Framework and Macro Considerations (2025 Level III CFA® Exam - Reading 1)

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Topic 1 - Capital Market Expectations
Reading 1 - Framework and Macro Considerations
LOS : Discuss the role of, and a framework for, capital market expectations in the portfolio management process.
LOS : Discuss challenges in developing capital market forecasts.
LOS : Explain how exogenous shocks may affect economic growth trends.
LOS : Discuss the application of economic growth trend analysis to the formulation of capital market expectations.
LOS : Compare major approaches to economic forecasting.
LOS : Discuss how business cycles affect short- and long-term expectations.
LOS : Explain the relationship of inflation to the business cycle and the implications of inflation for cash, bonds, equity, and real estate returns.
LOS : Discuss the effects of monetary and fiscal policy on business cycles.
LOS : Interpret the shape of the yield curve as an economic predictor and discuss the relationship between the yield curve and fiscal and monetary policy.
LOS : Identify and interpret macroeconomic, interest rate, and exchange rate linkages between economies.

[@FPimba]

This video is underrated. :)
Can you please expand on your comment at 01:21:38 "which is an expansionary policy" whilst the slide reads ""reversing the expansionary policy"?

[@danielbelotto1]

He made a mistake! When the government buys its own currency to prevent depreciation of its currency it leads to a contractionary policy.
Here is why:
Government buys its own currency -> reduces the supply of its currency -> strenghens its currency value
Consequences: exports are more expensive for foreign buyers, leading to a reduce in exports and consequently in economic activity

[@dinarajavadova5940]

Extremely helpful! Thank you!

[@kamranshahzad2156]

Excellent

[@agustinarcusa7696]

"You didnt have to worry about inflation. " I am from argentina 😅