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					US ECONOMIC ANNOUNCEMENTS /
FUNDAMENTAL ANNOUNCEMENTS
_____________________________________________________________________________

DEFINITIONS
1. A US Economic Report (Fundamental Announcement) is the release of one of around 40
   economic reports that materially affect the opinions of traders regarding the relative merits
   and demerits of that country’s currency. The data released by these reports is assimilated
   rapidly and acts as a catalyst to cause bonds, stocks and currencies to be immediately, and
   often dramatically, re-priced.

2. US Economic Reports comment on the perceived phase of the business cycle. Financial
   markets “move” when the latest economic news indicates that earlier perceptions and
   assumptions about the current strength of the economy are not quite correct. Since financial
   instruments are priced according to market participants’ perceptions of the relative strength of
   the economy, changes in perception lead immediately to re-pricing.

3. Economic Reports are to countries, as earnings announcements are to corporations.

_____________________________________________________________________________

IMPACT
Traders remaining flat and waiting for a Class 1 or Class 2 Economic report often cause
consolidations. The release of that report then often triggers a breakout.

A Class 1 stimulates breakouts or Class 2 Economic Report is capable of moving the value of a
currency by several hundred pips within a few hours of its release, particularly if it contains
information that surprises the market in a major way.

Economic Reports carry heightened impact if they are produced quarterly or monthly rather than
weekly or daily, if they are announced in the morning rather than the evening and, especially, if
they contain surprises when compared to consensus expectations.
_______________________________________________________________________

CLASSIFICATION
U.S. Economic Reports have been classified on a 1 – 4 scale according to their perceived level of
importance, which correlates directly with their ability to move the value of the US Dollar:

ECONOMIC REPORT                                 RATING 1-4       DATES              FREQUENCY
Federal Open Market Committee Policy            1                Random             8 x year
Announcements (FOMC)
Employment Report (Jobs Report)                 1                First Friday       Monthly
                                                                    th
Retail Sales                                    1-               13                 Monthly
Institute of Supply Management                  1-               First Week         Monthly
Manufacturing Index (ISM Index)
                                                                                      th
Consumer Price Index (CPI)                      2+               Monthly            13
                                                                                            st
Employment Cost Index (ECI)                     2+               Quarterly          End of 1
                                                                                    month
Chicago Purchasing Managers Index                2            Monthly           Last day
(Chicago PMI or NAPM Chicago Index)
                                                                                   th
Philadelphia Fed Index                           2            Monthly           20 -25th
                                                                                   th
Durable Goods Orders                             2            Monthly           26
                                                                                 rd   th
Gross Domestic Product (GDP)                     2            Monthly           3 - 4 week
                                                                                   th
New York or Empire State Fed Index               2            Monthly           15 -20th
Consumer Confidence - Conference Board           2-           Monthly           Last Tuesday
Help-wanted Index                                2-           Monthly           Last week
                                                                                   th
Housing Starts and Building Permits              2-           Monthly           16
                                                                                   th
Industrial Production and Capacity Utilization   2-           Monthly           15
                                                                                   th
International Trade and Trade Balance            2-           Monthly           20
(Import / Export prices)
                                                                                   th
Producer Price Index (PPI)                       2-           Monthly           11
                                                                                 nd
University of Michigan Consumer Sentiment        2-           Monthly           2 Friday
Index
Jobless Claims (Initial Claims)                  3+           Weekly            Thursday
New Home Sales                                   3+           Monthly           Last day
                                                                                 st
Personal Income and Consumption                  3+           Monthly           1
(Personal Consumption Expenditures Index)
Challenger Layoffs                               3+           Monthly           First week
                                                                                   th
Existing Home Sales                              3            Monthly           25
Beige Book                                       3-           8 x year
Auto and Truck Sales                             3-           Monthly           Early
                                                                                    th
Business Inventories                             3-           Monthly           15
Chain Store Sales                                4+           Weekly            Tuesday
                                                                                 st
Factory Orders                                   4+           Monthly           1
                                                                                 th
Productivity and Unit Labor Costs                4+           Quarterly         7
Redbook Retail Sales                             4+           Weekly            Tuesday
                                                                                 st
Construction Spending                            4            Monthly           1
Money Supply (M2)                                4            Weekly            Thursday
                                                                                 rd
National Association of Home Builders            4            Monthly           3 Tuesday
(NAHB) index
Regional Fed Manufacturing Surveys               4            Monthly           Various
(excluding Chicago and Philadelphia) and
chapters of the NAPM
                                                                                 rd
Treasury Budget (Federal Budget)                 4            Monthly           3 week
                                                                                 th
Consumer Credit                                  4            Monthly           5

