The Banking and Strategy Initiative

Chillin' out till it needs to be funded

It’s Monday Again: A few new names for the Nobel, Fama, Hansen and Shiller make it for empirical asset prices( The week ahead: October 14 – October 18, 2013 – US Economy & Markets)

For those not from the subject area of Finance, would be thus glad to know that Fama has been pricing Bonds and all Financial assets. His key ones  on SSRN for a quick dive being on Interest rates. Otherwise, he has in the early history of post war markets been a peer of Black, Scholes and Merton, making defining contributions as Fama and French(3 Factor Model, Cross sectional returns) , Fama and Bliss (Interest rates, Forwards)  and with Fisher and Jensen on the Information impact on stock prices.  Eugene Fama is currently working at Booth School of Business with the U of Chicago. To be technical, the last team in 1969 were the first to introduce the study of event based statistics.

Shiller is of course a known name from the Case Shiller Index and is at Yale. Lars Peter Hansen is with the Department of Economics at the U of Chicago where Fabrice Tourre s also enrolled for Doctoral work. Hansen’s work has recently covered the impact of CRA delays in rating Structured Finance RMBS/ABS mortgage debt tranches and the frequent downgrades post WAMU and Lehman failures in 2008 and 2009

The Laureates have laid the foundation for the current understanding of asset prices. It relies in part on fluctuations in risk and risk attitudes, and in part on behavioral biases and market frictions(marketwatch.com)

Back in the Markets, banks continue to report tomorrow, Citi expected to post $1.09, and Bank of America (US: BAC) likely to report 23 cents on Wednesday with US Bank(US:USB) 76 cents while Goldman Sachs closes out the big bang first week of Financials results with $2.44 per share estimated currently and we’d say more expected to create the uptrend in Financials with an outperformance of more than $3.2 per share instead. Citi and BAC may well follow the other mortgage settlement hit banks into a depression as Trading income dwindled further. JP Morgan meanwhile is expected to complete 11000 Job cuts in consumer banking this year.

The Job cut count in the US has hit 75,000 again as September saw a big jump in the Job cuts  report with Wells Fargo, Amex, Boeing and IBM

Bernanke does speak this evening at an 8 pm engagement but is unlikely to give away the Tapering calendar as the week is mostly about global inflation data and the Empire State Manufacturin index appears on Tuesday with the Redbook release for the Same store sales data before the holiday rush. Dudley and Fisher also speak at various engagements

Jobless claims data is expected to had up again and the Phils Index strikes just after Goldman Sachs reports on Thursday and is followed by the Chinese GDP first thing in the Asian morning on Friday. Fidelity sold into the US Treasuries (short) as its money market fund that controls $400 Bln in the $3 Tln money fund market also decided to follow other money funds and close its exposure with the Debt ceiling issue unlikely to see faster traction or close.

The Housing Index reports mid week will be much awaited for confirmation of the slowdown not impacting housing more adversely than expected from the refi bomb

English: Goldman Sachs Tower, Jersey City, New...

English: Goldman Sachs Tower, Jersey City, New Jersey (Photo credit: Wikipedia)

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