Financial Markets Functioning Well in a Pandemic

Promoting the relevance of academic research in the design, implementation, and evaluation of financial market regulation. Through events, analysis, and commentary, the program on financial markets regulation aims to elevate the role evidence-based decision making in the policy development process. Bringing the rigor of peer-reviewed research to decision-makers can mitigate the bias and conflicts that underlie many proposed regulatory actions, and lead to more balanced consideration of competing interests and perspectives among financial market participants. To achieve this, each initiative is focused on raising awareness of where evidence in support of financial market policy is needed, promoting regulator engagement with academic experts, and creating incentives for academics to apply their expertise to policy issues by measuring the relevance of their contributions to regulatory outcomes.Five reasons to be cautiously optimistic about their continued resiliency NCAA officials did their part in addressing COVID-19 fears, but cancelling the 64-team tournament didn't extinguish March Madness. It is alive and well in financial markets. Each day delivers upsets and unexpected developments, leaving commentators struggling to keep up with their recycled vocabularies. Superficial headlines abound. Markets reel. Stocks plunge. S&P gives back gains. Trillions wiped out. Investors riled. It is hard to find information of substance. Like being on the scene of a tragic accident, onlookers can't get beyond the surface images. Perhaps the most intelligent thing I've read all week came, aptly, from the WSJ's Intelligent Investor columnist Jason Zweig. He reminded his audience of enduring good advice from Warren Buffet's mentor, Benjamin Graham. [1] Buy-and-hold investors shouldn't be spooked by down markets. Sharp price declines provide an opportunity to buy wisely. And if you are trying to time the market (a.k.a., a speculator), be forewarned that in games of chance, casinos are the winners. All of this trading is great for market-makers on Wall Street. It is likely that the news driving markets could get worse as the "what-if" tree grows. The economic and social consequences of the recently announced travel ban and unprepared healthcare system is the current focus. I worry most about a potential leadership crisis. Imagine an election year where candidates face significant mortality risk. The coronavirus has shown to play favorites among the aged, which includes three presidential candidates and septuagenarian leaders of Congress. And some of them have revealed they may already be infected with hubris ... about the risks. But prospects aren't entirely bad. Financial markets have actually handled the pandemic remarkably well. As we head into a new week of market uncertainty, there are several reason to be optimistic about their continued resiliency.Salem Cente

Can Machine Learning in Finance Inform Clinical Decision Support?

Promoting the relevance of academic research in the design, implementation, and evaluation of financial market regulation. Through events, analysis, and commentary, the program on financial markets regulation aims to elevate the role evidence-based decision making in the policy development process. Bringing the rigor of peer-reviewed research to decision-makers can mitigate the bias and conflicts that underlie many proposed regulatory actions, and lead to more balanced consideration of competing interests and perspectives among financial market participants. To achieve this, each initiative is focused on raising awareness of where evidence in support of financial market policy is needed, promoting regulator engagement with academic experts, and creating incentives for academics to apply their expertise to policy issues by measuring the relevance of their contributions to regulatory outcomes.Before I dive in, I think it makes sense to start with some level setting remarks about the definition of machine learning. I gave my first machine learning talk in 2015. At that time, Wikipedia defined the term as “the study of algorithms that could learn from data.” By 2018 their posted definition was “a field in computer science that gives computers the ability to learn without being explicitly programmed.” As of this week, Wikipedia says it is the “study of algorithms and statistical models that computer systems use to perform a specific task without using explicit instructions, relying on patterns and inference instead.” So, when we talk about regulating the use machine learning, we need to first recognize that it is a bit of an elusive concept. The semantics have changed over time, and I suspect they will continue to do so. This can be a challenge to a regulator seeking to draw bright lines around practices that use it.Salem Cente

More Americans Than Ever Are Driving Cutting Edge Technology

Promoting the relevance of academic research in the design, implementation, and evaluation of financial market regulation. Through events, analysis, and commentary, the program on financial markets regulation aims to elevate the role evidence-based decision making in the policy development process. Bringing the rigor of peer-reviewed research to decision-makers can mitigate the bias and conflicts that underlie many proposed regulatory actions, and lead to more balanced consideration of competing interests and perspectives among financial market participants. To achieve this, each initiative is focused on raising awareness of where evidence in support of financial market policy is needed, promoting regulator engagement with academic experts, and creating incentives for academics to apply their expertise to policy issues by measuring the relevance of their contributions to regulatory outcomes.August 6, 2020 More Americans Than Ever Are Driving Cutting Edge Technology SCOTT W. BAUGUESS Finance Published on October 11, 2019 My rewrite of the WSJ article: “The Seven-Year Auto Loan: America’s Middle Class Can’t Afford its Cars.“ Financial innovation is adding fuel to an industry that keeps raising the bar for what to expect from the driving experience. Walk into an auto dealership these days and you might walk out with a seven-year car loan. Unlike the time it takes to digest chewing gum, seven years isn’t a myth. An increasing number of car buyers are electing to extend their payments. About a third of auto loans for new vehicles taken in the first half of 2019 had terms of longer than six years, according to credit-reporting firm Experian PLC. A decade ago, that number was less than 10%. The Wall Street Journal recently published an article titled: “The Seven-Year Auto Loan: America’s Middle Class Can’t Afford Its Cars.” I tweeted that the same set of facts could have supported a more positive story. Here is my suggested rewrite. In many places, I preserve the authors’ original language. Read and compare. The availability of inexpensive debt on increasingly generous terms is supporting auto industry sales and profits. For consumers, it’s become a crutch to support their expectations. This is enabling more Americans than ever before to drive cutting edge technology. But not everyone views this as a positive development. Some suggest this is a pronounced sign that American middle class buyers can’t afford a middle-class lifestyle. This view is based on the perception that incomes have risen at a sluggish pace in the past decade, while car prices have grown rapidly. Costly new technological and safety features, such as lane assist and larger and more sophisticated multimedia displays, are making their way to even the most basic cars. U.S. consumers have also veered toward pricier rides such as sport-utility vehicles that tend to dominate auto showrooms. The result? Consumers are seeking bigger loans than ever to purchase a car. And the only way they can afford them is to stretch out the payments.Salem Cente

Why is CATS Essential to Securities Law Enforcement?

Dr. Bauguess, who currently serves as the Deputy Director of the U.S. Securities and Exchange Commission Division of Economic and Risk Analysis and Deputy Director of the Office of Risk Assessment, discussed the importance of the Computerized Audit Trail System, CATS at the SEC