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Showing posts from February, 2016

Labor Market: Indicators to Monitor Its Health

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As noted in [7], there is a very strong correlation between bank tightening , particularly at the small firm level, and employment . The percent of banks tightening on loans to small businesses leads nonfarm payrolls by about 6 months and suggests unemployment levels will be picking up in the coming months. In this article, we will discuss different ways of monitoring labor market's health . Recession Recession was one of the most frequent media topics in the past months, with some sources even choosing "looming" as part of the description. [12-17] Recession happens typically after a period of: Over-investment Tight labor conditions Labor market usually peaks 7 months in advance of a recession Tight central bank monetary policies Significant capacity constraints [8] The Federal Reserve monitors capacity constraints because they indicate where supply bottlenecks are developing and inflation is beginning to simmer In the last recession, the Nati...

Technical Indicator: A Case Study Using William %R

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In his video starting at 7 min mark , Chris Ciovacco uses William %R to interpret the  overbought and oversold situation of NASDAQ index (i.e. $COMPQ). In this article, we will learn more about the current stock market using the William %R indicator. [1,2] Interpretation of William %R Developed by Larry Williams , Williams %R is a momentum indicator that is the inverse of the Fast Stochastic Oscillator .  As with the Stochastic Oscillator , Williams %R reflects the level of the close relative to the high-low range over a given period of time (or look-back period ). Overbought/Oversold As a bound oscillator , Williams %R makes it easy to identify overbought and oversold levels. The oscillator ranges from 0 to -100. No matter how fast a security advances or declines, Williams %R will always fluctuate within this range. Traditional settings use -20 as the overbought threshold and -80 as the oversold threshold . These levels can be adjusted to suit analytical...

Conflicts of Interest: Who's Talking the Book?

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Billionaire investor George Soros comments on China's economic downturn during an interview [1] with Bloomberg's Francine Lacqua at the World Economic Forum in Davos . On 01/26/2016, China was reported to have “warned” hedge fund legend George Soros to “back off.” Chinese state media has stepped up a salvo of biting commentaries against  George Soros and other currency traders as the yuan comes under pressure, with the billionaire investor accused of “declaring war” on the unit. What is interesting about China’s public warning regarding attacking their currency is not only the history – Soros is a legend for “breaking the Bank of England” and making millions betting against the British pound – but also the fact Soros didn’t exactly recommend shorting China. In fact, his trade recommendation was to short U.S. stocks! Did Soros talk his book while he commented about China's hard landing at Davos? [1]  We may not find out the truth until some time later. ...