Abby Joseph Cohen Says Many Financial Models Are Broken

The video discusses the return of the risk-free rate and the challenges faced by traditional financial models due to structural changes in the economy, such as shifts in labor force participation and immigration patterns. It highlights the impact of these changes on models like the Phillips Curve. The discussion also covers the unusual period of low interest rates and inflation, and the current focus of the Federal Reserve on ensuring positive real yields, as evidenced by the flat to inverted yield curve, indicating market confidence in Fed policies.

What is one reason traditional financial models have been disrupted recently?

• Higher interest rates

• Stable labor force participation

• Structural changes in the economy

• Increased reliance on technology

How has the retirement of baby boomers affected the labor market?

• No significant impact

• Shift in labor force dynamics

• Decreased demand for jobs

• Increased labor force participation

What percentage of employment increase in the U.S. was filled by immigrants over the prior decade?

• 40-45%

• 30-35%

• 50-55%

• 60-65%

What economic condition is characterized by a flat to inverted yield curve?

• Economic expansion

• Potential recession

• Stable growth

• High inflation

What is the Fed's current focus regarding real yields?

• Maintaining them at zero

• Ensuring they are positive

• Ignoring them

• Keeping them negative