Indicators of the fundamental analysis
Table of Contents
- 1 Indicators of the fundamental analysis
- 2 Gross national product
- 3 Gross domestic product
- 4 Consumer index
- 5 Index of the capacity of the investments
- 6 Index of the government expenses
- 7 Index of the clear commerce capacity
- 8 Index of the industrial production
- 9 Index of using the producing powers
- 10 Index of the industrial orders
- 11 Index of the orders for long-termed usage
- 12 Index of the store belts
- 13 Index of the expenses for construction
- 14 Inflation index
- 15 Financial indicators
- 16 Producer price index
- 17 Consumer price index
- 18 Implicit deflators of GNP and GDP
- 19 Commodity research bureaus future index (CRBFI)
- 20 Index of the industrial prices
- 21 Merchandise trade balance
- 22 Index of the employment
- 23 Index of the expenses on paying the labor (IEPL)
- 24 Index of the consumer expenses (ICE)
- 25 Index of sales of cars
- 26 Leading indicators
- 27 Index of the personal earnings
Economical indicators get on the market in exact time and more often than happening of changes in the base interest changes of governments and nature disasters like earthquakes and etc; Gross domestic product (GDP) and the index of work load which are publicized every 3 months.
Economical indicator is index for the stake under review and index for next stake under review. For example in July are publicized the economical indexes for May. This is made because of the reason the institution responsible for the summary of the economical statistic gets in the moment of publicizing of the indicator for June more information about May. This information is important to the traders. If the value of the economical indicator for the last month is with 0.4% better than the expectations but the indicator for the previous month is corrected with less than 0.4% the trader can skip all other database.
Economical indicators are announced on different time. In USA they are publicized between 8.30 and 10.30 in the morning (American east time). It is important to know that most of the information about the international currency is announced at 8.30 in the morning. The currency market in USA opens in 8.20 in the morning because there must be time for last preparations.
The information for the economical indicators is publicized in all newspapers like “Wallstreet Journal”, “Financial Times”, “New York Times”, also in newspapers about the whole business world like “Business Week”. The traders use actively the electronically sources “Bridge Information System”, “Reuters”, “Bloomberg” for receiving of information.
Gross national product
The gross national product (GNP) characterizes perfectly the economic in its wholeness. This indicator is made in macro scale of the sum of the consumer expenses, investments, government expenses and the clear capacity of the trade. When defining the GNP is used the sum of all stocks and services made by the population of USA in and out the country.
Gross domestic product
The gross domestic product (GDP) is sum of all stocks and services made in the country either national either international companies. The index of GDP abroad is more popular. For example in USA the indexes of GDP are publicized for making easier the comparing of the economical indicators of the different countries.
Consumption is possible either at the expense of personal either at the expense of stored up earnings. The decision of the consumer to spend the resources or to keep them has psychological character. The trust of the consumer is important indicator of the inclination of the consumers who have clear earning to pass from keeping of resources to spending them.
Index of the capacity of the investments
Investments or the gross private inner deposits are made of fixed deposits and of the value of the stocks.
Index of the government expenses
The index of the government expenses is especially important either by itself either from point of view of its influence on the other economical indexes. For example the expenses of USA for defense until 1990 play important role in securing of the general work load in USA. The made after that shortening of the military expenses in small period of time brings to rising of the indexes of unemployment.
Index of the clear commerce capacity
Clear commerce capacity is another important part of GNP. The global internationalization and the economical and political events after 1980 show big influence on the ability of USA to hold against the competition with other countries. Made over the last years deficit in USA slows down the stature of GNP. GNP depends on stock and financial streams.
Index of the industrial production
The index of the industrial production characterizes the general production of the national industrial, communal and extractive corporations. From the position of the fundamental analysis this is important indicator which shows the power of the economic and indirect – the power of the national currency. That’s the reason the currency traders to use this indicator as a potential signal for making trade decisions.
Index of using the producing powers
The index of using the producing powers characterizes the general capacity of the industrial production taken to the general producing power. The last shows the level of the production where the corporation can leave in normal energetically conditions. Usually using the power is not taken to the number of the indicators important for the currency market. After all there are examples when the drawing of this indicator from the position of the economic is useful for the fundamental analysis. Its normal value for stable economic is 81.5%. If it is 85% or more this means “overheating” of the industrial production i.e. the economic is close to reaching its maximum capacity. High steppe of utilization of the powers brings the inflation and for the currency market it is signal that the Central bank will rise its main interest percent to avoid or low down the inflation.
