Ranking the Fed Doves & Hawks | Yellen to Martin FOMCs by Linus Wilson

This video ranks the Federal Reserves based on the tenure of their chairs from William McChesney Martin, Jr. to Janet L. Yellen, using data from 1958 through 2018.

This reading of “A Dove to Hawk Ranking of the Martin to Yellen Federal Reserves” by Linus Wilson.

Inflation “doves” are willing to tolerate more inflation than inflation “hawks.” Comparing the Taylor (1993) rule and core inflation to the effective fed funds rates, it is found that the Yellen Fed is the most dovish Fed since 1958.

The tenures of the following Federal Reserve (FOMC) Fed Open Market Committees are analyzed based on core inflation (CPI-U) without food or energy prices, unemployment, fed funds rates and the Taylor rule:
Janet L. Yellen
Ben S. Bernanke
Arthur F. Burns
G. William Miller
William McChesney Martin, Jr.
Alan Greenspan
Paul A. Volcker

The paper quotes or cites some of the speeches of Janet Yellen.

It was written by Linus Wilson, Associate Professor of Finance at the University of Louisiana at Lafayette. The views expressed are his alone.

The Yellen Fed is found to be the most dovish in history based on its setting of short-term interest rates relative to inflation. This paper looks at the interest rate setting policy of the Federal Reserve going back to the chairmanship of William McChesney Martin, Jr. and ending with the Janet Yellen’s tenure as chair. The Yellen Fed lacked a recession or banking crisis that may have justified the negative real interest rate policy of the Bernanke Fed. For its four years, the Yellen Fed succeeded in having falling unemployment and low inflation with negative real interest rates.

The link to get the paper is below:
Wilson, Linus, A Dove to Hawk Ranking of the Martin to Yellen Federal Reserves Available at SSRN: https://ssrn.com/abstract=2529195 or http://dx.doi.org/10.2139/ssrn.2529195

The views expressed are of Linus Wilson alone.
Music by http://www.BenSound.com
Public domain photos of the Fed chairs from the U.S. Federal Reserve.
(c) 2018, Linus WilsonDoveThumb1280by720

Advertisements

Find the Cost of DEBT with free FINRA data

In this video, Professor Linus Wilson calculates the weighted average cost of debt using FINRA data. Calculating the cost of debt is important for corporations making capital budgeting decisions as a key component of the company cost of capital as measured by the Weighted Average Cost of Capital (WACC). Finding a company’s cost of debt is important for business valuation.

FINRA stands for the Financial Industry Regulatory Authority.

https://fnan.podbean.com/
https://itunes.apple.com/us/podcast/the-finance-professor-podcast/id1226939293?mt=2
https://www.stitcher.com/podcast/linus-wilson/the-finance-professor-podcast
http://www.linuswilson.com
http://www.financeprofessor.org

Music by http://www.BenSound.com

We mentioned chapter 14 (Cost of Capital) in

Stephen A. Ross, Randolph W. Westerfield, and Bradford D. Jordan, 2013, Fundamentals of Corporate Finance: Alternate Edition, 10th ed., New York: McGraw-Hill Irwin, (ISBN: 978-0-07-747945-9).

This video does not represent the views of the University of Louisiana at Lafayette, FINRA, or the authors of Fundamentals of Corporate Finance. This is not investment advice.

Take the 25-mile “Caravan” Challenge

I don’t understand the hype and fear associated with the “Caravan” of Hondurans walking over 1,000 miles across Mexico. I am still fascinated by it as an endurance challenge. I believe every American would change their life (for the better) if they would try to live one part of one day in these refugees footsteps. The CNN report that I watched said they were going to walk 25-miles that day with over 1,000 miles to go to the USA border. (They had 40 more days of walking ahead!)

This is my proposal as a 3-time marathon (26.2 mile) finisher and one-time marathon failure. This is my proposal as someone who has sailed his boat at an average speed of less than 5 mph over twenty percent of the earth’s circumference. This is my proposal as one who has read the stories of Pacific Crest Trail (PCT) and Appalacian Trail through hikers and the ones who could not complete those challenges:

Walk for 25-miles in one day.

