Two Trees: Asset Price Dynamics Induced by Market Clearing

If stocks go up, investors may want to rebalance their portfolios. But investors cannot all rebalance. Expected returns may need to change so that the average investor is still happy to hold the market portfolio despite its changed composition. In this way, simple market clearing can give rise to complex asset market dynamics. We study this phenomenon in a very simple model. Our model has two Lucas trees.' Each tree has i.i.d.dividend growth, and the representative investor has log utility. We are able to give analytical solutions to the model. Despite this simple setup, price-dividend ratios, expected returns, and return variances vary through time. A dividend shock leads to underreaction' in some states, as expected returns rise and prices slowly adjust, and overreaction' in others. Expected returns and excess returns are predictable by price-dividend ratios in the time series and in the cross section, roughly matching value effects and return forecasting regressions. Returns generally display positive serial correlation and negative cross-serial correlation, leading to 'momentuem,' but the opposite signs are possible as well. A shock to one asset's dividend a.ects the price and expected return of the other asset, leading to substantial correlation of returns even when there is no correlation of cash flows and giving the appearance of contagion.' Market clearing allows the inverse portfolio' problem to be solved, in which the weights of the assets in the market portfolio are inverted' to solve for the parameters of the assets' return generating process.

Default Risk and Equity Returns: A Comparison of the Bank-Based German and the U.S. Financial System

In this paper, we address the question whether the impact of default risk on equity returns depends on the financial system firms operate in. Using an implementation of Merton's option-pricing model for the value of equity to estimate firms' default risk, we construct a factor that measures the excess return of firms with low default risk over firms with high default risk. We then compare results from asset pricing tests for the German and the U.S. stock markets. Since Germany is the prime example of a bank-based financial system, where debt is supposedly a major instrument of corporate governance, we expect that a systematic default risk effect on equity returns should be more pronounced for German rather than U.S. firms. Our evidence suggests that a higher firm default risk systematically leads to lower returns in both capital markets. This contradicts some previous results for the U.S. by Vassalou/Xing (2004), but we show that their default risk factor looses its explanatory power if one includes a default risk factor measured as a factor mimicking portfolio. It further turns out that the composition of corporate debt affects equity returns in Germany. Firms' default risk sensitivities are attenuated the more a firm depends on bank debt financing

Oral rehydration versus intravenous therapy for treating dehydration due to gastroenteritis in children: a meta-analysis of randomised controlled trials

BACKGROUND: Despite treatment recommendations from various organizations, oral rehydration therapy (ORT) continues to be underused, particularly by physicians in high-income countries. We conducted a systematic review of randomised controlled trials (RCTs) to compare ORT and intravenous therapy (IVT) for the treatment of dehydration secondary to acute gastroenteritis in children. METHODS: RCTs were identified through MEDLINE, EMBASE, CENTRAL, authors and references of included trials, pharmaceutical companies, and relevant organizations. Screening and inclusion were performed independently by two reviewers in order to identify randomised or quasi-randomised controlled trials comparing ORT and IVT in children with acute diarrhea and dehydration. Two reviewers independently assessed study quality using the Jadad scale and allocation concealment. Data were extracted by one reviewer and checked by a second. The primary outcome measure was failure of rehydration. We analyzed data using standard meta-analytic techniques. RESULTS: The quality of the 14 included trials ranged from 0 to 3 (Jadad score); allocation concealment was unclear in all but one study. Using a random effects model, there was no significant difference in treatment failures (risk difference [RD] 3%; 95% confidence intervals [CI]: 0, 6). The Mantel-Haenzsel fixed effects model gave a significant difference between treatment groups (RD 4%; 95% CI: 2, 5) favoring IVT. Based on the four studies that reported deaths, there were six in the IVT groups and two in ORT. There were no significant differences in total fluid intake at six and 24 hours, weight gain, duration of diarrhea, or hypo/hypernatremia. Length of stay was significantly shorter for the ORT group (weighted mean difference [WMD] -1.2 days; 95% CI: -2.4,-0.02). Phlebitis occurred significantly more often with IVT (number needed to treat [NNT] 33; 95% CI: 25,100); paralytic ileus occurred more often with ORT (NNT 33; 95% CI: 20,100). These results may not be generalizable to children with persistent vomiting. CONCLUSION: There were no clinically important differences between ORT and IVT in terms of efficacy and safety. For every 25 children (95% CI: 20, 50) treated with ORT, one would fail and require IVT. The results support existing practice guidelines recommending ORT as the first course of treatment in appropriate children with dehydration secondary to gastroenteritis

Association of Accelerometry-Measured Physical Activity and Cardiovascular Events in Mobility-Limited Older Adults: The LIFE (Lifestyle Interventions and Independence for Elders) Study.