Index of the industrial orders
The index of the industrial orders characterizes the general capacity of the orders of stocks for short-termed and long-termed usage. To the last we can put the stocks for consumption, clothes, productions of the low industry and the products for long-termed usage. The orders for the last are separated from the others. For the traders on the currency market the index of the industrial orders has restricted meaning.
Index of the orders for long-termed usage
The index of the orders for long-termed usage characterizes the production of production with time limit of exploitation more than three years. Examples for such production are the cars, station equipment, furniture and toys. These stocks are separated in four categories – products of metallurgy, machine-building, electric and transport machine-building.
For expelling the influence of the volatility typical for the capacity of military orders, when defining this indicator the production for defense is reported separately.
This indicator is important for the currency market as long as it gives good notion for the user trust. The orders for long-termed usage are more expensive than the one for short-termed usage so the big meaning of this indicator shows the intention of the users to spend resources. That’s why for the currency market this indicator is “bull” signal.
Index of the store belts
The index of the store belts is based on the value of the objects made and held in store for future usage. To collect such information is not hard and it is not something that can surprise the market. Apart from that the reached level of control of the finances and the computerization secure the high steppe of control of the stored stocks. That’s why the importance of this indicator for the currency market is restricted.
Index of the expenses for construction
This index is important economical indicator included in the deciphers of the GDP of USA. Also every other construction traditionally is engine pulling out the American economic from the decline after the World War II. This indicator is separated in three basic categories:
- Count of the permitions and the start construction
- Count of the sales of new and existing houses
- Expenses for construction
The construction of private homes is watched on every stage. It is classified leading out of the count of the units – one, two, three, four, five or more regions – Northeast, West, Middle west and South and according to the region of statistic review. The statistic indicator is placed under cyclic changing and it is very sensitive to the level of the clear earnings. We have to point that the low basic interest brings to higher demand of houses.
As the situation in the beginning of the 1990s showed in spite of the traditional low basic interest in USA because of the mistrust to the weak economic, the housing construction grows up insignificantly.
The capacity of the construction in the interval of million and a half to two millions units shows strong economic but when the number is an around one million unit this shows economical decline.
The level of inflation characterizes the stature of the prices. That’s why watching the inflation is important macro economical task. Traders watch carefully the inflation as long as basic method for fighting the inflation is rising the basic interest percents and higher interest support the national currency. Such height of the level of the inflation is used for lowing down the nominal basic interest, GDP and GIP to their real values for securing and more precisely control over the consequences.
The stature of the real interest percents or the real GDP and GNP has biggest meaning for the specialist and traders on the international currency market letting them to make precisely comparing analysis all over the world.
For measuring the level of the inflation the traders use some economical tools:
- Producer price index
- Consumer price index
- Gross national product implicit deflator
- Gross domestic product implicit deflator
- Employment cost index
- Commodity research bureaus future index
- Index of the industrial prices of “Journal of commerce” magazine
- Consumer spending indicators
The first four are economical indicators which are publicized on a period of time. Stock indexes are information for the inflation operatively and permanent. Other economical indicators for measuring the inflation are the level of unemployment, the consumer price index and the usage of the powers.
Producer price index
It contains most of the sections of the economic such as machine-building, mine-building and agriculture. The index contains around 3400 stocks. The relative weight of every one of the main groups stocks is: nutritious stocks – 24%, fuel – 7%, cars – 7%, clothes – 6%. This index doesn’t include the imported stocks, services and taxes.
Consumer price index
Shows the average changing of the sale prices of fixed consumer cart with stocks and services. Indicators of the CPI are made by the prices of entertainment, home, clothes, fuel, transport, medical services which are daily demanding and received by the population. The relative weight of every one of these groups is: home – 38%, nutritious stocks – 19%, fuels – 8%, cars – 7% and clothes – 6%.
Both indexes PPI and CPI are used by the traders as a subsidiary when rating the inflation activity although the opinion of the Federal Reserve System is that these indexes overrate the power of the inflation.
Implicit deflators of GNP and GDP
The implicit deflator of GDP is calculated by dividing the current stature of GDP and the permanent value of GDP of USA in dollars.
Both deflators are publicized every three months together with the indicators of GDP and GNP. It is considered that the deflators are more important measurement of the inflation.