Take your money, cell phone, water, and any other modern convenience that you have, walk on the sidewalks of your home town or its parks. Walk in a straight line or in a loop. Stop for meals and drinks, but try to walk the distance. Perhaps you will cover 2, 8, 10, 20, 25, 26.2, or 30 miles before succumbing to tiredness or injury. Then, get a ride to your comfortable climate controlled bed (which the Honduran walkers lack) and see if you don’t admire them. After walking 25-miles in one day, see if you don’t believe they are superheroes on par with Rocketman or Wolverine in the comic books.IMG_2351

The author hiking in the island of Ua Pou, Marquesas, French Polynesia in June 2017.
https://youtu.be/A-yZNMWFqvM

The Fed Bailout of CMBS: Toxic Asset Subsidies & the Early Redemption of TALF Loans | MEA Conference

Nonrecourse loans can lead to option payoffs for the borrower. The securitzation market got a boost from the Federal Reserve during the financial crisis. Dr. Linus Wilson, Associate Professor of Finance at the University of Louisiana at Lafayette presents and reads his working paper:

 

“Toxic Asset Subsidies and the Early Redemption of TALF Loans”
at
https://ssrn.com/abstract=1742640

Abstract
This paper develops a formula to numerically estimate the unsubsidized, fair-market value of the toxic assets purchased with Federal Reserve loans.  It finds that subsidy rates on these loans were on average 33.9 percent at origination.  In contrast, by the 3rd quarter of the 2010, there was on average no subsidy in TALF loans.  The theoretical model is used to predict the early redemption of Term Asset-Backed Securities Loan Facility (TALF) loans used to purchase commercial mortgage backed securities (CMBS).  The predictions of the model are strongly supported by the data.  In addition, this paper looks at the determinants of early redemption.  CMBS originated inside the peak bubble years of 2005-2007 were much less likely to be redeemed early.  The giant investment managers, Blackrock and PIMCO, were much more likely to redeem their TALF loans early than smaller investment managers.

Journal of Economic Literature Codes:  G12, G13, G18, G21, G28, G38

Keywords:  alternative investments; bailout; banking; Blackrock; call options; commercial mortgage backed securities; CMBS; CDOs; Dodd-Frank Financial Reform Law of 2010; emergency lending; EESA; Emergency Economic Stabilization Act; lending; Legacy Securities Program; mortgages; PIMCO; Public-Private Investment Partnership; PPIP; put options; TALF; Term Asset-Backed Securities Loan; TARP; Troubled Asset Relief Program; toxic assets

Come and see Dr. Wilson present the paper at the 2018 Midwest Economics Association meeting on March 24, 2018.

The MEA conference in at the Hilton Orrington in Evanston, Illinois.

http://mea.grinnell.edu/conferences

This paper was read on the Finance Professor Podcast episode 8 which is at

https://fnan.podbean.com/
https://itunes.apple.com/us/podcast/the-finance-professor-podcast/id1226939293?mt=2
https://www.stitcher.com/podcast/linus-wilson/the-finance-professor-podcast

Music by http://www.BenSound.com

This paper does not represent the views of the University of Louisiana at Lafayette or the Midwest Economics Association.

ToxicThumb1280by720

 

 

Will “rock star” academics’ video lectures replace live professors?

Distance learning begs the question of whether technology will lead to a great consolidation of the academic ranks as recorded lectures of “rock star” academics displace your local in-person lecturer. My little experiment leads me to think that there is no replacing an in-person lecture. If students’ learning is a priority, make them come to class and don’t assume a video lecture is a substitute.

Class cancellations in the spring 2018 term due to an ice storm meant that one more lecture of my international finance class was cancelled in section 2 versus section 1. This meant that I could record the section 1 lecture on Thursday and post a recording of it before the next Tuesday’s class in section 2. My university allows up to 49% of lectures in non-distance learning classes to be virtual. Up until this time, I had conducted 100% of my lectures as live with no video recording at the University of Louisiana at Lafayette.

