The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunit

The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunit

Bernard Baumohl
2nd edition
Jul 24, 2007
Prentice Hall
“Economic statistics, employment data, Federal Reserve surveys. Think they are boring? Think again! They can drive markets into a frenzy, causing billions of dollars to be made or lost in an instant. Bernie Baumohl brilliantly, clearly, and, yes, entertainingly describes what every investor and business manager should know about economic indicators: which ones move markets, how to interpret them, and how to use them to spot and capitalize on future economic trends. The Secrets of Economic Indicators is an extraordinary and insightful work–an enormously important contribution to the body of financial literature. Read it and then keep it on your desk. Consult it the next time you are deluged with a flurry of economic statistics. Your understanding certainly will be enhanced, and your portfolio will likely be as well.”

–Robert Hormats, Vice Chairman, Goldman Sachs (International)
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Latest reviews

Good Primer for new order flow traders

I read this book after a really sharp orderflow trader from another site had recently posted a lot of insightful views on order flow trading.

The basic application is to identify what will either generate or change order flow in the markets.

Really good book for a price action trader to begin to correlate what is underlying your trades, and learn to anticipate trades more clearly by grasping more of the big picture.
Will this book make you a better trader or investor? By itself, probably not.

This book by Baumohl is a good book to have in one's reference library if you use government and private indicators to try to ascertain where the economy and, more specifically, the stock market might be headed. Bernard has not only listed all the most common indicators, but has given the source, quality, reliability, timing, and importance of each indicator upon the markets.

Will this book make you a better trader or investor? By itself, probably not. But, it is always useful to understand what indicators the 'general public' is viewing and how these indicators tend to impact on an un-informed investor's actions. It is probably a book more useful to a seasoned investor who is continuing to work to improve his investment analysis methods and his understanding of how various indicators can 'psychologically' impact the markets.
This is a must read.

What is it about?
Despite the "waltish" title, this book provides a description and interpretation of Major Economic Indicators. It is mostly focused on US data, but includes information about EU, German and Japanese data too.

The Good Bits:
The book has a chapter dedicated to each Major economic indicator that a trader is likely to meet throughout a quarter facing the markets. The book is further split into sections that collect similar indicators together (Prices, employments, spending, manufacturing etc)

Each chapter is layed out in an identical format, that describes its market sensivity, a one line introduction, when it is released and where to find it.

Each chapter then goes on to the following sections:

Why is it important?
How is it Computed?
The Tables: Clues
Market Impact

The end of the book has a list of online resources for economic releases and data in general.

The Bad Bits
The last section on each indicator - Market Impact - tries to explain the expected reaction across Stocks, Bonds and currencies should the release come in higher or lower than expected. In my experience this is a little too prescrptive, and readers are advised to take this last section with a pinch of salt.

More information on EU and UK data would be nice.

This is a must read. Granted, those reading this review are unlikely to be making macro bets, and so some of the information is redundant. However, For those that "trade the news", this book can provide insights into how information other than the headline figure can be the driving force behind a move in the markets. For those that like to avoid the news, the book helps put each indicator into context and allows a fuller picture of the economic situation to be painted.