Understanding the broader economic environment helps investors make better decisions. This category explains how the financial system, monetary policy, and macroeconomic trends impact investing.
You’ll learn about the Federal Reserve, interest rates, inflation, and how money flows through the global economy.
This section connects macro concepts directly to investment outcomes.
Introduction Interest rates influence nearly every part of the economy. They affect how much consumers borrow, how businesses invest, how much companies pay to finance operations, and even how investors value stocks. When interest rates rise, stock prices often come under pressure. When rates fall, valuations frequently expand. But why? For fundamental investors, understanding the […]
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The Federal Reserve’s policy decisions have a significant impact on stock prices. Financial news frequently covers Fed actions, and the phrase “don’t fight the Fed” has become a common principle among market participants. Despite this attention, many investors do not fully understand the mechanisms by which the Federal Reserve influences stocks and other risky assets.
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Why Investors Should Care In a fiat monetary system, central bank credibility is the anchor for inflation expectations. When that credibility is weakened by political pressure, the effects are not always immediate, but they are significant for investors over time. Investors should care about Federal Reserve independence because: Key Takeaways for Investors For a deeper
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When Momentum Cuts Both Ways Tuesday’s gold selloff highlights a feature of markets that too many people forget: momentum works both ways. Gold has had one of its best years since it was demonetized in 1971. On the spot market—where gold is purchased for immediate delivery—prices have risen from roughly $2,600 at the beginning of
Gold’s Momentum Trade: Why Prices Are Rising — and Falling — Faster Than Ever Read More »
On August 22, 2025, the Federal Reserve released its revised Statement on Longer-Run Goals and Monetary Policy Strategy. The revised document reverses policy changes introduced in 2020 which some economists believe contributed to the surge of inflation in 2021 and 2022. To understand the 2020 policy changes, we have to go back to earlier in
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Lost in the flurry of headlines regarding the conflict between the White House and the Federal Reserve is the wildcard for lowering interest rates more broadly – inflation expectations. What Is Inflation—And Why Does It Matter? Inflation is a persistent increase in consumer prices—or, put another way, a decrease in the purchasing power of money.
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The modern economy is highly globalized. Goods, services, and capital can flow between countries in a highly efficient manner. The price of a country’s currency relative to other currencies greatly affects that country’s economy. The currencies of most industrial economies trade freely against one another. The foreign exchange market is the market where currencies are
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Money is a commodity like any other and like other commodities, money can be lent by those with a surplus to those with a deficit. The price which those with surplus funds charge for the use of funds is called the interest rate. The Loanable Funds Market The supply of loanable funds ultimately comes from
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In a market economy, prices play a leading role in allocating scarce resources. Prices fulfill this function by conveying information to buyers and sellers about the relative scarcity or abundance of goods and services. With price information, buyers and sellers alter their behavior in ways that bring about equilibrium – the state in which a
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In this post, we discuss monetary policy and the role that central banks play in a modern economy. Although our focus is primarily on the U.S. central bank, the Federal Reserve, the policy tools which we discuss our similar to those used by other central banks, such as the European Central Bank, the Bank of
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