Fundamental Economic Data Reports: Medium Market Movers !!

Durable Goods Orders

• Importance: !!
• Source: The Census Bureau of the Department of Commerce.
• News Data Report Release Time: 8:30 EST around the 26th of the month (data for the prior month).

The durable orders release measures the dollar volume of orders, shipments, and unfilled orders of durable goods (defined as goods whose intended lifespan is three years or more). Orders are considered a leading fundamental indicator of manufacturing activity.

Conference Board Consumer Confidence

• Importance: !!
• Source: The Conference Board.
• News Report Announcement Time: 10:00 EST on the last Tuesday of the month (data for current month).

The Conference Board conducts a monthly survey of 5000 households to determine the level of consumer confidence. The report can occasionally be useful in predicting sudden shifts in consumption patterns, though most small changes in the stock index are just noise. Only index changes of at least 5 points should be considered significant.

Industrial Production

• Importance: !!
• Source: Fed Reserve.
• News Report Release Time: 9:15 ET around the 15th of the month (data for month prior).

The index of Industrial Production is a fixed-weight measure of physical output of the factories in a country, mines, and utilities. Manufacturing production, the biggest constituent of the overall total, can be accurately predicted using total manufacturing hours worked from the employment report.

Initial Jobless Claims

• Importance: !!
• Source: The Employment & Training Administration of Department of Labor.
• News Report Announcement Time: 8:30 EST each Thursday (data report for the week ended prior Saturday).

Initial jobless claims measure the No. of filings for the state jobless benefits(number of people out of a-job). This report provides a timely, but often misleading, indicator of the current momentum of the economy, with increases (decreases) in claims potential signaling/signifying slowing (accelerating) job growth.

There are 2 other statistics in this report - the number of people receiving state benefits and the insured unemployment rate; neither is watched closely by the market. Some analysts track the No. of people getting state benefits from month to month as a guide for job growth, though this series has got a poor track record in predicting the monthly employment data report. The insured unemployment rate changes little on a weekly basis & is never a factor for the market.

International Trade

• Importance: !!
• Source: The Census Bureau and the Bureau of Economic Analysis of Department of Commerce.
• News Report Announcement Time: 8:30 EST around the 20^th of the month (data for 2 months prior).

The trade report is most widely watched for trends in the over-all trade balance. But trends in both exports & imports of goods and services bear watching as well. The export info in particular are important to watch for indications that a strengthening competitive position at home &/or strengthening economies overseas are boosting the America economy Growth. The Imports provide an indication of the domestic demand, but given the severe lag of this report relative to other consumption indicators, it isn't particularly very valuable for this purpose.

The volatility in the monthly trade balance can play an important role in GDP forecasts. Net exports are a relatively volatile constituent of the GDP, and the Gold trade report provides the only early clues to the net export performance every quarter.

Producer Price Index - PPI

• Importance: !!
• Source: Bureau of Labor statistics, U.S. Department of Labor.
• News Data Report Release Time: Around the 11^th of each month at 8:30 EST for the prior month.

The Producer Price Index measures prices of goods at the wholesale level. There are 3 broad subcategories within PPI: crude, intermediate, & finished. The market keeps track of the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user.

University of Michigan Consumer Sentiment Index

• Importance: !!
• Source: The University of Michigan.
• News Report Announcement Time: Preliminary: 10:00 ET on the second Friday of the month (data for current month); Final: 10:00 ET on the fourth Friday of the month (data for the current month).

Michigan index is very identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading. Like the Conference Board index, it has two sub-indices - expectations & current conditions. The expectations index is a component of the Conference Board Leading Indicators index.

Institute for Supply Management - ISMInstitute for Supply Management (ISM) - Formerly referred to as the NAPM. Change was effective in January 2002. ISM is a composite diffusion index of national manufacturing conditions.

Readings above 50% indicate an expanding factory sector. Investors need to keep their finger on the performance of the economy because it dictates how various different types of investments will perform.

