Economics for financial markets

목차 (Table of Contents)

• CONTENTS
• PREFACE = xi
• 1. WHAT DO YOU NEED TO KNOW ABOUT MACROECONOMICS TO MAKE SENSE OF FINANCIAL MARKET VOLATILITY? = 1
• The big picture = 2
• Financial markets and the economy = 5
• Gross national product and gross domestic product = 8
• Monetarism and financial markets = 8
• The quantity theory of money - the basis of monetarism = 9
• How money affects the economy - the transmission mechanism = 12
• The modern quantity theory - modern monetarism = 15
• Monetarism and Federal Reserve operating targets from 1970 to the present = 18
• The Non-Accelerating Inflation Rate of Unemployment(NAIRU) = 28
• 2. THE TIME VALUE OF MONEY : THE KEY TO THE VALUATION OF FINANCIAL MARKETS = 33
• Future values - compounding = 33
• Present values - discounting = 34
• Bond and stock valuation = 36
• Simple interest and compound interest = 41
• Nominal and effective rates of interest = 45
• 3. THE TERM STRUCTURE OF INTEREST RATES AND FINANCIAL MARKETS = 47
• Functions of interest rates = 47
• Determination of interest rates, demand and supply of funds = 48
• International factors affecting interest rates = 53
• Price and yield - a key relationship = 54
• The term structure of interest rates = 56
• Determination of forward interest rates = 58
• The yield curve = 59
• Unbiased expectations theory = 59
• Liquidity preference theory = 62
• The market segmentation theory = 66
• The preferred habitat theory = 66
• 4. HOW CAN INVESTORS FORECAST THE BEHAVIOUR OF FINANCIAL MARKETS? THE ROLE OF BUSINESS CYCLES = 71
• The cyclical behaviour of economic variables : direction and timing = 75
• The stages of the business cycle = 76
• The role of inventories in recessions = 81
• The business cycle and monetary policy = 82
• How does monetary policy affect the economy? = 83
• Fundamental analysis, the business cycle, and financial markets = 85
• The NBER and business cycles = 87
• How do you identify a recession? = 90
• The American business cycle : the historical record = 91
• The Non-Accelerating Inflation Rate of Unemployment(NAIRU) - a new target for the Federal Reserve = 95
• What is the future of the business cycle? = 100
• 5. WHICH US ECONOMIC INDICATORS REALLY MOVE THE FINANCIAL MARKETS? = 103
• Gross national product and gross domestic product = 103
• GDP deflator = 105
• Producer price index(PPI) = 107
• The index of industrial production = 109
• Capacity utilization rate = 110
• Commodity prices = 111
• Crude oil prices = 111
• Food prices = 113
• Commodity price indicators : a checklist = 114
• Consumer price index(CPI) = 116
• Average hourly earnings = 118
• The employment cost index(ECI) = 119
• Index of leading indicators(LEI) = 121
• Vendor deliveries index = 123
• 6. CONSUMER EXPENDITURE, INVESTMENT, GOVERNMENT SPENDING AND FOREIGN TRADE : THE BIG PICTURE = 125
• Car sales = 126
• The employment report = 128
• The quit rate = 132
• Retail sales = 133
• Personal income and consumer expenditure = 135
• Consumer instalment credit = 137
• Investment spending, government spending and foreign trade = 138
• Residential fixed investment = 140
• Non-residential fixed investment = 143
• Inventory investment = 146
• Government spending and taxation = 148
• Budget deficits and financial markets = 153
• Foreign trade = 156
• 7. SO HOW DO CONSUMER CONFIDENCE AND CONSUMER SENTIMENT INDICATORS HELP IN INTERPRETING FINANCIAL MARKET VOLATILITY? = 159
• Michigan index of consumer sentiment(ICS) = 160
• Conference board consumer confidence index = 161
• National association of purchasing managers index(NAPM) = 164
• Business outlook survey of the Philadelphia Federal Reserve = 168
• Help-wanted advertising index = 169
• Sindlinger household liquidity index = 171
• 8. THE GLOBAL FOREIGN EXCHANGE RATE SYSTEM AND THE 'EUROIZATION' OF THE CURRENCY MARKETS = 174
