Economic Calander

The Economic condition defines the Market direction.
How do we measure the state of the economy? Economic calendar is a type of calendar that is intended to inform traders about the scheduled major Economic Numbers (like CPI, PMI, Jobless Claims), government reports and speeches of the most influential persons of the financial world. Economic calendars are usually issued on a hourly basis. These Economical data (Indicator) may impact the market to various degrees, however there are some that will define the state of the market.

You need to know what financial news are due, especially if you are day trading (i.e. Short-term Trader). These data can affect the price of the stock that you are trading however temporary it may be.

Reports indicating low inflation, slow growth, and declining consumer confidence usually drive interest rates down, and vice-versa. However, the expected versus the actual result of an event can also affect the reaction of the Broader market.

Here are a list of some of the most important Economic Data that is released.

1. Gross Domestic Products (GDP)

2. FMOC -interest rate and monetary policy decision.
This can affect currencies, share price and indices
before & after the announcement has been made

3. Employment figures (weekly initial/continuing claims, monthly payrolls)

4. PPI/CPI/Leading Economical Indicators (LEI)

5. Durable goods, Factory orders

6. Home sale figures (existing/new sales)

7. Crude Oil/Natgas inventories (if you are trading energy related stocks)

When the Actual figure is better than the Expected figure the market rises, when the actual figure is worse than what is expected the market falls. Here is the Key.

1. Actual: Actual figures after their release.

2. Economic Number: An economic indicator (or business indicator) is a statistic about the economy.

3. Market Expects: Represents the market consensus estimate for each indicator.

4. Prior: Represents the last actual for each indicator.

There are some important terminology that a trader must familiarise themselves with. Here are some important events and terms.

Business Inventories: monthly – The dollar amount of inventories held by manufacturers, wholesalers, and retailers. The level of inventories in relation to sales is an indicator of the near-term direction of production activity.

Consumer Confidence: monthly, Conference Board – A monthly survey of 5,000 households designed to measure Americans.

CPI: Consumer Price Index: monthly, Labor Department – Measures the change in the cost of living for most American families. Widely followed as an indicator of inflation on retail purchases.

Core CPI = CPI less food and energy

Durable Goods Orders: monthly, Commerce Department – Measures new orders placed with domestic manufacturers for items considered useful for at least three years (such as vehicles, large appliances, and computers). In addition to gauging the strength of the manufacturing sector, it can also be used to assess consumer sentiment.

Economic Number: An economic indicator (or business indicator) is a statistic about the economy. Economic indicators allow analysis of economic performance and prediction of future performance.

Employment Situation: monthly, Bureau of Labor Statistics, U.S. Department of Labor – Set of labor market indicators. Unemployment rate measures the number of unemployed as a percentage of the labor force.

Export price index: Price index of the goods that a country exports.

FOMC: Federal Open Market Committee – Sets U.S. monetary and short-term interest rate policy. Changes in policy directly affect adjustable-rate mortgage (ARM) rates.

Gross Domestic Product (GDP): quarterly, Commerce Department –Widely followed as the most comprehensive measure of the nation’s total economic activity. It is a measure of all final goods and services produced within the U.S. Also includes an inflation component.

Import price index: Price index of the goods that a country imports.

Industrial Production: monthly, Federal Reserve – Measures output of U.S. factories, mines, and utilities. Utilization of more than 85% of capacity is considered to indicate inflation.

Initial Claims: Initial jobless claims measure the number of filings for state jobless benefits.

Jobless Claims: weekly – Compilation of the number of individuals who filed for unemployment insurance. This indicator, and more importantly, its four-week moving average, is followed as an indicator of trends in payroll employment.

Mich Sentiment-Prel: university of Michigan Consumer Sentiment Index. The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading.
NY Empire State Index: A seasonally-adjusted index that tracks the results of the Empire State Manufacturing Survey.

PMI: Purchasing Managers Index, a measure of manufacturing activity.

Producer Price Index (PPI): monthly, Labor Department – A price index of goods (such as oil, steel, and grain) sold at the wholesale level to businesses. In most cases, inflation changes in the PPI tend to precede changes in the CPI.

Retail Sales: monthly, Commerce Department – Measures total net sales of retail stores and may be used as an indicator of consumer spending.

Treasury Budget: The monthly Treasury budget data follow strong seasonal patterns which produce huge month-to-month fluctuations in the deficit.

Trade balance: Balance of trade: The value of a country's exports minus the value of its imports. Unless specified as the balance of merchandise trade.

That concludes our section on Economic Calanders, please go to the next section on an in depth discussion on Economic Indicators.