The Author's Page for
The Complete Idiot’s Guide to
The Complete Idiot’s Guide to Economic Indicators
Web Links and Updates by Chapter
Economic Indicators: A High Impact on Markets and on You
Introduction from Chapter 1
Ever watched a World Series baseball game with a 3-2 pitch count, the bases loaded, and 2 out? In game 7? Well, that’s nothing compared to 2 seconds after the employment situation report comes out. There’s more tension before—and action afterwards—in the financial markets when a key economic indicator comes out than during a decade of World Series games. And there’s more money at stake, too.
Before an economic news release, financial traders have their finger on the trigger to trade as soon as they know whether the economic news is good or bad. Within seconds after the news, the trade trigger is pulled by millions of traders and investors. By the time you finish this book, you’ll know what’s going on in this exciting world. And you’ll also understand how economic indicators can make or break your retirement savings and even determine whether you have job!
Ready to change channels from the World Series to the excitement of economic indicators? Find a comfortable chair, relax, and read on. And who knows? You might just learn enough to hit a financial homerun of your own!
Web Links for Chapter 1
This chapter focuses on the monthly news cycle for economic news and how you can track the numbers. There are several basics about indicators you need to know. How do traders think? What makes the difference when an indicator update is released and traders hit the sell button or the buy button? What is the monthly schedule of economic news and how does its progressive unveiling each month impact views about the economy? And what is and why does a “consensus” make or break the markets when economic indicators are made public? Chapter 1 answers these questions.
But for this web addition, the focus is on, how do you “get in the game?” A key task for you is to pick an economic calendar on the web to track the indicator releases and keep up with the so-called consensus. Here are links to some of my favorite economic calendars. But first, I’ll go along with a little truth in advertising. I work for Econoday and provide economic commentary each week. So, my favorite economic web site obviously, is Econoday’s. Others are available.
This is Econoday’s basic, free version for the public. A more comprehensive version is available at Econoday.com by subscription with a free trial available.
Part of keeping up with the economy is to watch how economic indicators impact various financial markets. There are so many markets that it is hard to list them all. So, we’ll just hit the highlights.
Equities or Stock Markets
When one thinks of financial markets, most initially think of “the stock market”—although there is no single stock market but many in the U.S. and in other countries. CIG Economic Indicators explains many of the key financial markets. Here are a few of the many links that track stock market indexes and even individual company stocks. There is some overlap in sources for links with economic calendars above but the embedded links go to pages for different topics.
Bond Yields and Prices
The biggest market for bonds is for U.S. Treasury securities—or Treasuries. There are bond markets for corporate bonds, U.S. government agency debt, state & municipal bonds, and overseas bonds, among others. But again, the biggest bond market is for U.S. Treasuries and it is the market you should be able to track and have a general understanding before moving on to other bond markets. Bloomberg is a good site to use for tracking bond prices and yields.
On Bloomberg’s U.S. Treasuries page, there are nearby links for government bonds for other major countries.
This link at Bloomberg.com shows a table which is generally called for cross rates. It shows the value of a currency expressed in a number of other currencies. For traders of U.S. currencies, the two key relationships are for the dollar versus the euro and the dollar versus the yen.
In recent years, it has become vogue to talk about the currency value of the dollar in terms of “the dollar index.” For most currency traders, this means a composite index of currencies versus the dollar. A specific dollar index trades on the Intercontinental Exchange (ICE found on theICE.com) and this is what is commonly referred to as the dollar index. The index has components based on the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Here’s ICE’s page explaining their dollar index:
While you can learn much about the dollar index methodology on ICE’s site at theICE.com, a site that is popular for tracking the dollar index is INO markets. Here’s their page for tracking the dollar index during daily trading:
As discussed in CIG Economic Indicators, commodities are wide ranging, including items such as wheat, gold, oil, copper, coffee, and sugar. A good starting point for tracking commodities prices is on Bloomberg.
Energy commodities probably get more attention than any other group. This includes prices for crude oil and other commodities such as natural gas. Bloomberg also tracks spot prices for energy goods. CIG Economic Indicators discusses the difference between futures prices and spot prices in Chapter 12, Oil, Gold, and Other Commodities Prices. The below link includes spot prices for Brent and Cushing crude—probably the two most watched energy prices in the spot market.
Of course, if you track oil prices, you need to track the exchange rate of the dollar since most crude oil is traded in dollars.
A really cool site for tracking individual stocks is Yahoo!Finance. You can even download historical data for company stock prices.
To get historical stock price data for a company, type in a company stock ticker symbol in the quote dialogue entry box and then after the company page comes up, click the “Historical Prices” link. After the data pops up in a web page, you can click at link at the bottom to download to Excel.
Want to learn what goes into stock market indexes? Dow-Jones has a number of web pages that explain what companies go into various Dow-Jones indexes. And the companies that are in various stock market indexes changes from time to time. Most companies that create composite (multiple companies) stock market indexes, delete companies and add companies in the index on a regular (often yearly) basis.
Here’s where you can find out about what goes into the Dow-Jones Industrial Average (also known as Dow 30), the Dow-Jones transportation (or transport), and Dow Jones Utilities indexes.
Email comments or suggestions to RMRogers@mindspring.com