By tracking the economic date such as the ISM, investors will know what the economic backdrop is for the different markets. The ISM generates a detailed look at the manufacturing industry sector, how busy it is and where things are headed.

Since the manufacturing industry sector is a major source of cyclical variability in the economic environment, this report has got a big influence on the markets. More than one of the ISM sub-indexes provides insight on commodity prices & clues regarding to the potential for inflation developing.

The Federal Reserve maintains a close watch on this data report which helps it to determine the direction of interest rates when the inflation signals are signaling in these data.

Leading Technical IndicatorsLeading Indicators - A composite index of 10 economic reports that often lead the overall economic activity.

Traders need to keep their finger on the performance of the economy because it dictates how various different types of investments will perform.

By tracking economic data like the index of leading indicators, traders will know what the economic backdrop is for the different markets.

The index of Leading Indicators is designed to predict turning points in the economy such as recessions and recoveries. Incidentally, stock prices are one of the leading fundamental indicators in this index.

Import & export pricesImport and export prices - The prices of goods that are brought into the US but produced abroad & the prices of goods sold abroad but produced locally & domestically.

These prices reflect inflation trends in the internationally traded products. Changes in import & export prices are a valuable measure of the inflation here(locally and domestically) & abroad. Furthermore, the data can directly impact the financial markets such as bonds & the dollar.

Inflation leads to higher interest rates and that's bad news for stocks as well. By monitoring inflation measures such as import prices, investors can keep an eye on this menace to their portfolio.

IFO Business Climate in industry & tradeIFO Business Climate in industry and trade - The IFO Business Climate Index is an early indicator for economic development in Germany. Every month the IFO Institute surveys more than 7,000 enterprises in west & east Germany on their appraisals of the business situation/environment (good/satisfactory/poor) and their expectations for the next 6 months (better/same/worse).

The replies are weighted according to the importance of the industry & aggregated. The percentage shares of the positive & negative response to both of the questions are balanced & a geometric mean is formed from the balances divided according to east & west Germany. The series of balances thus derived are linked to a base year (currently 1991) & seasonally adjusted.

APICS SurveyAPICS Survey - Composite diffusion index of national manufacturing conditions. The APICS survey generates a detailed and thorough look at the manufacturing industry sector.

This survey is less well known that the ISM, but also can indicate trends in production. The diffusion index doesn't move in tandem with the ISM index every month, but sometimes the 2 do move in the same direction.

Since manufacturing is a major sector of economy, traders can get a feel for the general economic backdrop for various investments. An index level of 50 means no growth, but every 10 points signals gains of 4 % in manufacturing.

Beige BookBeige Book - District banks have been printing out the summaries of the economic conditions in their districts since 1970. Initially this Red Book was prepared for policymakers only and was not intended for public consumption.

It was made public in 1983. To mark this change, the color of the cover was changed and the publication became known as the Beige Book.

The Beige Book is released 2 weeks before each FOMC meeting eight times a year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank & branch directors and interviews with key businessmen, economists, market experts, & other sources.

The Beige Book summarizes this info by district & sector. An overall summary of the 12 district reports is prepared by a designated Federal Reserve Bank on a rotating basis. The report is primarily seen as an indicator of how the Fed may act at its upcoming meeting.

Blue Book ReportBlue Book - A day after the green book, the FOMC members get and receive the blue book. All blue books present the Board staff's view of monetary and financial developments for the few months surrounding the meeting in question. Each book first reviews the recent developments in policy variables, including the Federal Funds rate, reserve measures, & the monetary aggregates. The blue book also presents 2 or 3 alternative policy scenarios for the upcoming inter-meeting period. The blue books written for the February and July meetings contains 2 extra sections to assist the Committee in its presentation for the Humphrey-Hawkins testimony. The first of these sections provides longer term simulations, covering the next five or six years. This section also provides estimates of how different assumptions about various factors/components such as fiscal policy, the equilibrium unemployment rate, or the speed of adjustment to the changed inflationary expectations would affect the predicted outcome. The second additional section in the February and July blue books sets out alternative annual ranges for the growth of the monetary aggregates.