I told my section 2 class that they were required to view the video all the way through and take notes from a link that I posted on the class-management, Moodle page only accessible to students. The video was made unlisted so that it did not show up in search and suggested features in YouTube. That link was clicked 31 times out of a class of 35 students. Some students likely clicked the link multiple times, and several did not bother to click it at all. The average watch time on the 75 minute video was 10 minutes or about 13%. Compare that to a typical lecture leading up to the virtual where 31 out of 35 students attend and are in their seats for over 95% of the lecture. Obviously, the in-person lecture is going to lead to better learning outcomes.

It did seem to on the test. I curved the video lecture’s test based on their lower scores so the curved results in the video lecture section and the regular lecture sections curved scores are similar. The raw, uncurved average in the video lecture section was 66% and was 74%. The raw medians in the video and in-person lecture section was 69% and 75% respectively. There were 5 lectures covering the test in question. For the video section, 4-out-of-5 lectures were in-person lectures. For the other section, 5-out-of-5 lectures were in-person. There is every indication that, if I held more video lectures, the video section’s scores would have been abysmal. I do give different test questions in each section and some of the variation in test scores could reflect the different questions, but the question topics were almost identical. The question topics should be entirely predictable to a student taking notes in the lectures.

I used 3 cameras and edited the video with screen shots of the lecture slides at various points in addition to my working out examples on the board. Nevertheless, I did not edit our the normal pauses mid-lecture that an in-person student would have sat through. For fun, I have an entertainment oriented channel with over 4,000 subscribers on YouTube. Its typically, 15 minute videos with a very focused niche audience only average 50% audience retention. Longer videos typically have lower percentages viewed.

50% audience retention will lead to failing grades in education. That is why in-person lectures and in-person education will dominate video lectures. Since academic “rock stars” can record videos but cannot appear in-person to thousands of sections across thousands of universities, the local professor or lecturer will be much more effective in educating students than on-demand, video education.

Social pressure keeps most students from walking out mid-lecture. There is no such social pressure when it comes to watching a video. Other parts of the live experience may also facilitate learning in ways we don’t understand. There is no way that every lecture can be as entertaining multi-million dollar budget Hollywood blockbuster. That is why video education will fail, and in-person education is here to stay.

Ep. 8 of the Finance Professor Podcast: The Fed Boosts CMBS Markets “Toxic Asset Subsidies and the Early Redemption of TALF Loans” by Linus Wilson

In this episode you will hear how nonrecourse loans can lead to option payoffs for the borrower. The securitzation market got a boost from the Federal Reserve during the financial crisis. Dr. Linus Wilson, Associate Professor of Finance at the University of Louisiana at Lafayette reads his working paper

Toxic Asset Subsidies and the Early Redemption of TALF Loans

https://ssrn.com/abstract=1742640

Abstract

This paper develops a formula to numerically estimate the unsubsidized, fair-market value of the toxic assets purchased with Federal Reserve loans.  It finds that subsidy rates on these loans were on average 33.9 percent at origination.  In contrast, by the 3rd quarter of the 2010, there was on average no subsidy in TALF loans.  The theoretical model is used to predict the early redemption of Term Asset-Backed Securities Loan Facility (TALF) loans used to purchase commercial mortgage backed securities (CMBS).  The predictions of the model are strongly supported by the data.  In addition, this paper looks at the determinants of early redemption.  CMBS originated inside the peak bubble years of 2005-2007 were much less likely to be redeemed early.  The giant investment managers, Blackrock and PIMCO, were much more likely to redeem their TALF loans early than smaller investment managers.

Journal of Economic Literature Codes:  G12, G13, G18, G21, G28, G38

Keywords:  alternative investments; bailout; banking; Blackrock; call options; commercial mortgage backed securities; CMBS; CDOs; Dodd-Frank Financial Reform Law of 2010; emergency lending; EESA; Emergency Economic Stabilization Act; lending; Legacy Securities Program; mortgages; PIMCO; Public-Private Investment Partnership; PPIP; put options; TALF; Term Asset-Backed Securities Loan; TARP; Troubled Asset Relief Program; toxic assets

Come and see Dr. Wilson present the paper at the 2018 Midwest Economics Association meeting on March 24, 2018, at 1:15PM in session 7E Credit.

