES LEVERAGE RISK ECONOMETRICS RESEARCH EQUITIES MARKET RISK GARCH MODELS RESEARCH PAPER RISK MANAGEMENT STOCK MARKET BUBBLE SYSTEMIC RISK VaR Forecasting VOLATILITY AND MARKET RISKS Working Paper

Q1 2025 Seasonal Volatility and Stock Market Correction: A Forecasting Analysis

Feb 24, 2025 capitalmarketsjournal

The first quarter of 2025 may bring increased stock market volatility, potentially leading to a market correction. A detailed analysis…

ASSETS PRICES HYPERINFLATION Assets Returns DERIVATIVES EXPOSURE DERIVATIVES LEVERAGE RISK DERIVATIVES MARKET ECONOMETRICS RESEARCH STOCK MARKET BUBBLE STOCK MARKET CORRECTION Stock Market Crash STOCK PRICE CORRECTION STOCK PRICE OVERVALUATION SYSTEMIC RISK TIMESERIES VOLATILITY Uncategorized Volatility VOLATILITY AND MARKET RISKS

Mastering Stock Markets: Insights from ETF and SPX Volatility Analysis with GARCH-EVT

Feb 18, 2025 capitalmarketsjournal

https://www.youtube.com/watch?v=2iq9stdldh8&list=PL819paOyj_dpoe9Y2pQiooOUa2BSinFB5 https://www.youtube.com/watch?v=2iq9stdldh8&list=PL819paOyj_dpoe9Y2pQiooOUa2BSinFB5

DERIVATIVES LEVERAGE RISK FINANCIAL DERIVATIVES FINANCIAL STABILITY RISK LIQUIDITY RISK

Financial Derivatives and Their Risks for Financial and Economic Stability

Mar 18, 2024 capitalmarketsjournal

Financial derivatives have revolutionized modern finance by providing tools for risk management, speculation, and investment. However, their widespread use also…

Why Can't the Fed Control Inflation Anymore? The Shocking Flatness of the Phillips Curve.

Liquidity Illusion: Systemic Risk, Securitization, and the Shadow Banking Leverage. Quantitative Analysis (1Q-2025)

PALANTIR STOCK VOLATILITY: A CANARY IN THE COAL MINE FOR TECH STOCK BUBBLE AND MARKET CORRECTION ?

Q1 2025 Seasonal Volatility and Stock Market Correction: A Forecasting Analysis

Mastering Stock Markets: Insights from ETF and SPX Volatility Analysis with GARCH-EVT

Financial Derivatives and Their Risks for Financial and Economic Stability

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