Commodity research bureaus future index (CRBFI)
The CRBFI lighten up the watching of the inflation trends. CRBFI is made by 21 stocks with equal relative weight. Components of CRBFI are:
- Noble metals – gold, silver, platinum
- Industrial raw materials – petrol, fuel oil for heating, no ethyl fuel, wooden material, honey and cotton
- Grain – wheat, rue, bean plants, soy-bean, soy-bean butter
- Animals and meat – cattle, pigs and etc
- Import – coffee, cocoa, sugar
- Other – peach juice
Index of the industrial prices
The index of the industrial prices of “Journal of Commerce” magazine is made by the prices of 18 industrial and raw materials used in the initial stage of machine-building, construction and the energy producing.
It is more sensitive than the other indexes as long as it was meant for generalizing of the signals in the inflation processes leaving behind the other indexes.
Merchandise trade balance
It is one of the most important economical indicators. Using its values it is judged for long-termed changes in the financial and external politic. The merchandise trade balance is made of the clear difference between the export and import during the trade with exact country. The database of the index includes stocks from 6 categories:
- Raw materials and industrial components
- User stocks
- Station equipment
- Other stocks
Index of the employment
The level of employment is economical factor that plays important part in many relationships. The level of the employment shows the state of the economic.
The level of employment – this is initiating indicator. This important characteristic must be watched especially during economical drop. When the population points their attention to the state and the recovery of the section of labor, the index of employment is the last thing that calms it down. When the drop in the economic provoke shortening of working places, time is needed for forming psychological confidence in the economical progress on administrative level until new working places show up. On individual level the understanding for recovering the situation can become gloomy because working places are created only in small companies and this makes the expectations connected with the index discharged.
The stakes for the employment are important for the financial and currency markets. The database for the employment is especially topical in transitional economic, recovery and the decline.
The reason for the importance of this indicator in extreme economical situations is concluded in this that with its help is creating a picture of the state of the economic and the duration of the business cycle. Lowing down the indicator of the unemployment certificates for finishing of the cycle after in the beginning this indicator was the highest.
We need to notice that most commonly it is used the employment figure, which is not a level of unemployment for a month in percents but a non firm payroll rate (NFPR). This rate is calculated as quotient in dividing of the difference between the general number of capable of working and the number of working and the general number of the capable of working. Such indicator is more complicated and brings more information. On the currency market standard indicator which is watched by the traders is the indicator of unemployment showing the employment in the industry, NFPR, average payment and the average duration of the working week. Usually the most important characteristics of the employment are the employment in the industry and NFPR followed by the level of unemployment in percents.
Index of the expenses on paying the labor (IEPL)
The index of the expenses on paying the labor (IEPL) compare the size of the payment with the level of the inflation and allows to be made fuller analysis of the paying of the labor including the salaries, real payments and extra privilege. IEPL is one of the main three-month indicators of the Federal Reserve System.
Index of the consumer expenses (ICE)
The ICE is based on the database for the capacity of the small trade and it is important for the currency market because it shows the power of the user demand and the confidence of the users that are basic exit database in the stakes of other economical indicators such as GNP and GDP.
Index of sales of cars
Although the importance of the car industry from point of view of the production and the sale, the level of the sales of cars is not taken to the economical indicators which are actual for the currency traders. The car market in USA suffers continuous and steady stage of lowing down its part on the market that becomes less painful in the end of the 1990s.
The car market over the last years is internationalization and the American cars are directed out of the USA, Japanese and German cars get into the American market. This mixed character makes hard for using the index of sales of cars on the currency market.
To the leading indicators are:
- Average continuous of the working week in machine-building
- Average count for a week of the given applications for support of the unemployed
- The capacity of the general orders of user stocks and materials when reviewing the inflation
- The capacity of the contracts and the requests for station industrial equipment when reviewing the inflation
- The number of given permissions for construction
- The number of no realized orders from the producers of stocks for ling-termed consumption
- Change of the price of fast spoiling goods
Index of the personal earnings
The index of the personal earnings shows the level of the earnings of the private persons, uneconomical organizations and private funds. This indicator includes salaries, earnings from giving houses for rent, dividends, percents of bank deposits and transfer payments, appliances for social insurance, veteran pensions. The salaries and the earning show the real economical situation. This indicator is modern for the trade section. When missing of personal earning and inclination of taking, the capacity of taken from the user stocks for long-termed or short-termed usage is restricted.
For traders of Forex the index of personal earnings is immaterial.