• What is the ideal exchange rate system that a country should adopt? = 174
• Dollarization and the choice of an exchange rate regime = 179
• Why do currencies face speculative attacks? = 182
• The IMF exchange rate arrangements = 185
• What is the current worldwide exchange rate system? (October 2001) = 187
• The 'Euroization' of the foreign exchange market = 193
• The European Exchange Rate Mechanism : ERM Ⅱ = 194
• 9. WHY ARE EXCHANGE RATES SO VOLATILE? THE FUNDAMENTAL AND THE ASSET MARKET APPROACH = 203
• Exchange rate determination over the long term : the fundamental approach = 203
• Determination of exchange rates in the short run : the asset market approach = 210
• Why do exchange rates change? = 215
• Why are exchange rates so volatile? = 219
• 10. HOW CAN INVESTORS PREDICT THE DIRECTION OF US INTEREST RATES? WHAT DO 'FED WATCHERS' WATCH? = 222
• Rule 1 : remember the central role of nominal／real GDP quarterly growth = 222
• Rule 2 : track the yield curve if you want to predict business cycle turning points = 225
• Rule 3 : watch what the Fed watches - not what you think it should watch = 229
• Rule 4 : keep an eye on the 3-month euro-dollar futures contract = 231
• Rule 5 : use Taylor's rule as a guide to changes in Federal Reserve policy = 232
• Rule 6 : pay attention to what the Federal Reserve does - not what it says = 234
• Rule 7 : view potential Federal Reserve policy shifts as a reaction to, rather than a cause of, undesired economic／monetary conditions = 234
• Rule 8 : remember that ultimately the Federal Reserve is a creature of Congress = 235
• Rule 9 : follow the trends in FOMC directives : how to interpret Fed speak? = 236
• Rule 10 : fears of inflation provoke faster changes in monetary policy than do fears of unemployment = 238
• 11. DERIVATIVES : WHAT DO YOU NEED TO KNOW ABOUT ECONOMICS TO UNDERSTAND THEIR ROLE IN FINANCIAL MARKETS? = 240
• What are derivatives? = 240
• Where did derivatives come from? = 241
• Some terminology = 241
• What is an option? = 242
• Exchange-traded versus over-the-counter(OTC) options = 244
• Where do option prices come from? = 245
• Arbitrage = 245
• Probability distributions = 248
• Who are the market participants in the derivatives market? = 251
• The arbitrageur's role and the pricing of futures markets = 253
• What are the factors influencing the price of futures? = 254
• Futures pricing = 255
• What is basis? = 257
• Spot versus forward arbitrage = 258
• What are forward market contracts? = 259
• What are futures contracts? = 260
• How are options priced? = 262
• The binomial model = 263
• What determines the value of call options? = 267
• What is the profit profile for a call option? = 270
• Put options = 272
• What are the determinants of the value of a call option? = 275
• Black-Scholes model = 278
• 12. THE NEW ECONOMIC PARADIGM : HOW DOES IT AFFECT THE VALUATION OF FINANCIAL MARKETS? = 281
• The new economy defined = 281
• So what is the new economic paradigm? = 288
• The triangle model = 291
• The new paradigm and the price earnings ratio = 293
• 13. BUBBLEOLOGY AND FINANCIAL MARKETS = 296
• Introduction = 296
• The bubble terminology = 297
• The role of expectations in analysing bubbles = 298
• Bubbles and the formation of expectations = 299
• Bubbles and the efficient market hypothesis = 300
• Rational bubbles = 302
• Some bubbles in history = 304
• Speculative bubbles theory = 309
• Rational speculative bubbles = 311
• The 'bubble premium' = 312
• APPENDIX A. Diffusion indexes : their construction and interpretation = 315
• APPENDIX B. The construction and interpretation of price indices = 318
• APPENDIX C. Title, announcement time, and reporting entities for macroeconomic announcements = 323
• APPENDIX D. Consumer and business confidence surveys = 324
• APPENDIX E. Useful web addresses = 326
• BIBLIOGRAPHY = 335
• INDEX = 345