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economic indicator

Page history last edited by Brian D Butler 9 years, 3 months ago

Economic Indicators - useful for International Business

 

Table of Contents:


 

 

 

 

 

Leading Indicators

 

Economic indicators that help to inform analysts about the direction of the economy:

 

 

OECD leading INTERNATIONAL indicators:

 

Indicators to avoid

  • leading home pending sales

 

 

 

 

 

Commodities as Leading-Indicators:

commodities  make for good GLOBAL indicators because of the international orientation of most commodity markets.  For this purpose, these are some of the best internationally traded commodities, which are useful: 

  • Copper: 3rd most heavily-used metal. it is cheap and heavy, making storage inefficient...any copper bought is used relatively quickly. when the price rises, it is almost always because of a construction or infrastructure boom. it is mined and refined all over the world and is used all over the world.… that copper is the metal with the Ph.D. in economics in that copper has tended to rise during periods of economic strength  and has tended to wane in periods of weakness. Now, however, we prefer saying that the base metals in aggregate have a Ph.D. in economics, for they do tend to rise when the global economy is rising and fall when the global economy is falling. see mining and metals
  • Cement: basically all the same reasons as above, provides good check for copper
  • Rice: grown in several regions and consumed in most regions...only setback is that it is a staple of many Asian diets, so it skews the consumption...usually a great indicator of other agricultural commodities and tends to "lead the pack."  (concern:  rice might not be good because it is really not traded.  most rice is consumed in the market where its produced (with the exception of a few countries such as Thailand, its mostly because of export barriers).
  • Soy: similar to rice...good to use as a check...also, heavily used in animal feed

     

  • see also:  commodity and mining and metals

 

 

 

 

Economic indicators & leading indicators:

see also USA macro data

lots of data here: http://www.federalreserve.gov/releases/

US government site: Joint Economic Committee by the Council of Economic Advisors:  http://www.gpoaccess.gov/indicators/

 

 

 

 

Conference Board indicators:

 

Up  arrow

Consumer Confidence Index®
May 25 - The Conference Board Consumer Confidence Index® Increases

Up arrow

Employment Trends Index
May 10 - The Conference Board Employment Trends Index™ (ETI) Continues to Grow, But at Slower Pace

Down arrow

U.S. Leading Indicators
May 20 - The Conference Board Leading Economic Index® (LEI) for the U.S. Dips

Up  arrow

Help-Wanted Online
May 3 - Online Job Demand Registers Strong Increase of 222,700 in April, The Conference Board Reports

Down arrow

CEO Confidence Survey
Apr. 7 - CEO Confidence Declines Slightly, The Conference Board Reports

 
 

International Leading Indicators
Australia 0.3%
China 1.1%
Euro Area 0.9%
France 1.2%
Germany 1.5%
Japan 2.3%
Korea 0.3%
Mexico 1.3%
Spain 0.0%
U.K. 0.1%
U.S. 0.1%

 

 

 

 

 

More Indicators:

 

Macro Economic Growth

  1. GDP
  2. Cyclical indicators such as the Economic Sentiment Indicator (ESI), which correlates closely with year-on-year GDP growth

 

 

 

"Surprise" index:

 

Citigroup is one of a number of institutions that calculates an "economic surprise index", which measures data outcomes relative to consensus expectations. The real economy aftershock of the Lehman collapse generated a steady skein of worse-than-expected data. More recently, however, analysts seem to have "caught up", and so far this year the data has, in aggregate, come out in line with expectations. source: MacroMan blog

 

[SPX+AND+ESI.GIF]

 

 

Predicting Defaults:

 

"The risk of corporate debt is often measured by looking at the spread between its yield and similar ‘risk-free’ government debt. The higher the spread, the greater the risk. However, when government credit comes into question, this spread is no longer suitable as a measure of corporate risk. The spread does, nevertheless, tell a story about relative risk. In Greece, Ireland, and Portugal, a number of sectors have negative corporate spreads, suggesting that firms are either less likely to default than their governments or will have higher recovery rates if they do default. The sector that stands apart as being much riskier than the government is financials. If these governments partially default, the guarantees they have made to the banking system are no longer credible, and the credit losses may be severe." See chart here

 

 

Spread of Junk bonds (high yield bonds) over Treasuries:

 

If the spread of junk bonds over comparable Treasuries widens, that is a good indicator that bond traders are expecting a recession.   Risk premiums, or spreads, on speculative bonds in 10/2008 (the middle of the credit crisis) widened to the highest level since the great depression, indicating that bond speculators were pricing in a huge recession. 

