Everyone has a different opinion on how best to take the measure of the markets and the economy at large.
Hairs standing up on end, a knee that aches with the weather, tea leaves, earnings estimates, the Hindenburg Omen - it seems like all of these are significant in some way at one time or another.
Here at Money Morning, it's no different. We have an editorial meeting each and every morning - rain or shine - where the editors and writers huddle to pitch the stories and reporting we bring you every day. The meeting covers a huge range of financial and policy topics, and ideas of all stripes are kicked around and discussed until a solid story emerges.
A few days ago, we talked about important financial and economic indicators, where each of us turn to get some idea of the health of the markets and economy. Someone asked, "What's the number you look at first ever day?" We all answered in turn, and a really interesting collection of ideas began to emerge - as it always does.
Here are the numbers we think you should be looking at every day - before breakfast, after coffee - if you want to get an idea of the big picture.
U6, however, is the gut-puncher. It accounts for just about everything: people who have long since lost their benefits, who work only occasionally if at all, and those who are labeled "disaffected workers." It's the U6 number where you'll find the real picture. It's currently stands at a very sobering 13.9%. Contrast this with the "official" U3 rate of 7.5%
The Everyday Price Index tracks higher than that. A lot higher. The reason. EPI is not seasonally adjusted. After all,are you? This means it tracks much more closely with the way prices really feel to consumers, how big of a hit your wallet is really taking. The EPI usually runs between 1 % to 3% higher than the Consumer Price Index, although sometimes they do run in tandem in certain categories.
It factors in 23 shipping routes on a time-charter basis. These 23 routes are said to be representative of the entire dry shipping market. The Baltic Dry index hit a stupendous 11,793 points in 2008, and then crashed - along with just about everything else - to 663 points later the same year. It has since recovered somewhat, and sits at 806. This obscure little index is your ticket to understanding the global growth picture in three or four digits.
There is a famous VIX derivative, an exchange traded note traded (VXX). VXX is the hedge of smart cookies the world over. The more volatility on the markets, or the more likely the S&P is to take a dive, the more valuable VXX will be. The VIX is a great gauge of market sentiment and predictability.
Euro: 56.7%
Japanese yen: 13.6%
Pound sterling: 11.9%
Canadian dollar: 9.1%
Swedish krona: 4.2%
Swiss franc: 3.6%
The USDX goes up when the dollar is stronger relative to the other currencies, and down on dollar weakness. It's a good way to get your head around the import/export picture, and obviously foreign exchange.
If the economy heats up the 10-year yield should rise with the growth. Conversely If the economy slows down, the yield would likely fall. A caveat: the Fed's easy money policies have mucked up this indicator a bit, but the recent upward spike in the 10-year might be telling us the economy is slightly improving.
If you have anything you'd like to add, we'd love to hear from you. What #economicindicators concern you the most? Sound off on our Twitter page, or drop us a line on Facebook.
Related Articles:
[epom]