La Jolla Economics

La Jolla Economics Macroeconomic Research Firm La Jolla Economics is a well-established and widely followed economics research and consulting firm founded by Victor Canto, Ph.D.

We combine qualitative analysis and quantitative models to offer informative economic, political, and industry research to the institutional investment community.

08/08/2013

New Report: The Carry Trade and the Financial Sector’s Profitability

Summary: A rising slope on the yield curve produces two possible profitability outcomes. If demand-driven, the rising slope is bullish, while a supply-driven increase is bearish. Given these two possibilities, investors face what economists call a signal extraction issue when observing an increase in the slope of the yield curve.

http://www.lajollaeconomics.com/reportdetail.pl?reportid=1040

08/05/2013

“The Myth of America’s Inferior Broadband” WSJ August 5th ,2013
This article makes a very important point. When the broadband provider owns the line, it has an incentive to invest in it. If you own the line you harvest the good and the bad form the line. You have every incentive to make the most of it. That is why since the elimination of the mandatory leasing arrangements to those who own the lines and the switch to a feasibilities based approach in which the companies own their own network has resulted in a tremendous improvement of the broadband service in the U.S. This point won Ronald Coase the Nobel Prize. The essence of his theory is that well defined property rights eliminate external effects. A great insight that should help explain why cable may be a good investment.

07/23/2013

In light of the recent industrial production data, we have re-estimated our model forecasts and estimated the probability of the Industrial Production Index outperforming its previous measures. We estimate the odds of the expected third quarter change in the index exceeding the previous quarter change in the index to be approximately 63.83%.

http://www.lajollaeconomics.com/reportdetail.pl?reportid=1038

07/02/2013

New Report: The LJE Asset Allocation Process: Second Quarter Performance and Third Quarter 2013 Outlook

Summary: The LJE Allocation is a two-step process. First, our quantitative model estimates the probability that one asset class will outperform another. Second, we tilt the benchmark allocation for the asset classes in direct proportion to the probability estimates.

http://www.lajollaeconomics.com/reportdetail.pl?reportid=1035

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