62. Trading the News - Economic Numbers - GDP Part 1
Produced By:
InformedTrades on 26 Feb 2008
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A lesson (more...) on what traders of the stock, futures, and forex markets look for when the Gross Domestic Product (GDP) Number is released.
As we have learned in previous lessons there are many components of the US Economy which can affect overall economic growth and inflation expectations. Some of the major examples here are how many people are employed in the economy vs. unemployed, how much the housing market is growing in different parts of the country, and at what rate the prices for different products in the economy are seeing increases.
As all of these things are so important to the economy and therefore to the markets, there are no shortage of economic reports which are released to try and help people gauge how things are going with different pieces of the economy. It is important for us as traders to understand the major reports here as even if we are trading off of technicals, understanding what is happening in the market from a fundamental standpoint can help establish a longer term bias for trading. In the short term an understanding of these numbers will also help to assess the erratic and sometimes extreme movements which can occur after economic releases.
The granddaddy of all economic reports is the release of the Gross Domestic Product (GDP) number for the economy. The Gross Domestic Product for the US or any other country is the final value of all the goods and services produced in that economy. Essentially what you get after calculating GDP by adding up the value of all goods and services produced in the economy is a measure of the size of the overall economy. It is for this reason that market participants will watch the GDP number closely as the rate of growth in this number represents the rate of growth in the overall economy.
As a side note here, GDP also allows a comparison to be made of the sizes of different economies from around the world, as well as their growth rates. To give you an idea of just how large the US Economy is, 2007 GDP for the United States was estimated at 13.7 Trillion dollars. This is in comparison to the next largest economy in the world, Japan which has a GDP of under 5 Trillion Dollars.
Quarterly estimates of GDP are released each month with Advance Estimates which are incomplete and subject to further revision being released near the end of the first month after the end of the quarter being reported. In the second month after the end of the quarter being reported preliminary numbers (which basically means more accurate than advanced) normally are released and then finally the final GDP number is released at the end of the 3rd month after the end of the quarter being reported on.
Traders are going to focus heavily on the growth rate released in the Advanced number and markets will also move on any significant revisions made in the preliminary and final GDP numbers. (less)
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Duration: 07:18
54. Simple Explanation of The US Economy For Traders Part 2
Produced By:
InformedTrades on 01 Feb 2008
Tags: howtotradetradingeconomy(more...)fundamentalanalysisdaytradeinvestingbusinessforexfutures
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A lesson (more...) on the second two components of the US Economy the Private and Government Sector and how these each affect forex, futures, and stock traders.
In our last lesson we began a discussion on the different components that make up the US Economy and how these relate to trading with a look at the Natural Resources and Labor Force components. In today's lesson we continue this discussion with a look at the Private Sector and Government components and how each of these relates to trading.
While having lots of natural resources and a large well educated labor force to produce goods and services from those natural resources is a great thing, without a way to organize these first two components of the economy, not much would get done. This is where the small, medium, and large businesses which make up the private sector come in. In addition to organizing the labor force to produce goods and services, the private sector is also responsible for raising the capital necessary to bring all these things together which they do through private investors, loans from commercial banks, the bond market, and/or the equities market.
While many people think that the US Economy is dominated by the large corporations, it may come as a surprise the large role that the small business play's in the US Economy. According to the US Department of State:
'Of the nearly 26 million firms in the United States, most are very small—97.5 percent ... have fewer than 20 employees,' the U.S. Small Business Administration says. 'Yet cumulatively, these firms account for half of our nonfarm real gross domestic product, and they have generated 60 to 80 percent of the net new jobs over the past decade.'
While we will go into more details about the private sector and how this all relates to trading in later lessons, it should be obvious at this point the large effect that the private sector has on all markets as they are the ones who: 1. Raise capital through bonds and stocks that we then trade, 2. produce the goods and services which drive demand for the commodities we trade and 3. Affect the foreign Exchange markets by playing a role in what goods and services are produced domestically, which we import from overseas, as well as cross boarder mergers and acquisitions. (less)
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Duration: 05:44
Buried in Debt: Funeral Expenses
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moneytalks on 14 Sep 2007
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Description: Ceremonies like weddings and funerals (more...) are often expensive affairs. But with funerals, most of the planning is done last minute, and saving money is the last thing on anybody's mind. But there are solutions... (less)
Mortgage Prepayment Programs
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moneytalks on 22 Oct 2007
Tags: mortgageprepaymenthousingnews
Description: We all know the world is full of people (more...) trying to convince us to pay for things we shouldn't. For example, programs that promise to help you pay off your mortgage ahead of schedule. Worth the money? Not according to money reporter Stacy Johnson. (less)
debt help
Added on: 31 Dec 1969
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debt freedom
Added on: 31 Dec 1969
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Added on: 31 Dec 1969
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