Analysis of U.S. Stocks Inch Higher as Investors Weigh Inflation

Stock Analysis Author Name Institution Affiliation In today’s business world, we love interacting with banks, insurance companies and government regulated companies who deal with the pension funds. We also hear terms like the stock market, bonds, and insurance almost daily. The question that often strikes our minds is that do we really know how all these terms, companies and institutions are interrelated. We may also ask ourselves how to drive the economy of a country. In the second chapter of this book (An Overview of the Financial System), it is clearly mentioned that banks and other financial companies work as intermediaries; they help those people in society who are in need of funds by obtaining money from that segment of people who have excessive funds (page. 22). Financial markets and intermediaries play a pivotal role, as they aid the economic system with the goods and services produced by accumulated capital. This capital is a direct outcome of the facilitation provided by the financial markets that control the flow of investments and savings of other parties. The financial intermediaries and the financial markets ensure that both lenders and borrowers are getting the best deals as they do not want to keep one side happy since their own commissions are based on the satisfaction of each party. It is very important for a healthy economy that its financial markets and financial intermediaries are functioning properly (Rubio, 2003). This is where the government plays its role to devise a mechanism according to which the financial institutions are regulated. This regulation is essential to secure the payments of the investors and to protect such companies are exploiting the borrowers' rights as well so they. SEC (Securities Exchange Commission), a government agency, requires all financial institutions to have an independent audit to ensure that they are adhering to the rules and regulations for standard practice (chapter – 8 – An economic analysis of the financial structures – page 172). The article points towards the fears found amongst the investors in the stock market which are due to the slowing US economy and building trends of low profitability amongst many companies. The concerns are also high due to the increasing tensions between the US and China and the announcement made by the US to impose a heavy tariff on European goods is another indicator of slimming profits and growing fears amongst investors. Due to this scenario in past years the foreign financial markets have seen steep growth. The deregulation of foreign markets paved ways for the investors to open saving accounts in other countries and make investments there, thus, giving a great opportunity to foreign financial companies to expand their operations overseas. The American government with its stock market companies is likely to bridge the gap in their capitals by going in partnership with international compa...