Large and regular seasonal price fluctuations in local grain markets appear to offer African farmers substantial inter-temporal arbitrage opportunities, but these opportunities remain largely unexploited: small-scale farmers are commonly observed to "sell low and buy high" rather than the reverse. In a field experiment in Kenya, we show that credit market imperfections limit farmers' abilities to move grain inter-temporally. Providing timely access to credit allows farmers to buy at lower prices and sell at higher prices, increasing farm revenues and generating a return on investment of 28%. To understand general equilibrium effects of these changes in behavior, we vary the density of loan offers across locations. We document significant effects of the credit intervention on seasonal price fluctuations in local grain markets, and show that these GE effects shape individual level profitability estimates. In contrast to existing experimental work, the results indicate a setting in which microcredit can improve firm profitability, and suggest that GE effects can substantially shape microcredit's effectiveness. In particular, failure to consider these GE effects could lead to underestimates of the social welfare benefits of microcredit interventions.
Sell Low and Buy High: Arbitrage and Local Price Effects in Kenyan Markets -- by Marshall Burke, Lauren Falcao Bergquist, Edward Miguel
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How the Reformulation of OxyContin Ignited the Heroin Epidemic -- by William N. Evans, Ethan Lieber, Patrick Power
We attribute the recent quadrupling of heroin death rates to the August, 2010 reformulation of an oft-abused prescription opioid, OxyContin. The new abuse-deterrent formulation led many consumers to substitute to an inexpensive alternative, heroin. Using structural break techniques and variation in substitution risk, we find that opioid consumption stops rising in August, 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas with greater pre-reformulation access to heroin and opioids. The reformulation did not generate a reduction in combined heroin and opioid mortality--each prevented opioid death was replaced with a heroin death.
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Financial Development, Growth, and Crisis: Is There a Trade-Off? -- by Norman Loayza, Amine Ouazad, Romain Ranciere
This paper reviews the evolving literature that links financial development, financial crises, and economic growth in the past 20 years. The initial disconnect--with one literature focusing on the effect of financial deepening on long-run growth and another studying its impact on volatility and crisis--has given way to a more nuanced approach that analyzes the two phenomena in an integrated framework. The main finding of this literature is that financial deepening leads to a trade-off between higher economic growth and higher crisis risk; and its main conclusion is that, for at least middle-income countries, the positive growth effects outweigh the negative crisis risk impact. This balanced view has been revisited recently for advanced economies, where an emerging and controversial literature supports the notion of "too much finance," suggesting that there might be a threshold beyond which financial depth becomes detrimental for economic growth by crowding out other productive activities and misallocating resources. Nevertheless, the growth/crisis trade-off is alive and strong for a large share of the world economy. Recognizing the intrinsic trade-offs of financial development can provide a useful framework to design policies targeting financial deepening, diversity, and inclusion. In particular, acknowledging the trade-offs can highlight the need for complementary policies to mitigate the risks, from financial macroprudential policies to monetary policy frameworks that monitor the growth of credit and asset prices.
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BME Supports The Caracas Stock Exchange In Its Trading Platform Upgrade
The Caracas Stock Exchange has successfully launched a new version of the SMART-SIBE trading platform, developed by BME and in production since 1999.
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TMX Group Equity Financing Statistics – March 2018
TMX Group today announced its financing activity on Toronto Stock Exchange and TSX Venture Exchange for March 2018.
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tZERO Unveils Security Token Trading Software
tZERO, the blockchain-meets-Wall-Street subsidiary of Overstock.com, Inc. (NASDAQ:OSTK), announces the highly-anticipated prototype of its planned security token trading software. The demo link displays a video demonstrating how security tokens may be traded on this platform.
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Normal Tax Rules Apply to Crypto Income, Says South Africa
The South African Revenue Service has clarified its stance on the treatment of cryptocurrency tax, saying current rules suffice.
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$1 Billion Blockchain Fund Launches with Chinese Government Backing
China now has a new blockchain fund with $1.6 billion available â 30 percent of that backed by the Hangzhou city government.
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Dear Students, Everything In Bitcoin's Way Is Your $1 Billion Opportunity
Blockchain luminaries descended on the University of Pennsylvania's business school in what seemed like a recruiting session for the crypto-ecosystem.
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CESC Announces Key Findings Of Belt And Road Research Reports And Introduces CES Belt And Road Index
China Exchanges Services Company Limited (CESC) today (Monday) hosted a media conference and investment forum where it announced the key findings of its Report on Participation in Belt and Road Initiative by Listed Companies Tradable under Stock Connect (the Report) and the CES Belt and Road Index (CES OBOR), an index designed to reflect the stock price performance of listed companies actively participating in the Belt and Road Initiative.