DESCRIPTIONS:
Federal Open Market Committee Policy Announcements (aka FOMC): 1

The FOMC consists of 12 members: the 7 members of the Board of Governors of the Federal
Reserve System, the president of the Federal Reserve Bank of New York and a rotating selection
of 4 presidents of the 11 other Reserve Banks. The FOMC holds 8 regularly scheduled meetings
annually to direct the conduct of open market operations by the Federal Reserve Bank of New
York in a manner designed to foster the long-term objectives of price stability and sustainable
economic growth. The FOMC also establishes policy relating to Federal Reserve System
operations in the Forex markets.

Employment Report (Jobs Report): 1

This report is the timeliest and broad Economic Indicator released each month. It is actually 2
separate reports generated from 2 separate surveys: a survey - the Household Survey - of 50,000
households measures unemployment and a survey – the Establishment Survey - of 375,000 non-
agricultural businesses measures employment i.e., these 2 reports measure employment levels
from different angles. Total payrolls are broken down into sectors and the manufacturing sector is
closely watched as it often leads the business cycle.

SOURCE: The Bureau of Labor Statistics of the US Department of Labor.
                            st
RELEASE: 8:30am on the 1 Friday of each month with data for the prior month.

Retail Sales: 1-

This report is a measure of the total receipts of retail stores (not services) in the US. Changes in
retail sales are widely followed as they are considered to be a timely indicator of broad consumer
spending patterns. Retail sales are often viewed ex-autos as auto sales can change sharply from
month to month.

SOURCE: The Census Bureau of the US Department of Commerce.
                                        th
RELEASE: 8:30am EST around the 13 day of the month with data for the prior month.

Institute of Supply Management Manufacturing Index (ISM Index and Purchasing Managers
Index): 1-

The ISM was formerly the National Association of Purchasing Managers of US. This report is one
of the first comprehensive economic releases of the month. It is a national survey of purchasing
managers and covers such manufacturing sector Economic Indicators as new orders, production,
employment, inventories, delivery times, prices, export orders and import orders.

SOURCE: The Census Bureau of the US Department of Commerce.
                                        st     th
RELEASE: 10:00am EST around the 1 and 6 business day of each month with data for the
prior month.

Consumer Price Index (aka CPI): 2+

The CPI measures changes in the prices paid by urban consumers for a representative basket of
goods and services. CPI is the benchmark inflation and cost of living index.

SOURCE: The US Department of Labor.
                                   th
RELEASE: 8:30am EST on the 13 day of each month with data for the prior month.

Employment Cost Index (aka ECI): 2+

This report measures the dollar cost changes on a quarter over quarter and year over year basis.
It focuses on 3 employment cost categories: total employment costs, wages and salaries and
benefit costs.

SOURCE: The Bureau of Labor Statistics of the US Department of Labor.

RELEASE: 8:30am EST near the end of the first month of the quarter for the prior quarter.

Philadelphia Fed Index: 2. See Regional Fed Manufacturing Survey.

Chicago Purchasing Managers Index (Chicago PMI and NAPM Chicago Index): 2. See
Regional Fed Manufacturing Survey.
Durable Goods Orders: 2

This report measures the dollar volume of orders, shipments and unfilled orders for durable
goods (goods with a lifespan expected to exceed 3 years). These orders are considered a leading
Economic Indicator of manufacturing activity.

SOURCE: The Census Bureau of the US Department of Commerce.
                                      th
RELEASE: 8:30am EST on the 26 day of each month with data for the prior month.

Gross Domestic Product (aka GDP): 2

This report is the broadest measure of economic activity. Annualized quarterly percent changes in
GDP reflect the growth rate of total economic output. GDP is a measure of the total of goods and
services produced by a country. It is considered the bell weather indicator of national economic
growth. The broad components of GDP are: consumption, investment, net exports, government
purchases and inventories. Consumption is by far the largest component of GDP.

SOURCE: The Bureau of Economic Analysis of the US Department of Commerce.
                                 rd        th
RELEASE: 8:30am EST in the 3 or 4 week of the month for the prior quarter with subsequent
revisions released in the second and third months of the quarter.

New York or Empire State Fed Index: 2. See Regional Fed Manufacturing Survey.

Consumer Confidence (aka Conference Board Consumer Confidence): 2-

This report is similar to the University of Michigan Consumer Sentiment Index. This report
describes the results of a monthly survey of 5,000 households contacted to ascertain the level of
consumer confidence in the US. This report has 2 sub-indexes: expectations and current
conditions.