The MEA conference in at the Hilton Orrington in Evanston, Illinois.

http://mea.grinnell.edu/conferences

Check out the video presentation of the episode 6 podcast guest:

on the Linus Wilson YouTube channel:

https://www.youtube.com/channel/UCYY02-A8UQ6307k8PPDj5hQ

Professor Andrew Metrick is the Michael H. Jordan Professor of Finance and Management at the Yale School of Management. He is the director, Yale Program on Financial Stability and the Faculty Director, Masters in Systemic Risk program at Yale.

Like the Finance Professor Podcast’s Facebook page to see any Facebook live versions of MEA conference presentations.

https://www.facebook.com/FinanceProfessorOrg/

 

Secrets of Channel Authority in the YouTube Algorithm Revealed

You will unlock the secret of how CHANNEL AUTHORITY is defined in the YouTube Search and Discovery Algorithm in this video. Using official YouTube sources, Linus Wilson speculates that YouTube looks at watch time (the last 28 and 365 days) and subscribers to determine channel authority and how many people see a video in the first 24 hour or week. The YouTube Creator academy defined channel authority as w

Small YouTubers have been dealt a death blow by the January 16, 2018, announcement that they will need at least 1,000 subscribers and 4,000 hours of watch time before they will ever see a dime in AdSense revenue. This is a HUGE change to the YouTube Partner Program (YPP). Most creators never reach 1,000 subscribers. Thus, most will never see ads again after the new policy comes into effect on February 20, 2018. My study of over 400 sailing vloggers found most of these active video creators never broke 1,000 subscribers.
See my video about my study entitled:

“How to Make $ on Patreon Like Sailing LaVagabonde & SV Delos: Tips, Tricks, Facts, and Advice”

My academic study with all the facts is at
https://ssrn.com/abstract=2919840

It is called:

“A Little Bit of Money Goes a Long Way: Crowdfunding on Patreon by YouTube Sailing Channels”
21 Pages Posted: 21 Feb 2017
Linus Wilson
University of Louisiana at Lafayette – College of Business Administration

Date Written: February 17, 2017

Abstract
This study finds that YouTube channels crowdfunding on Patreon have more frequent video creation. The median YouTube channel that crowdfunded on Patreon produced a video every 7.5 days compared to 105 days for the median comparable channel that did not link to Patreon. Crowdfunders have more views per video, are more likely to link to their Facebook pages, and uploaded videos more frequently. While two channels in the sample, each earned over $150,000 in 2016 from Patreon, the typical crowdfunding sailing channel earned $73 per video, per month, or creation. It appears that a little bit of money was associated with a big increase in new video production.

While most folks don’t make more than $100 getting to their first 1,000 subscribers 240,000 minutes of watch time is only achievable for low 1,000 subscriber channels that are active. Less active small channels will be kicked out of the program. Linus Wilson not only discusses the big change to YouTube monetization he reads the two blogs at the end of the video.

The YouTube blogs are:
https://youtube-creators.googleblog.com/2018/01/additional-changes-to-youtube-partner.html

Creator Blog
Additional Changes to the YouTube Partner Program (YPP) to Better Protect Creators
Tuesday, January 16, 2018
by Neal Mohan, Chief Product Officer and Robert Kyncl, Chief Business Officer

and

“A New Approach to YouTube Monetization”
Tuesday, January 16, 2018
by Paul Muret, VP, Display, Video & Analytics

https://adwords.googleblog.com/2018/01/a-new-approach-to-youtube-monetization.html

These changes make the April 2017 requirement of 10,000 views to be a new AdSense partner no longer in force. That was announced in the blog below:

https://youtube-creators.googleblog.com/2017/04/introducing-expanded-youtube-partner.html