Tradeonomics: A Trader's Guide To US Economic Indicators

Investment Banking - The A-Z of Fundamental Analysis for Traders and Investors; Demystifying US Economic Indicators
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  • Lectures 41
  • Length 4 hours
  • Skill Level All Levels
  • Languages English
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About This Course

Published 4/2016 English

Course Description

Increase your trading profits in any markets by understanding US Economic Indicators

Gain the knowledge investment bankers possess on fundamental analysis - macroeconomic indicators, how these indicators affect the stock, bond and forex markets and the central bank's reaction. This course contains 25 ebooks and multiple hands on projects that will ensure you understand the economic concepts. 

"Market Analysis can be approached from either direction (Technicals or Fundamentals). While I believe that technical factors do lead the known fundamentals, I also believe that any important market move must be caused by underlying fundamental factors. Therefore, it simply makes sense for a technician to have some awareness of the fundamental condition of a market." - John J. Murphy, Technical Analysis of the Futures Market 

Increase your financial intelligence by understanding markets
 Did you ever read Robert Kiyosaki's book 'Rich Dad Poor Dad'?  One of the important messages in Robert Kiyosaki's book is that we can increase our financial wealth by increasing our  financial intelligence. He mentions that financial intelligence is made up of four technical skills - accounting, investing, understanding markets and understanding the law. The goal of this course is to learn one of those essential technical skills - understanding markets. The keys to understanding markets are to understand economic indicators such as growth, inflation, and interest rates; the impact of these indicators on financial markets; and the central bank's reaction to these indicators.

Get your complete guide to U.S. macroeconomic indicators  including ebooks containing historical charts and in-depth analysis of U.S. economic indicators
We find bits and pieces of information on macroeconomic indicators all over the internet but to make the connections between these economic entities, macro-economic indicators, financial markets, and central bank policies we need a deeper insight into how they work. In any country, macroeconomic indicators are statistics released by government agencies and the private sector that provide us with information on the state of the country's economy.

This course will help you make the connections between economic indicators, financial markets and central bank policies
We will make all these connections between economic entities, factors, markets and central bank policies through the use of an economic map. The economic map helps us to understand how each small sub-component aggregates to the larger components, which in turn aggregate to the Gross Domestic Product thus giving us a wider perspective of how entities interrelate with one another.
The economic indicators we will study are: 

  • The Quarterly GDP Report 
  • Car Sales Report 
  • Retail Sales Report 
  • Personal Income and Outlays Report 
  • Housing Starts 
  • Durable Goods Orders Report 
  • Factory Orders and Manufacturing Inventories 
  • Construction Spending 
  • Trade Balance Report 
  • Purchasing Manager's Index
  • Employment
  • Industrial Production
  • Leading Economic Indicators 
  • The Beige Book
  • Consumer Confidence Index
  • Consumer Credit Report
  • GDP Deflators
  • Consumer Price Index
  • Producer Price Index

 Skills you should be able achieve by the end of this course

By the end of this course, you will have all the tools necessary to start making the connections between these economic indicators, financial markets and the central bank's monetary policy. This is the knowledge that investment bankers acquire during their trading experience and it is this technical skill that we will achieve by the end of this course.


You could also get the Kindle book or iBook. Please search for "A Layman's Guide to the US Economy" on the Amazon store. If you do not have a Kindle reader you can read Kindle books on your computer, phone, tablet by downloading the Kindle app.   


What are the requirements?

  • No prior knowledge of economics or finance is required. This course starts with the basic concepts of bonds, stocks and foreign exchange markets. We then move on to the fundamentals of growth, inflation and interest rates using an example of a hypothetical country that starts as a simple economy and progresses to a more realistic one. With the constant reference to an economic map we make the connection between growth and economic indicators related to growth. We deduce how these economic indicators will influence the reactions of financial market participants and central bankers.

What am I going to get from this course?

  • Increase your financial intelligence by understanding economic indicators, their influence on financial markets and the central bank's reaction.
  • Essential course for FOREX, Bond, Stock traders on Fundamental Analysis
  • Learn by completing multiple projects on the impact of economic indicators on financial instruments, calculations of nominal and real GDP, growth rates etc
  • Learn the fundamental techniques that investment bankers use for trading
  • Technical analysts can complement their trading skills by understanding fundamental analysis
  • Improve your investing skills by understanding the effect of macroeconomic indicators on financial markets
  • Increase your financial wealth by increasing your financial intelligence. According to Robert Kiyosaki, author of "Rich Dad Poor Dad", increasing your financial intelligence increases your financial wealth and one of the core technical skills to improve your financial intelligence is to understand markets
  • Improve your ability to make the connections between economic indicators, financial markets and central bank policies
  • Learn to predict the future direction of a country's economy
  • Understand the impact of economic indicators on stock, bond and forex markets
  • Learn the reason's why central bank's react post the release of macroeconomic indicators
  • Technical analysts can complement their trading skills by understanding the fundamental analysis that drives the markets
  • Read the financial papers, watch financial news, learn financial jargon and participate in financial discussions
  • Learning macroeconomic indicators and the impact on financial markets greatly enhances the chance of getting an investment banking job

What is the target audience?