SOURCE: The US Conference Board.

RELEASE: 10:00am on the last Tuesday of each month and providing data for the current month.

See Regional Fed Manufacturing Survey.

Help Wanted Index: 2-

A key barometer of the US job market. This report publishes the results of a monthly survey of 51
major US newspapers. Because advertisement volume has proven to be sensitive to labor market
conditions this survey provides a credible gauge of the local, regional and national supply of jobs.

SOURCE: The US Conference Board.
                                th
RELEASE: 8:30am EST in the 4 week of the month for the prior quarter with subsequent
revisions released in the second and third months of the quarter.

Housing Starts and Building Permits: 2-

Housing Starts are a measure of the number of single and multiple family residential units on
which construction is begun each month.

SOURCE: The Census Bureau of the US Department of Commerce.
                                         th
RELEASE: 8:30am EST around the 16 day of each month with data for the prior month.

Industrial Production and Capacity Utilization: 2-

The index of Industrial Production measures the physical output of the factories, mines and
utilities in the US. This report also measures capacity utilization (the extent to which the capital
stock is employed in production) – a critical gauge of the slack available in the economy.

SOURCE: The US Federal Reserve.
                                         th
RELEASE: 9:15am EST around the 15 day of each month with data for the prior month.

International Trade and Trade Balance: 2-

This report measures US imports and exports and is widely watched for trends in the overall trade
balance.
SOURCE: The Census Bureau of the US Department of Commerce.
                                         th
RELEASE: 8:30am EST around the 20 day of each month with data for the 2 prior months.

Producer Price Index (PPI): 2-

This report measures prices of goods at the wholesale level and is broken down by commodity,
industry and stage of production. There are 3 broad stages of production of goods: crude,
intermediate and finished. The Market tracks the finished goods index most closely as it
represents prices for goods that are ready for sale to the end user.

SOURCE: The Bureau of Labor Statistics of the US Department of Labor.
                                         th
RELEASE: 8:30am EST around the 11 day of each month with data for the prior month.

University of Michigan Consumer Sentiment Index (Sentiment Index): 2-

This report reflects the results of a survey of US households to determine their expectations and
current conditions.

SOURCE: The University of Michigan.

RELEASE: Preliminary - 10:00am EST on the second Friday of each month with data for the
current month; final – 10:00am EST on the fourth Friday of the month with data for the current
month.

Jobless Claims (Initial Claims): 3+

Initial Jobless Claims measure the weekly number of filings for state jobless benefits. On the
assumption that an increase in Jobless Claims signals slowing job growth, this report is a timely
Economic Indicator of the direction of regions within the US.

SOURCE: The Employment and Training Administration of the US Department of Labor.

RELEASE: 8:30am EST each Thursday with data for the prior week.

New Home Sales: 3+

This report indicates the level of new, privately owned, single-family houses sold and for sale in
the US.
SOURCE: The Census Bureau of the US Department of Commerce.

RELEASE: 10:00am EST around the last day of each month with data for the prior month.

Personal Income and Consumption (Personal Consumption Expenditures Index): 3+

This report measures personal income from all sources. The largest component of total income is
wages and salaries. Personal income is believed to be a reasonable indicator of future consumer
demand.

SOURCE: The Bureau of Economic Analysis of the US Department of Commerce.

RELEASE: 8:30am EST around the first business day of each month with data for the 2 prior
months.

Challenger Layoffs: 3+

This report describes layoffs in the US. It is prepared monthly by an outplacement firm and it
believed to lead the Jobless Claims Report.

SOURCE: Challenger, Gray & Christmas – an outplacement firm based in Chicago.

RELEASE: First week of the month for the prior month.

Existing Home Sales: 3

This report provides a measure of the level of sales of existing homes and is considered a good
Economic Indicator of demand-side activity in the housing sector.

SOURCE: The US National Association of Realtors.
                                      th
RELEASE: 10:00 EST around the 25 of each month with data for the prior month.

Beige Book (aka Survey on Current Economic Conditions): 3-

Summarizes current economic conditions in each of the Fed’s regions in the US. This report is
published 8 times annually by the Federal Reserve Board to assist the FOMC prepare for its
meetings. The Beige Book is seen as an indicator of how the Fed might act at its upcoming
meeting.

SOURCE: Data contained in the Beige Book is a compilation of information assembled by
Federal Reserve Districts.

RELEASE: The Beige Book is released at 2:15pm EST 2 Wednesdays prior to each FOMC
meeting.

