Question

For our discussion/participation this week, each student should locate a current article on a topic related to the economics of information.  Possible topics include risk (consumer, firm or market) and uncertainty, auctions, and other information related topics.  The article should be no more than one year old and should be from a reputable source.  

Answer 1

Here we look at the forces causing volatility on Wall Street.

Firstly, 3 years’ worth of interest rate raises by the Fed are ultimately beginning to pinch interest-rate-sensitive segments, mainly housing, the automobile industry & firms with hefty debt loads. After years in which the country has become greatly tilted toward sectors which depend upon low rates of interest, a possibly agonizing rebalancing is underway.

Secondly, investors fret that the trade war between the U.S & China could begin to pinch business earnings & economic activity greater than it has to date. However, that conflict has been developing throughout 2018.

Thirdly, the taxation cut which has lifted business earnings & economic growth in 2018 will not be repeated in 2019, implying a harder slog for firms seeking greater profits.