The influence of social - New views from the 2014 IBM Global Telecommunications Consumer Survey

The key findings from our most recent global telecommunications consumer survey can be summed up in two words: Social disruption. The study clearly validates the population of social networking, instant messaging, microblogs, Internet video and other over-the-top (OTT) communication applications. In addition, it underscores the challenges new conversation channels create for communication service providers (CSPs).

However, it also reveals important information about consumers’ spending priorities, how they make provider-related decisions, their loyalty triggers and more. CSPs can use this information to drive brand passion and develop new strategies for top-notch customer service – including more self-service options. In addition, CSPs can take advantage of consumers’ willingness to collaborate on product and service improvements – and use the rising popularity of social media to do so.

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Are Household Investors Noise Traders: Evidence from Belief Dispersion and Stock Trading Volume

A new paper from researchers at the Federal Reserve shows that retail investors—in America, at any rate—are a lot smarter than the professionals imagine. In fact, they have a bigger effect on the markets than the highly paid investment strategists of Wall Street.

Much of the economic literature assumes that ordinary investors are “noise” traders who deal at random. They trade too often, it is thought, and are susceptible to behavioural biases such as over-optimism and loss-aversion.

Strikingly, the researchers find that the views of retail investors show a sharp rise in dispersion just before recessions, whereas the views of professional forecasters do not diverge until the tail end of recessions. In other words, the amateurs are better at forecasting downturns than the experts.
This may be because the consumer surveys interview people with a wide range of backgrounds and from many different locations, whereas investment strategists are a tightly knit group, and may accordingly suffer from a herd mentality.

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MGI Report: Global flows in a digital age: How trade, finance, people, and data connect the world economy

Today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.

MGI  scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.

The study finds that countries with a larger number of connections in the global network of flows increase their GDP growth by up to 40 percent more than less connected countries do. The penalty for being left behind is rising.

MGI’s new Connectedness Index ranks 131 countries on total flows of goods, services, finance, people, and data and communication, adjusting for country size. The index shows that developed economies remain more connected than emerging ones: Germany tops the list, followed by Hong Kong and the United States. Emerging economies are less connected to global flows, but some are climbing up the ranks rapidly: Morocco and Mauritius gained 26 places and 28 places, respectively, between 1995 and 2012—the largest increases in our index. Saudi Arabia rose 19 places, reflecting the rising value of oil exports and the recycling of oil wealth into global financial markets. India gained 16 places in this period, thanks to growth in services flows, and Brazil jumped 15 on the strength of expanding services and financial flows.

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Aspects of Macroeconomic Policy Combinations and Their Effects on Financial Markets

Abstract

This paper analyses the implications of macroeconomic policy interactions for financial stability, proxied by financial assets prices (equity and bonds). The empirical analysis applies a Vector Autoregressive (VAR) model and findings suggest that an accommodating monetary, and disciplined fiscal, stance has
been optimal for both stock and bond markets. There is also ample evidence of interdependence between policies, as an expansionary fiscal policy could persuade the monetary authorities to adopt an accommodating stance, whereas a contractionary monetary policy leads fiscal policy towards consolidation. The interrelation between monetary and fiscal policy necessitates coordination between them for the sake of financial stability.

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