Auto and Truck Sales: 3-

This report measures sales of all US-produced autos and trucks in the previous month. Since
autos and trucks account for 25% of all retail sales in the US, this report is seen as an important
indicator of Retail Sales.

SOURCE: Individual US auto and truck manufacturers with the US Commerce Department
making adjustments for seasonal factors.
RELEASE: Each US auto and truck maker releases its sales for the previous month during the
first 3 business days of the subsequent month and the American Manufacturers’ Association
consolidates these releases and announces them shortly thereafter.

Business Inventories: 3-

This report measures sales and inventory statistics from all 3 stages of the manufacturing
process – manufacturing, wholesale and retail. But by the time it is released all 3 of its sales
components and 2 of its inventory components have already been reported. Accordingly, retail
inventory is the only new piece of information.

SOURCE: The Census Bureau of the US Department of Commerce.
                                          th
RELEASE: 8:30am EST around the 15 of each month with data for 2 months prior.

Chain Store Sales: 4+

This chain store sales index is based on a representative sample of 9 large retailers and
measures sales on a weekly basis. The report is provided to paid-up subscribers an hour earlier
than the official embargo times.

SOURCE: The Bank of Tokyo-Mitsubishi and UBS Warburg.

RELEASE: Bank of Tokyo-Mitsubishi at 7:45am EST each Tuesday with data for the week ended
the prior Saturday.

Factory Orders: 4+

This report consists of the earlier announced Durable Goods Orders report plus 2 new
components - non-durable goods (food, tobacco etc.) orders and factory inventories. In addition
to seeing non-durable orders and factory inventories for the first time, the Market also watches for
revisions to the Durable Goods Orders Report, which can be significant.

SOURCE: The Census Bureau of the US Department of Commerce.
                                    st
RELEASE: 10:00 EST around the 1 business day of each month with data for the prior 2
months.

Productivity and Costs: 4+

This report measures the non-farm productivity of workers and the costs associated with
producing a unit of output.

SOURCE: The Bureau of Labor Statistics of the US Department of Labor.
                                         th
RELEASE: 8:30am EST around the 7 day of the second month of each quarter with data for the
prior quarter.

Redbook Retail Sales: 4+

A weekly report of same-store sales provided by 60 general merchandises and apparel retailers.
This report is provided to subscribers an hour earlier than the official embargo times.

SOURCE: Instinet Research, a Reuters Company.
RELEASE: 9:00am EST on Tuesday of each week with data for the week ended the prior
Saturday.

Construction Spending: 4

This report is broken down between residential, non-residential and public expenditures on new
construction. The monthly changes are both volatile and subject to huge revisions so this report
rarely has much Market impact.

SOURCE: The Census Bureau of the US Department of Commerce.
                                   st
RELEASE: 10:00am EST on the 1 business day of each month for the 2 months prior.

Money Supply (M2): 4

This report measures the supply of Money in the US.

SOURCE: The US Federal Reserve Board.

RELEASE: 4:30pm EST every Thursday with data for the week ended 2 Mondays prior.

National Association of Home Builders (NAHB): 4

This index measures homebuilder sentiment about single-family home sales and homebuyer
traffic. It is considered a good indicator of future housing activity.

SOURCE: National Association of Home Builders.
             rd
RELEASE: 3 Tuesday in each month with data for the prior month.

Regional Fed Manufacturing Survey (Chicago PMI and Philadelphia Fed Index): 4, with the
exception of the Philadelphia Fed Index and the Chicago PMI which are Class B Economic
Reports.

There are many regional manufacturing surveys and they are ranked in order of their timeliness
and the importance of the region. The Philadelphia Federal Reserve Bank’s publication takes
              st
place on the 1 of each month. All the manufacturing surveys report on whether the
manufacturing sector is expanding or contracting in their region.

SOURCE: Regional purchasing managers’ organizations and Federal Reserve Banks.
                                                                                        rd
RELEASE: Varies. The Philadelphia Fed Index is released at 10:00am EST on the 3 Thursday
of the month for the current month and the Chicago PMI is released on the last business day of
the current month for the current month.

Treasury Budget Federal Budget): 4

The monthly Treasury Budget data follows strong seasonal patterns, which produce huge month-
to-month fluctuations that tell Traders little about long term budget trends. Only in April – the most
important month for tax inflows to the Treasury – does the Market pay close attention to this
report.

SOURCE: The US Treasury Department.
                            rd
RELEASE: 2:00pm EST in the 3 week of the month with data for the prior month.

Consumer Credit: 4
This monthly measure of consumer debt is volatile and subject to massive revisions. It is also
released well after many other indicators of consumer spending: weekly chain store sales, auto
and truck sales, consumer confidence, retail sales and personal consumption.

