Loading ...My vision is to have a dashboard of sorts composed of all the different indicators that I like to follow. I’d like to update them periodically and share them with you. I hope to have a brief explanation of why each one may be useful, along with a blurb about what the most recent indicator reading may mean.
Bloomberg Financial Conditions Index (link here)
From the actual description:
The Bloomberg Financial Conditions Index combines yield spreads and indices from the Money Markets, Equity Markets, and Bond Markets into a normalized index. The values of this index are z-scores, which represent the number of standard deviations that current financial conditions lie above or below the average of the 1994-June 2008 period.
OK, so what does all that mean? First of all, it is a way of assessing what the current financial conditions are. According to this article, this index “monitors the level of stress in the U.S. financial markets.” A value of zero represents conditions that are at the level you’d get if you average them from 1994 until June 2008. Essentially, this represents the “normal” level of stress, and any deviation from the norm is captured in this index. The amount above or below zero is expressed in standard deviations, which is a fancy statistical way of saying “graded on a curve.”
When this index is high (good), it means that money is probably flowing well between banks and businesses or consumers. When it goes lower (worse), it means that credit is probably tough to get, so many businesses and people cannot get a hold of the money they need to take care of their needs (hiring workers, buying inventory, buying machinery, buying homes/cars, etc.)
Latest Reading: +0.32 The index has been above zero most of the time since September 2010. For several months after the “Flash Crash” (when the stock market took an incredible nosedive for part of the day on May 5), this index was down near the -1 to -1.5 level. But that danger was averted as the levels returned back to normal levels and now a bit better. This is great news for the economy, which needs to have stable financial conditions for businesses to hire workers and for the housing market to recover eventually.
Economic Indicator Roundup (January 4, 2011)
NOTE: You may be reading an outdated analysis. Please visit my latest economic indicators roundup.
| Indicator: USA Today / IHS Global Insight Economic Outlook IndexLink: Click hereDescription: Forecast of the 6-month annualized Real GDP growth rate for the next several months. Based on an index of 11 leading indicators, each of which generally predicts future changes in economic growth.Latest Reading: Gradual decrease from July’s 3.1% to December’s 2.5% forecast rate of growth.
Implications: Not a terrible forecast, but this growth rate would be slower than average and would not help employment at all. NEUTRAL Above Info as of : Aug 2010 |
Indicator: Bloomberg Financial Conditions IndexLink: Click hereDescription: Monitors the level of stress in the U.S. financial markets. Zero is normal, above zero is good and below zero is bad.Latest Reading: +0.32
Implications: Conditions look pretty good now and support continued economic growth. Businesses and consumers are likely able to get a fair amount of credit and money to take care of business. POSITIVE Above Info as of : January 4, 2011 |
Indicator: TBDLink:Description:Latest Reading:
Implications: Above Info as of : |
| Indicator: TBDLink:Description:Latest Reading:
Implications: Above Info as of : |
Indicator: TBDLink:Description:Latest Reading:
Implications: Above Info as of : |
Indicator: TBDLink:Description:Latest Reading:
Implications: Above Info as of : |
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