Economic DATA / Journal and synthesizing data. Key Indicator assessment You will pick 10 key indicators from the text ( Baumohl)Indicators that have a market sensitivity of medium or high. For each

Economic DATA / Journal and synthesizing data. 

Key Indicator assessment

  • You will pick 10 key indicators from the text ( Baumohl)
  • Indicators that have a market sensitivity of medium or high.
  • For each indicator. Research for the most recent report.
    1. Source of data, how often, recent data, trend
    2. In your words explain how does this indicator impact :
      1. Stocks related investments
      2. Fixed income ( Bonds) related investments
    3. Does this affect every industry or select industry.
      • For example Consumer sentiment typically has effect on consumer spending so that may have effect on consumer buying and hence effect like retail stores industry, auto, travel industry etc.
        • Explain why ( this is the most important part of the exercise)
        • Please note everything has to be in your own words (no cut and paste)
  • Recent news related to this data / metric. (News during the assigned period for this assignment )
  • In your own words describe how would you use this indicator as part of your investment strategy
  • PLEASE NOTE: THIS IS ABOUT DATA AND TREND FOR THE DATA, and its implications on investments ( Stocks and or bonds). Based on research.   

   FORMAT SAMPLE    : 

FORMAT SAMPLE

REPORT: Beige Book Survey or “Summary of Commentary on Current Economic Conditions by Federal Reserve District”

SOURCE: The Federal Reserve @ thefederalreserve.gov

SENSITIVITY: Medium

FREQUENCY: 8 times per year

TIMELINESS: Timely, two weeks before the Federal Open Markets Committee (FOMC) Meetings

TREND: Generally up <<<<< Expand on the trend

TODAY’S REPORT: Today’s report shows patchy, modest growth in the US, that is too anemic to trigger an imminent slowing of bond buying by the Fed thus fostering expectations of continued low interest rates for the time being. Home and auto sales were up, but considered too weak to withstand even the suggestion of rising interest rates.

IMPACT ON MARKET AND WHY: The Beige Book is well regarded since it is one of the books the FOMC considers before making interest rate decisions and is the only document the public is privy to prior to their decision. While timely and awaited with eager anticipation, this book is a poor predictor of actually decisions and policies, yet if it suggests lower interest rates, bonds are favorably affected as are equities, but the dollar can be expected to sink.

STOCKS: The stock market continues sliding and is attributed to the specter of potential weaning off from QE 3. As one radio pundit was heard saying no one wants to be the one without a chair when the music stops playing so there is a dash to the exits.

BONDS: Rising interest rates create a drop in bond prices as they struggle to compete with higher yielding vehicles, but lifts other fixed income yields like CDs and money market funds and so rewards savers.  

INDUSTRY: Confidence and purchasing power remains low and people are reluctant to separate from their money. Rising inflation pressures may make companies leery of investing, but rates remain quite low.

HOW THIS IS IMPORTANT TO MY INVESTMENT STRATEGY: This report further confirms my need to move out of bonds and into another area, be it equities, real estate or tax liens as any real move up in interest rates will lower bond prices.

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