Page 14 - Module 4 - Trading_Ways_and_Means

Module 4 - Lesson 3 Indicators for fundamental analysis

It’s calculated by dividing the current dollar GDP figure by the constant dollar GDP figure. Both the
GNP and GDP implicit deflators are released quarterly, along with the respective GNP and GDP
figures. The implicit deflators are generally regarded as the most significant measure of inflation.

Commodity research bureau's (CRB) futures index
The Commodity Research Bureau's Futures Index makes watching for inflationary trends easier. The
CRB Index consists of the equally weighted futures prices of 21 commodities. The components of the
CRB Index are:

▪ Precious metals: gold, silver and platinum
▪ Industrials: crude oil, heating oil, unleaded gas, lumber, copper, and cotton
▪ Grains: corn, wheat, soybeans, soy meal, soy oil
▪ Livestock and meat: cattle, hogs, and pork bellies
▪ Imports: coffee, cocoa, sugar
▪ Miscellaneous: orange juice

The preponderance of food commodities makes the CRB Index less reliable in terms of general
inflation. Nevertheless, the index is a popular tool that has proved quite reliable since the late 1980s.

The “Journal of Commerc” industrial price index (JoC)
Consists of the prices of 18 industrial materials and supplies processed in the initial stages of
manufacturing, building, and energy production. It is more sensitive than other indexes, as it was
designed to signal changes in inflation prior to the other price indexes.

Balance of Payments

Merchandise trade balance

It’s one of the most important economic indicators. Its value may trigger long-lasting changes in
monetary and foreign policies. The trade balance consists of the net difference between the exports
and imports of a certain economy.

The data includes six categories:
1. Food
2. Raw materials and industrial supplies
3. Consumer goods
4. Autos
5. Capital goods
6. Other merchandise.
A separate indicator that belongs to that group is the “US – Japan Merchandise Trade Balance”.

4. Employment Indicators
The employment rate is an economic indicator with significance in multiple areas. The rate of
employment, naturally, measures the soundness of an economy. The unemployment rate is a
lagging economic indicator. It is an important feature to remember, especially in times of economic
recession. Whereas people focus on the health and recovery of the job sector, employment is the
last economic indicator to rebound.

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