INFLATION EXPECTATION 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

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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

UK Inflation Outlook: Persistent Inflationary Pressures and the Narrow Path to Price Stability

Oct 22, 2025 capitalmarketsjournal

Recent data from the Office for National Statistics (ONS) indicates that UK inflation has been stubbornly persistent, with the Consumer…

INFLATION INFLATION EXPECTATION INFLATION FORECAST

Overnight Economic Data and Macro-Data of The Week

Oct 20, 2025 capitalmarketsjournal

Your Old China plates’ economy presents a mixed picture for the third quarter, characterised by robust industrial performance and steady…

ECONOMETRICS RESEARCH Economic growth ECONOMY FISCAL DEFICITS FISCAL POLICY Freedom of Expression Freedom of Thought and discussion INFLATION INFLATION EXPECTATION

Albion Economic Outlook: About the UK

Oct 16, 2025 capitalmarketsjournal

Despite modest growth, the UK economy faces a complex landscape. The International Monetary Fund (IMF) predicts the UK will be…

ECB INFLATION INFLATION EXPECTATION MACRO-ECONOMIC DATA MONETARY POLICY Uncategorized

European Inflation: A Diverging Picture Amid Broad Disinflation

Oct 15, 2025 capitalmarketsjournal

The latest batch of European macroeconomic data, culminating in the September figures from France and Spain, confirms that the continent…

FISCAL DEFICIT HIGH INFLATION INFLATION INFLATION EXPECTATION INFLATION SWAP CURVE INFLATION VOLATILITY JOBS MARKET MONETARY POLICY STAGFLATION

Has the UK Economy Broken Down? The Strange Case of Sticky Inflation and low growth

Oct 3, 2025 capitalmarketsjournal

Current Economic Framework of the UK Government Finances and Debt Inflationary Pressures and Forecasts Here is a line chart showing…

A.I. AUTOMATION GUNTHER ANDERS INFLATION INFLATION EXPECTATION LABOUR MARKET MONETARY POLICY PHILLIPS CURVE TECHNOLOGY

Impact of Technology on the Labor Market and Taxation

Oct 1, 2025 capitalmarketsjournal

The Flattening of the Phillips Curve Alternative Drivers of Inflation Macroeconomic Models and Parameters Central Bank Monetary Policy and Its…

INFLATION INFLATION EXPECTATION INFLATION FORECAST INFLATION VOLATILITY

Challenges in Modeling Tariff Pass-Through

Sep 30, 2025 capitalmarketsjournal

Here is a flowchart illustrating the direct tariff pass-through effect: Modelling Approaches and Forecasts Sector-Specific Tariff Impacts Monetary Policy Implications…

BANK OF ENGLAND CORE INFLATION CPI INFLATION CPI INFLATION EXPECTATIONS DERIVATIVES RISK GILTs Market Freeze INFLATION INFLATION EXPECTATION VOLATILITY AND MARKET RISKS

Rising Inflation in the UK: Is the BoE Losing Credibility?

Feb 21, 2025 capitalmarketsjournal

COMMODITIES PRICES ENERGY PRICES INFLATION INFLATION EXPECTATION

The Price Surge: How Commodities, Energy, and Deficits Fuel Inflation (and What You Can Do About It)

Mar 29, 2024 capitalmarketsjournal

https://www.youtube.com/watch?v=APmqaMR3UV4

INFLATION EXPECTATION MISPRICED YIELD CURVE UK GILTS YIELD CURVE UNANCHORING INFLATION EXPECTATIONS

FRONT END GILTs YIELD CURVE MISPRICED COMPARED TO 5.2% INFLATION EXPECTATIONS

May 19, 2023 capitalmarketsjournal

Inflation Expectations in the United Kingdom decreased to 5.20% in April from 5.40% in March of 2023 THE FRONT END…

INFLATION INFLATION EXPECTATION MONETARTY POLICY STAGFLATION UNANCHORING INFLATION EXPECTATIONS

What do we do with a drunken sailor?

Mar 27, 2023 capitalmarketsjournal

On this chart, UK Inflation Expectations stand at 6.1% On this chart, UK Inflation Expectations have risen to 5.6% in…

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

UK Inflation Outlook: Persistent Inflationary Pressures and the Narrow Path to Price Stability

Overnight Economic Data and Macro-Data of The Week

Albion Economic Outlook: About the UK

European Inflation: A Diverging Picture Amid Broad Disinflation

Has the UK Economy Broken Down? The Strange Case of Sticky Inflation and low growth

Impact of Technology on the Labor Market and Taxation

Challenges in Modeling Tariff Pass-Through

Rising Inflation in the UK: Is the BoE Losing Credibility?

The Price Surge: How Commodities, Energy, and Deficits Fuel Inflation (and What You Can Do About It)

FRONT END GILTs YIELD CURVE MISPRICED COMPARED TO 5.2% INFLATION EXPECTATIONS

What do we do with a drunken sailor?

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