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B3 And BYMA Enter Into Groundbreaking Agreement In Latin America
B3 and BYMA (Bolsas y Mercados Argentinos) have signed a joint agreement for B3 to provide technology services to BYMA. Through the agreement, Argentina’s leading stock exchange will enter the derivatives markets using B3’s consolidated PUMA Trading System platform.
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Passive Aggressive Investing
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| Matterhorn Disaster by Doré |
Not quite: Doing nothing doesn't mean your not doing something. Because while you are sitting on your hands, things are happening around you, and your investment portfolio is changing. The reason is that you are in an index that is market capitalization weighted. The bigger the company, the more of it you are holding. This means you are going to hold more in industries and sectors that by nature have big companies. So more in big banks and insurance companies than in specialty retailers and restaurant chains. And, more important for the point I am focused on in this post, increasingly more in companies that are doing well, that is, companies that have rising market capitalization. And on the flip side, you are effectively selling off stocks that are not doing so well.
If Apple is worth five times as much as XYZ, then hold five times as much in Apple as in XYZ. And if Apple moves up to be worth ten times as much, hold ten times as much. This is what will happen with what appears to be a buy-and-hold, passive, do nothing portfolio.
This is a big concern now because of the run-up in the FAANG (Facebook, Apple, Amazon, Netflix, Google) and related stocks. They have taken a large share of market capitalization as they have risen in value, and there is a momentum dynamic to be unleashed if they start to drop. This has happened time and again when cap weighting has led to extremes in the share of total market capitalization claimed by a popular sector. Consumer discretionary grew to 22% of the index in 1972; Oil 30% in 1980; TMT 34% in 2000; Banking 23% in 2007. In each case it finally got out of hand and dropped back to its earlier level and dropped the market as well. The odds are it will happen with FAANG as well.
Of course, the market cap does to rise by magic. Each time investors find a reason for the sector gobbling up the market. With TMT it was that the old methods like P/E were no longer relevant. So I don't get much comfort in the justifications for the domination this time around of the FAANG and related stock.
This is bad, for both you and for the market generally. And it is bad because you will not see any indication that it actually is bad.
First off, you get more an more concentrated. Which means less and less diversified. You end up concentrated in whatever is hot at the time. And in industries that, just by their nature, tend to be larger and to have more concentrated stocks. It used to oil, then banks, not FAANG and related stocks.
It is bad for the markets because you might be doing nothing, but the effect is to pile on. If someone comes into the market, they are really stocking up on Apple, so, guess what. Apple really goes up.
If you are in cap weighted passive, you have a factor bet without realizing it. Because you are following a cap-weighted index and are also measuring yourself against that index, the factor bet looks like "no harm done." It looks like you are simply moving with the market, the end objective of a passive position.
An alternative that has taken hold is to hold stocks based on some other factor that market cap. The problem is that any rule that is based on some factor is going to have the problem that you are still making a bet. What you want to hold is a portfolio where you can pick any factor -- P/E, capitalization, momentum, any "smart beta" factor of your choosing -- and fail to find any relationship between that and your portfolio return.
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Blockchain Startup Symbiont Teams with Wall Street Legend Ranieri
The firm founded by the "father" of mortgage-backed securities has partnered with blockchain startup Symbiont to shake up the mortgage industry.
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Relief Rally Ahead? Oversold Ether Eyes Gains Against Bitcoin
With a relief rally in the offing, ether could outperform bitcoin in the short-run, according to ETH/BTC technical charts.
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Salesforce Working on Blockchain Product, Says CEO Benioff
Salesforce is working on a product based on blockchain and cryptocurrency, the cloud computing company's CEO has revealed.
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US Treasury Calls For Large Position Reports
The U.S. Department of the Treasury is calling for Large Position Reports from those entities whose positions in the 2-1/4% Treasury Notes of November 2027 equaled or exceeded $4.58 billion as of close of business Monday, January 15, 2018. Entities with positions in this note equal to or exceeding the $4.58 billion threshold must report these positions to the Federal Reserve Bank of New York. Entities with positions in this note below $4.58 billion are not required to file Large Position Reports.
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Moscow Exchange: Risk Parameters Change On Securities Market
CCP NCC is changing IM rates on Securities market starting from April 10, 2018 for the following shares
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Numerix Video Blog | MiFID II and Real-Time Tech Fortify Electronic Trading
We examine the role that MiFID and new technologies are playing in generating a measurable rise in electronic trading and the factors that impact market makers.
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Weekly Top 5 Papers – April 9, 2018
1. The 2018 Revealed-Preferences Ranking of Law Schools by CJ Ryan (Vanderbilt University, Peabody College) and Brian L. Frye (University of Kentucky – College of Law)
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Brown Rudnick Alert: OFAC Blocks Russian “Oligarchs” And Companies With Implications For U.S. Activities
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More Pages to Explore .....