Red Book - Published every Tuesday, this report presents the detail sales of some 30 US stores produce the previous week & compared to the previous month. It is always a forecast which counts for the request for the households but a rather volatile measure taking in to consideration the more or less significant months for the details business.

Business InventoriesBusiness Inventories - Dollar amount of the inventories held by the manufacturers, wholesalers and retailers. The level of inventories in relation to the sales is a crucial indicator of the near term direction of the production activity.

Traders need to monitor the economy closely because it mostly dictates how various different types of investments will perform. Rising inventories can be an indication of business optimism that sales will be growing in the coming months.

By looking at and analyzing the ratio of the inventories to sales, investors can see whether production demands will expand or contract in the near future. The business inventory info provide a valuable forward-looking trading tool for tracking the economic environment.

Chain Stores SalesChain Stores Sales - The Monthly sales volume from department, chain, discount & apparel stores. Sales are reported by the individual retailers. Chain store sales are an indicator of retail sales and consumer spending results.

Consumer spending contributes and accounts for a total two-thirds of the over-all economy, so if you know what the consumers are up to, you will have a pretty good handle on where the economic environment is headed.

Sales are reported as a change from the same month a year ago. It is crucial to know how strong the sales actually were a year a go to make any sense of this year's sales. Additionally, sales are usually reported for comparable stores in case of company mergers.

Consumer sentimentConsumer sentiment - The Survey of consumer attitudes concerning both the current situation as well as expectations regarding economic conditions conducted by the University of Michigan.

5 hundred consumers are surveyed each month. The level of consumer sentiment is directly proportional to the power of consumer spending. Consumer spending accounts for a two thirds of the overall economy, so the markets are always dying to know what consumers are upto & how they might behave in the near future.

The more confident consumers are about the economy & their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of the consumer attitudes gives and provides an insight to the sentiment of the economy.

Changes in consumer sentiment and retail sales don't move in tandem month by month.

Current trading accountCurrent account - The Measure of the country's international trade balance in terms-of goods, services & unilateral transfers. The level of the current trading account, as well as the market trends in exports & imports, are followed as indicators of trends in foreign trade.

U.S. Trade with foreign countries hold important clues to economic trends here and abroad. The info can directly impact all financial trading markets, but especially the fx value of the dollar.

Factory ordersFactory orders - Dollar level of new orders for manufacturing durable goods and nondurable goods. It provides more complete information than durable goods orders that are reported one or two weeks earlier in the month.

The orders information show how busy the factories will be in coming months as the manufacturers work on filling the orders. This report provides insight to the demand for not only hard goods like refrigerators & cars, but nondurables such as cigarettes and apparel.

Additionally to new orders, analysts monitor unfilled orders, a indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current & future production.

All in all, this report tells traders what to expect from the manufacturing industry sector, a major component/constituent of the economy and hence a major factor of influence on their investments.

Green BookGreen Book - The green book is prepared by the staff members at the Board of Governors 5 days in advance of an FOMC meeting. It presents the staff's interpretations on several economic & financial variables and is divided in to two parts.

The first part of the green book describes & interprets the significant developments in the US Economic activity, prices, interest rates, flows of money and credit, and the international sector which have occurred in the recent months or quarters.

This section also presents forecasts of a number of variables for the next 6 to 8 quarters. The second section of the green book provides additional info on recent developments.

It describes trends in employment, production, & prices and the factors influencing them. This section also includes sector-by-sector analyzes, commenting on such areas as housing, motor vehicle production, inventories, & spending by federal, state, and local governments.

It reviews a range of developments in domestic financial trading markets, including credit patterns for banks, other financial intermediaries, non-financial businesses, & consumers.

Finally, international developments are reviewed and analyzed, with commentary on trade statistics, international financial trading transactions, forex markets, & economic activity in a number of foreign countries.

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