BACKGROUND:Data are sparse regarding the value of physical activity (PA) surveillance among older adults-particularly among those with mobility limitations. The objective of this study was to examine longitudinal associations between objectively measured daily PA and the incidence of cardiovascular events among older adults in the LIFE (Lifestyle Interventions and Independence for Elders) study. METHODS AND RESULTS:Cardiovascular events were adjudicated based on medical records review, and cardiovascular risk factors were controlled for in the analysis. Home-based activity data were collected by hip-worn accelerometers at baseline and at 6, 12, and 24 months postrandomization to either a physical activity or health education intervention. LIFE study participants (n=1590; age 78.9±5.2 [SD] years; 67.2% women) at baseline had an 11% lower incidence of experiencing a subsequent cardiovascular event per 500 steps taken per day based on activity data (hazard ratio, 0.89; 95% confidence interval, 0.84-0.96; P=0.001). At baseline, every 30 minutes spent performing activities ≥500 counts per minute (hazard ratio, 0.75; confidence interval, 0.65-0.89 [P=0.001]) were also associated with a lower incidence of cardiovascular events. Throughout follow-up (6, 12, and 24 months), both the number of steps per day (per 500 steps; hazard ratio, 0.90, confidence interval, 0.85-0.96 [P=0.001]) and duration of activity ≥500 counts per minute (per 30 minutes; hazard ratio, 0.76; confidence interval, 0.63-0.90 [P=0.002]) were significantly associated with lower cardiovascular event rates. CONCLUSIONS:Objective measurements of physical activity via accelerometry were associated with cardiovascular events among older adults with limited mobility (summary score >10 on the Short Physical Performance Battery) both using baseline and longitudinal data. CLINICAL TRIAL REGISTRATION:URL: http://www.clinicaltrials.gov. Unique identifier: NCT01072500

Temporal stability of multitrigger and episodic viral wheeze in early childhood

The distinction between episodic viral wheeze (EVW) and multitrigger wheeze (MTW) is used to guide management of preschool wheeze. It has been questioned whether these phenotypes are stable over time. We examined the temporal stability of MTW and EVW in two large population-based cohorts.We classified children from the Avon Longitudinal Study of Parents and Children (n=10 970) and the Leicester Respiratory Cohorts ((LRCs), n=3263) into EVW, MTW and no wheeze at ages 2, 4 and 6 years based on parent-reported symptoms. Using multinomial regression, we estimated relative risk ratios for EVW and MTW at follow-up (no wheeze as reference category) with and without adjusting for wheeze severity.Although large proportions of children with EVW and MTW became asymptomatic, those that continued to wheeze showed a tendency to remain in the same phenotype: among children with MTW at 4 years in the LRCs, the adjusted relative risk ratio was 15.6 (95% CI 8.3-29.2) for MTW (stable phenotype) compared to 7.0 (95% CI 2.6-18.9) for EVW (phenotype switching) at 6 years. The tendency to persist was weaker for EVW and from 2-4 years. Results were similar across cohorts.This suggests that MTW, and to a lesser extent EVW, tend to persist regardless of wheeze severity

Adding a polyphenol-rich fiber bundle to food impacts the gastrointestinal microbiome and metabolome in dogs

IntroductionPet foods fortified with fermentable fibers are often indicated for dogs with gastrointestinal conditions to improve gut health through the production of beneficial post-biotics by the pet's microbiome.MethodsTo evaluate the therapeutic underpinnings of pre-biotic fiber enrichment, we compared the fecal microbiome, the fecal metabolome, and the serum metabolome of 39 adult dogs with well-managed chronic gastroenteritis/enteritis (CGE) and healthy matched controls. The foods tested included a test food (TF1) containing a novel pre-biotic fiber bundle, a control food (CF) lacking the fiber bundle, and a commercially available therapeutic food (TF2) indicated for managing fiber-responsive conditions. In this crossover study, all dogs consumed CF for a 4-week wash-in period, were randomized to either TF1 or TF2 and fed for 4 weeks, were fed CF for a 4-week washout period, and then received the other test food for 4 weeks.ResultsMeaningful differences were not observed between the healthy and CGE dogs in response to the pre-biotic fiber bundle relative to CF. Both TF1 and TF2 improved stool scores compared to CF. TF1-fed dogs showed reduced body weight and fecal ash content compared to either CF or TF2, while stools of TF2-fed dogs showed higher pH and lower moisture content vs. TF1. TF1 consumption also resulted in unique fecal and systemic metabolic signatures compared to CF and TF2. TF1-fed dogs showed suppressed signals of fecal bacterial putrefactive metabolism compared to either CF or TF2 and increased saccharolytic signatures compared to TF2. A functional analysis of fecal tryptophan metabolism indicated reductions in fecal kynurenine and indole pathway metabolites with TF1. Among the three foods, TF1 uniquely increased fecal polyphenols and the resulting post-biotics. Compared to CF, consumption of TF1 largely reduced fecal levels of endocannabinoid-like metabolites and sphingolipids while increasing both fecal and circulating polyunsaturated fatty acid profiles, suggesting that TF1 may have modulated gastrointestinal inflammation and motility. Stools of TF1-fed dogs showed reductions in phospholipid profiles, suggesting fiber-dependent changes to colonic mucosal structure.DiscussionThese findings indicate that the use of a specific pre-biotic fiber bundle may be beneficial in healthy dogs and in dogs with CGE