  • This course is for anyone who has a desire to improve their financial intelligence. One of the technical skills required to improve financial intelligence is 'Understanding Markets', as mentioned by Robert Kiyosaki in his book 'Rich Dad Poor Dad'. If we need to start understanding markets we need to study how a country's economic factors such as growth, inflation and interest rates are measured and their impact financial markets. We will also understand how macroeconomic releases on employment, inflation and gross domestic product influence the central bank's monetary policy. By the end of this course you will possess the necessary knowledge required to make the connections between economic indicators, financial markets and the central bank's decision to intervene through their monetary policy.
  • Essential course for FOREX, Bond, Stock traders on Fundamental Analysis

What you get with this course?

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Curriculum

Section 1: Course Goals and Benefits
08:06

"I believe getting educated on the economy and looking forward is vital for any investor or someone looking to get started." - Robert Kiyosaki, author 'Rich Dad Poor Dad'. This is our goal - to get educated on the economy and make the connections between the economy, financial markets and central bank actions. Though we look at US economic indicators these concepts are applicable to any country's economy.

Section 2: Financial Markets
04:08

The cash flows of a bond are equivalent to those of a loan product. We learn how to map the cash flows of a bond in a spreadsheet.

04:08

In this lesson we demonstrate the inverse relationship between interest rates and bond prices. 

03:38

Here we understand the relationship between bond prices and the broad economic factors such as growth, inflation and interest rates.

5 questions

Check your understanding of the Bond Market essentials

04:48

We study the relationship between stock prices and corporate profits as economic factors such as growth, inflation and interest rates have a direct impact on corporate profits.

05:24

The inflation premium has a direct impact on cash flows. The higher the inflation premium the higher the discount rate and lower the present value of cash flows.

The Effect of Interest Rates on Corporate Profits
02:45
6 questions

A quick test on the core concepts.

07:11

A major determinant of foreign exchange rates is the interest rate differential between 2 currencies.

1 question

Test your knowledge on interest rate differentials and carry trades

Article

Completing the attached spreadsheet on stocks, bonds, foreign exchange will increase your understanding of the financial markets and the impact of the broad macroeconomic factors such as growth, inflation and interest rates. This will make it easier to understand the effect of specific macroeconomic factors within the broad categories. 

Section 3: The Gross Domestic Product
03:30

In this section we will learn what the Gross Domestic Product is, what its components are, the various economic entities that contribute to the GDP and the relationship between them, how GDP is computed, the difference between real and nominal GDP and other important concepts such as computing growth rates . By the end of this section you would have actually computed the real and nominal GDP of a hypothetical economy and understood the importance of each component (consumption, investment, government expenditure and net exports) in the US quarterly GDP report published by the Bureau of Economic Analysis.

06:45

We compute the Nominal and Real Gross Domestic Product for a hypothetical economy as an exercise to understand the concepts of real and nominal GDP

07:45

We quickly browse through some basic economic definitions or terms that you would be required to get comfortable with as you will come across quite frequently while studying how GDP is computed.

4 questions

Test your understanding of the basic economic definitions

07:00

We explain how GDP is computed by starting with a simple two entity model – households and firms.

02:19

We introduce savings by households and investments by firms to make our hypothetical economy a more realistic one

01:39

We now introduce the third economic entity - the Government

06:05

We introduce the fourth and final economic entity - the rest of the world to our hypothetical world to model the realistic world. 

6 questions

Test your understanding of the most important economic indicator - the Gross Domestic Product

05:23

Before we begin with the economic indicators we need to understand the historic context of the GDP figure to understand what high growth, sustainable growth and recession is. We need to understand the historical context of growth, inflation and interest rates because when any economic indicators are released we can look back to see how the central bank has reacted in the past when confronted with this data.

08:20

We once again understand how growth rates, nominal and real GDP growth are computed in this simple exercise to reinforce our concepts.

3 questions

Test your knowledge on basic GDP concepts

08:05

The quarterly GDP report released by the Bureau of Economic Analysis BEA of the US Department of Commerce is the mother of all US economic indicators

8 questions

Test your understanding on the components of GDP

Section 4: GDP-Consumption Expenditure Indicators
06:50

We look at three indicators that provide us information on Consumer Expenditure- Car Sales, Retail Sales and Personal Consumption Expenditure

05:49

The Car Sales report is published by Automobile manufacturers in the US and is the first report released each month.

4 questions

Test your knowledge of the basics of the Car Sales Report

05:46

The Retail Sales Report is released monthly by the Census Bureau and the U.S. Department of Commerce. Retail sales comprises of durable and non durable goods sold at retail outlets. 

