Tag: Macro

macro analysis

Guessing Market Cycles

Guessing Market Cycles

Market cycles can be analized through the formation of bubbles consisting of four phases: Accumulation, Mark-Up, Distribution, and Mark-Down. Usually, accumulation coincides with the early stages of recovery, mark-up with the consolidation of the economic condition leading to a bullish sentiment, distribution substantially with lateral movements and indecision in market sentiment, and mark-down with the early stages of mid recession.

Oil Correlations with Commodity Currencies

Oil Correlations with Commodity Currencies

Currencies move with supply and demand, politics, interest rates, speculation, and GDP. Thus, whenever growth in a country is mainly commanded by commodities exports, some currencies are generally correlated with commodity prices. Major commodity currencies include the Australian Dollar, the New Zealand Dollar, the Canadian Dollar, the Japanese Yen, and the Swiss Franc. Minor currencies include the Russian Ruble, the Colombian Peso, and the Peruvian Sol.

Lagging Indicators

Lagging Indicators

Lagging indicators represent financial signs that becomes apparent only after a large economic shift has taken place. Such indicators are used to confirm the recent strength or weakness of economic activity. The Conference Board Lagging Index generally reacts after the start of recessions and expansions.

Coincident indicators

Coincident indicators

These variables track the current state of the economy; thus, coincindent indicators are useful to understand the strength and resilience of current economic conditions. Specifically, such metrics are used in conjunction with leading and lagging indicators to get a full view of where the economy has been and how it is expected to change in the future.

Leading Indicators

Leading Indicators

The leading economic index (LEI) for the United States was implemented in 1996 and introduced the interest rate spread as a measure for recessions but also measures used to cover manufacturing orders, commodity, prices, and inflation. The LEI index is thought to change in advance of the general economy; thus, it is used to gauge whether the pace of future business activity is expected to accelerate, decelerate, or trend sideways.

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