SOURCE: The US Federal Reserve.
                        th
RELEASE: 3:00pm on the 5 business day of each month with data for the 2 prior months.
_____________________________________________________________________________

EXPLOITATION STRATEGIES
How do we exploit the potential of the Market moving vigorously in a direction that is not known
until the Economic Report that causes the response is made public?

Jack Schwager quotes Paul Tudor Jones as saying: “I don’t risk significant amounts of money in
front of key reports, since that is gambling, not trading.”

Marcel Link expresses the same sentiment: “The most important thing a high probability trader
wants to do before a scheduled news release is to be flat. The market can go either way when a
report comes out, and by having a position you are adding too much risk to your trading. It’s not
worth trying to guess which way the market will go after a report comes out. When a trader starts
doing this, he becomes a gambler, not a trader.”

1. Do not enter a trade within 2 hours of the release of a Class 1 or 2 Economic Report

2. If you find yourself in a trade with a Class 1 or 2 Economic Report about to be released,
   temporarily tighten your stop and relax your Limit.

If a Trader insists on attempting to exploit the release of a scheduled Economic Report, his
optimum strategy is a straddle.

A straddle is a trading strategy that enables a Trader to exploit his uncertainty as to the direction
in which the market will break out following the release of an Economic Report.

A straddle involves a trader concurrently placing a Buy Stop Order and a Sell Stop Order just
before an Economic Report is released. His intent is to enter long if prices break out to the north
or enter short if prices break out to the south. He then manually cancels one of the Stop Orders in
the event that the other Stop Order is filled.

There are 2 types of Straddle:

1. Consolidation Straddle – this approach is recommended by MTI when a period of
   Consolidation precedes the release of an Economic Report. The Day Trading execution rules
   are designed to enable a Trader to enter long if prices break out above Resistance or enter
   short if prices break out below Support:

       On a 30/15 minute chart, confirm that:
           a. The trading range of the Consolidation is less than 60 pips
           b. The Consolidation has existed for at least 6 hours
           c. An Economic Report is imminent

       Beware of the possibility of False Spikes
       Beware of the possibility of Whiplashes caused by back-to-back opposing Economic
        Reports
       Only Enter when the Trade meets the Equity Management Rules
       Place Entry orders 15 minutes before the Economic Report is released
         The horizontal length of consolidation often equals the diagonal length of the break out
         Enter and Exit according to these Rules:

          CONSOLIDATION                   ENTRY                                    EXIT RULES
            STRADDLE                      RULES                        STOP                         LIMIT
        Bull                     14 Pips north of             10 Pips south of Support     10 Pips south of
                                 Resistance at the zenith     on a 30 minute Chart         Resistance on a 30
                                 of the Consolidation                                      minute Chart or Cancel
                                                                                           and Replace until
                                                                                           Stopped Out
        Bear                     10 Pips south of Support     14 Pips north of             14 Pips north of Support
                                 at the nadir of the          Resistance on a 30           on a 30 minute Chart or
                                 Consolidation                minute Chart                 Cancel and Replace until
                                                                                           Stopped out

2. 1 & 2 Straddle – this strategy is only for Traders with nerves of steel. This approach can be
   applied to every Economic Report i.e. a preceding period of consolidation is not a
   prerequisite.

    The 1 & 2 Straddle is intended to exploit runaway breakouts with very little risk. It is generally
    a very short-term trade – often only a few very wild minutes.

    The execution rules are designed to enable a trader to enter long or short if the market rallies
    or dips by 10 pips as a direct result of the release of the Economic Report. The execution
    rules are:

         Confirm that a Class A or B Economic Report is imminent
         If one of these contingent orders is filled the other order must be cancelled manually at
          once
         If neither of these contingent orders is filled within 5 minutes of the release of the
          Economic Report both must be cancelled manually
         Enter and Exit according to these Rules:

            1&2                                                                    EXIT RULES
          STRADDLE                 ENTRY RULES                          STOP                        LIMIT
        Bull              3 minutes prior to release of the    The Bid price at time of    When momentum dies or
                          Economic Report place a Buy          order entry                 when a retracement
                          Stop Order 14 Pips north of the                                  exceeds approximately
                          current Bid price                                                20% of the rally
        Bear              3 minutes prior to release of the    4 Pips north of the Bid     When momentum dies or
                          Economic Report place a Sell         price at time of order      when a retracement
                          Stop Order 10 Pips south of the      entry                       exceeds approximately
                          current Bid price                                                20% of the dip

				
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