 

 

 

Shipping as leading indicators....Baltic Dry Index:

a benchmark for global freight costs (indicator that mirrors price of shipping bulk products such as iron ore, coal or grains) read more here:

 

 

 

 

 

 

Bdiy1203

 

read more here:  Bespoke Investments

 

 

PMI -

another leading index: measures the rise and fall of manufacturing in the USA....is a leading indicator of economic activity

 

 

Venture Capital confidence indicator:

http://www.usfca.edu/sobam/nvc/pub/svvcindex.html

 

SV VC Confidence Index 2008 Q4

 

The Silicon Valley Venture Capital Confidence Index hit an all time low of 2.77 in the fourth quarter. (The survey ranks confidence from 1 to 5, with 1 being the lowest.) It was the fifth consecutive new low since the index began in the first quarter of 2004. The index is compiled by Mark Cannice at the University of San Francisco. He contacted 33 San Francisco Bay Area VCs and asked them about their outlook for the entrepreneurial environment for the Bay Area over the next six to 18 months.

 

 

Cardboard sales to indicate manufacturing / shipping in Brazil

Cardboard sales, a key measure of economic activity, fell 4.5 percent in December from a year earlier, the Brazilian Corrugated Paper Association said this week. 

 

 

 

 

 

Geographic-specific indicators

 

China

 

Chinese economic data: Reading China's palm | The Economist

Reading China's palm. A new leading indicator for China's economy. May 20th 2010 | BEIJING | From The Economist print edition ...
www.economist.com/businessfinance/displaystory.cfm?story_id...

 

 

 

Leading sites for Trend watchers

 links:

 

ECRI maintains well over 100 proprietary indexes for 20 major economies. Our complete index database is available as part of our Professional Services, which also includes analysis and forecasting.

 

Global Aggregate

 

Index Geomap

 

 

 

 

Future prediction?

Here is a list of sites that try to predict what is going to happen next....enjoy...

predicting the future 

 

 

Links from GloboTrends

see our discussion of global trends

 

  • page economic indicator
    blog Spread of Junk bonds (high yield bonds) over Treasuries: If the spread of junk bonds over comparable Treasuries widens, that is a good indicator that bond traders are expecting a recessio…
    Brian D Butler edited 6 hrs ago 

 

 

 
  • page Credit Default Swap (CDS) market
    in credit spread. Pricing: if the price is 85 basis points, that means that it costs 83,000 euros to insure 10 million Euros of debt over 5 years. Examples: 5-year Spa…
    Brian D Butler edited 1 mo ago 

 

 

 
  • page Crisis watch
    Credit-default-swap spreads on its government debt have surged to horrifying levels, signalling that investors see a high risk of default. Asia Export-dependent countries: would normally do wel…
    Brian D Butler edited 1 yr ago

 

 

 
  • page bid-ask spread
    sp; Bid-ask spread how a broker makes money in a stock market . Lets say you hear a quote of 100-100 1/4, that means that the broker is willing to buy at 100, and is willing to sell at 100.25.…
    Brian D Butler edited 1 mo ago

 

 

 
  • page bond
    an excel spreadsheet, or financial table...find the annuity factor for time = T, and rate = r, and plug into this formula: PV = C * annuity factor + Future payment / (1+r)^t. 3. Consols: a uniqu…
    Brian D Butler edited 8 hrs ago

 

 

 
  • page Carry Trade
    imaginable, credit spreads, bond spreads; everything is poisoned. It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet. People have a Panglossian beli…
    Brian D Butler edited 1 yr ago

 

 

 

 

 

 

 

 

 

 

 

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