In this section the role played by the financial markets is covered. The spotlight on clients and their needs allows participants to place the markets in context.
- What are the financial markets and why do they exist?
The major players and the role of the investment banks
- Fund management industry
- Primary and Secondary Markets
Key clients within financial markets
- Institutional investors
- Private clients
- Asset managers
- Regulatory environment
Key features of each asset class are discussed along with an overview of investors for each. This session is built around a research exercise.
- Fixed income
- Credit products
- Foreign Exchange
- Exercise: Risk: Asset classes found within financial markets are discussed in terms of risk characteristics: low, medium or high
An understanding of the macroeconomic and geopolitical environment is the basis of fundamental market analysis. In this session policy decisions are discussed, along with a brief history of policy making in the UK.
- Aims of Macroeconomic Policy
- Key Economic Indicators
- Fiscal Policy
- Monetary Policy
- Economic Data
- Fundamental Research: Macro vs. Micro
- Example Macroeconomic Diary
As primary policy makers, Central Banks are crucial within the financial system. The role played by these organizations and their policy tools are discussed in this section.
- Role of Central Banks
- Money supply
- Central Bank Policy tools
- Spotlight on Quantitative Easing
- Case study: Where are we now?
Long term trends are the backdrop to both macroeconomic performance and the development of policy decisions.
In this section the link between the macroeconomy and securities markets is made using a business cycle-based investment model.
- Macroeconomic measures throughout the cycle
Understanding where we are in the cycle
- Slow down
- Asset class performance throughout the cycle
Financial markets react to new information, both economic and company related. Identifying this information is key to market participants.
- Macro vs. micro data
- Policy decisions
Key economic indicators
- Lead indicators
- Lagging indicators
Markets are studied using price charts. The historical movements are discussed alongside macroeconomic developments.
Current research reports are discussed in class. The structure and aim of the different reports are scrutinized. Participants are tasked within discussing the path of prices for different markets over the short and medium term using both research reports and price charts.
An understanding of how investor decisions may include biases will help individuals to both explain their own decision process and analyze markets.
- Cognitive biases
- Emotional biases