The fundamental side of the market


There are optimum values for the indicator Housing Starts and Permits. If its value is in the range between 1.5 million and 2 million, this corresponds to a healthy state of the economy. The decrease of this index indicates possible difficulties in the economy.

The index is published monthly.

Leading Indicators Index - The index of the main indicators

This index is derived from a set of core economic monthly indicators with different weights. Thus, it appears indicator of the overall state of the economy. Increase its value corresponds to improve the economy and leads to an increase in the exchange rate and stock market. On the basis of this index may predict long-term trends of economic development. Because it is made up of other, previously published indices (index data do not reflect the past, and last month), it does not carry the novelty for the markets.

The index is published monthly.

Personal Income - Personal income. This refers to the aggregate income from all sources, including wages, rental income, government grants, dividend income, etc. Personal income is a secondary indicator of future consumer demand. Recessions usually occur when consumers stop spending.

With the growth of the indicator of the observed increase in stock prices, an increase in the degree of profitability of securities, the appreciation of the currency.

If the monitor only gain in income, you can skip the turning point when consumers stop spending.

Personal Income is considered, along with another index, Personal Spend, which reflects the personal consumption expenditures for services and consumer durables and non-durables.

With the growth rate PS observed increase in the price of shares, increase profitability of the credit market instruments, the appreciation of the currency.

It is published on the last working Friday of each month.

Money supply.

One of the current concepts of macroeconomics are the monetary aggregates. They can be represented in a conditional sequence M0, M1, M2, M3, M4, where

M0 = cash;

M1 = M0 + checking deposits;

M2 = M1 + time deposits, deposits of less than $ 100,000;

M3 = M2 + time deposits, deposits of more than $ 100,000;

M4 = total monetary aggregate (total).

Rapid growth is seen as inflationary process, and a sharp decline - as a sign of decline. Earlier (in the early 80's) message to the change in the money instantly led to a change in interest rates, stock prices, exchange rates. Then existed the idea that the increase in the money supply will cause increased federal rate (the threat of higher inflation), resulting in rising interest rates and the dollar, falling stock prices.

Now for the Fed monetary aggregates are not subject to strict control. Fed carefully considers a broader set of indicators, mainly aimed at keeping inflation. Money supply as one of the significant macroeconomic ceased to have a decisive impact on the financial authorities from the moment when it became clear that the velocity of money changes adequately change the money supply. In the early nineties, the velocity of circulation has increased dramatically, forcing abandon monetary measures impact on the economy.