4 questions

Test your knowledge of this very important economic indicator

11:04

The Personal Consumption Expenditures Report also called the Personal Incomes and Outlays report is issued by the BEA monthly, 4-5 weeks after the coverage month

7 questions

A quick quiz on PCE, the most important indicator on consumer spending

Section 5: GDP-Investment Indicators
05:29

Introduction to the Gross Private Investments component of GDP

07:53

The New Residential Construction Report, known as "housing starts" on Wall Street, is a monthly report Collected by the Bureau of the Census, which is a part of the Dept of Commerce jointly with the U.S. Department of Housing and Urban Development (HUD)

4 questions

Test your knowledge of this popular Wall Street report

08:05

The Durable Goods Report also known as the Advance Report on Durable Goods, Manufacturers’ Shipments, Inventories and Orders provides information on new orders received from approximately 3000 manufacturing companies of durable goods

5 questions

Test your knowledge on the largest component of Investments

06:34

The Factory Orders and Manufacturing Inventories report or the more formal title Manufacturers' Shipments, Inventories and Orders Report is a mix of new and old information similar to the durable goods report

3 questions

A quick quiz on the report that gives us much more details on durable goods, non durable goods and inventories

Section 6: GDP-Government Spending
05:23

The Construction Spending Report is released monthly by the U.S. Department of Commerce's Census Bureau, it looks at residential and non-residential construction in the private sector, and state and federal at the public level

2 questions

A small quiz on construction spending

Section 7: GDP - Net Exports
04:27

Introduction to the final GDP component Net Exports, the Trade Balance Report and the Balance of Payments Report

12:22

The Merchandise Trade Balance Report contains information about transactions of US residents with the rest of the world. We look at Balance of Payments and the US trade deficit in addition to the composition of exports and imports.

7 questions

Test your knowledge of the Trade Balance Report and the Balance of Payments account

Section 8: Growth Indicators
10:23

The Employment report is one of the earliest reports to be released hence its importance for the markets. Because unemployment is also a very politically sensitive issue it is closely watched by the Federal Reserve Board and politicians.

5 questions

A quick quiz on one of the most politically sensitive economic indicator

07:51

The index of Leading Economic Index is designed to provide additional information as a sum rather than its parts. Along with this indicator the BEA also releases the coincident and lagging indicator and we will see how the ratio of the two can be used to provide some very interesting result. There are ten components to the Conference Board's Leading Economic Index. The ten components of The Conference Board Leading Economic Index are produced by the BEA of the department of Commerce using data from various sources such as – the Federal Reserve Bank, departments of Labour, Commerce, Treasury, Defence.

3 questions

A quick quiz on Leading Economic Indicators

07:14

Another such popular index on Wall Street which is quite uniquely constructed and timely since it arrives just before the important employment index is a diffusion index, previously known as the National Association of Purchasing Management its now known as the Purchasing Manager's Index

4 questions

A quick quiz on the PMI originally called the NAPM

05:45

The industrial production data measures the unit volume of output for the manufacturing, utilities and mining sector prepared by the Board of Governors of the Federal Reserve System and is available around the middle of the month

02:41

The Beige Book is a summary of commentary on the current economic scenario by Federal Reserve District. The book has 12 regional reports from each member of the Federal District Banks and published just before the FOMC meeting. 

02:33

The Consumer Confidence Report is a survey taken from over 5000 households on the financial health, confidence and spending power of the average consumer. This report is released by the Conference Board on the last tuesday of the month for the prior month's data.

02:01

The Federal Reserve Board releases the monthly Consumer Credit Report that estimates changes in the dollar amounts to loans except mortgage loans to individuals that are outstanding.

9 questions

Test your knowledge of The Beige Book, the Consumer Confidence Index, the Consumer Credit Report, Industrial Production and Capacity Utilization

02:29

We briefly revisit the economic indicators in the context of our economic map so that we can reinforce the connections between the indicators and economic entities.

Section 9: Inflation Indicators
06:20

In this session we study the three price deflators published in the Quarterly GDP Report produced by the BEA - the implicit price deflator, fixed weight deflator, and the chain-price index.


3 questions

A quick quiz on Fixed Weight, Implicit Price and the chain price index

07:17

The Consumer Price Index released monthly by the Bureau of Labour Statistics BLS of the Department of Labour is THE measure of inflation. There are three consumer price indices within the CPI report, two of which have been around for a while – the CPI-U and the CPI-W.  The third a chain weighted CPI,the C-CPI-U is also released along with the core CPI and its popularity is growing as it captures the shifts in consumer buying preferences.

4 questions

The most popular inflation indicator

05:16

The Producer Price Index is prepared by the Bureau of Labour Statistics of the Labour Department. The PPI report has 3 headline figures based on the 3 stages of production – PPI Commodity Index (Crude), PPI Stage of Processing (SOP) Index-  and lastly PPI for finished goods. 

4 questions

A quick quiz on the Producer Price Index

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Instructor Biography

Investment Banker, IT Consultant Mikesh Shah, Director - AltGmX Technology Pvt Ltd

Bachelor of Computer Engineering and a MBA from Queen's University Canada. Worked 8 years in the investment banking division and 11 years in Oracle Financial Services Software Ltd as an IT and banking consultant. Worked in various projects -  at the IMF in Washington, built trading systems at an investment bank in London for the algorithmic trading desk, implemented a complex core banking software system at banks such as Bank of Montreal, Wells Fargo.

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