The Trader's Guide to Key Economic Indicators (Bloomberg Financial) [Hardcover]

Richard Yamarone (Author)

Book Description

ISBN-10: 1576603016 | ISBN-13: 978-1576603017 | Publication Date: November 21, 2007 | Edition: Revised & enlarged

Yamarone, a former trader, academic, and current Wall Street economist, shows readers what to look for in new economic data reports, how to react, and how to use or avoid the popular tricks of Wall Street. This new, fully updated edition covers everything from GDP and employment to consumer confidence and spending, with two new chapters on commodities and fixed-income indicators. Yamarone's clear and concise analysis focuses on the most important economic indicators in today's marketplace.

Editorial Reviews

Review

"An easy-to-understand guidebook for investors... offering 'tricks from the trenches' you won't find anywhere else." -- Rhonda Schaffler, Senior Correspondent/Anchor, CNNfn

"Every stock and bond trader should keep this invaluable description of relevant economic indicators within easy reach." -- David M. Jones Ph.D., Chairman of the Board, Investors' Security Trust Company; Former Chief Economist, Aubrey G. Langston

"Will enable you to emulate the methods and successes of the pros." -- Stan Richelson, Coauthor, The Money-Making Guide to Bonds --This text refers to an out of print or unavailable edition of this title.

Review

"Every stock and bond trader should keep this invaluable description of relevant economic indicators within easy reach."
—David M. Jones, PhD
Chairman of the Board, Investors' Security Trust Company Former Chief Economist, Aubrey G. Lanston

"Richard Yamarone has done a masterful job of describing technical economic concepts in plain English. This book will enable you to emulate the methods and successes of the pros, by instructing you as to which indicators are the most relevant and how to use them to make money in the financial markets."
—Stan Richelson
Coauthor, Bonds: The Unbeaten Path to Secure Investment Growth

See all Editorial Reviews

Product Details

• Hardcover: 328 pages
• Publisher: Bloomberg Press; Revised & enlarged edition (November 21, 2007)
• Language: English
• ISBN-10: 1576603016
• ISBN-13: 978-1576603017
• Product Dimensions: 6.3 x 1 x 9.3 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #472,784 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

59 of 62 people found the following review helpful:

3.0 out of 5 stars Useful as a reference guide, could have been much more, February 5, 2005

By 

Mercenary Trader - See all my reviews

This review is from: The Trader's Guide to Key Economic Indicators (Hardcover)

This book contains lots of factual information and useful overviews as to what the key economic indicators are, how they are constructed, what their purpose is, and how they work. With that said, it felt more like a pocketbook of facts and figures, similar to the ones published by The Economist, than an actual "guide" for traders.

In the introduction, the book is offered as a useful source for anyone new to these indicators, but Yamarone never really mentions one of the most important aspects of trading: how to prioritize information flow.

The drawback of fundamental trading is the susceptibility to "analysis paralysis," i.e. the danger of information overload causing you to freeze like a deer in the headlights. On the other side of the coin, traders who try to digest a mountain of information without prioritizing it are more likely to make their decisions based on a handful of dominating factors, or even hunches, and then simply use the additional supportive data they find to justify those decisions. Studies of decision-making habits conducted on CIA intelligence analysts show that, when there is a surplus of information, it's a natural tendency to use only a small portion of the information available, while incorrectly assuming that all of it is being utilized.

Yamarone does not mention these pitfalls, nor does he cover the reality of theme trading and indicator fashion. Indicators and market relationships go in and out of style, much like short skirts or thigh high boots on the catwalks of Paris and Milan. Traders will collectively switch their focus from one relationship to another, one data set to another, and so on; the trade deficit means nothing for a while, then suddenly it means everything. The Employment Situation is critical for a time, then later inconsequential as long term yields come to the fore. It's all about context, and that isn't addressed at all.

In writing for a large audience, Yamarone also made sure to keep his opinions bland and uncontroversial. I found this a little disappointing in terms of what was left out. For example, consider this tidbit from the chapter on New Residential Construction:

"Before the 2001 recession, housing starts were the most reliable and accurate measure of U.S. economic health... the 2001 recession broke this pattern. Housing starts remained strong during the downturn because historically low inflation kept mortgage rates low..."

For a student of economic history--or a trader wishing to profit from macroeconomic movements--this is highly provocative subject matter. Questions come tumbling forth: Has a longstanding relationship been declared invalid by the 2001 pattern, or was it a case of unprecedented doubling down via credit stimulus? Were mortgage rates low simply because inflation was low, or more because the fed was hell-bent on pumping easy money into the economy to avoid a reckoning? Is it historically a good thing to try and avoid all painful recessions, or are painful recessions occasionally necessary, as a cleansing process after a period of extreme speculative excess, with bad-to-worse consequences for putting them off? Is there greater risk when a paper asset bubble transitions into a real estate valuation bubble?

Yamarone sails past all of this, like an amateur checkers player doing commentary for a chess tournament. My guess is that he is well aware of these subtexts, but his overriding goal was to avoid fistfights and not offend anyone. When conflict avoidance is a key factor, milktoast commentary is often the lukewarm result!

In my reviews I occasionally suggest alternate titles that better reflect a book's contents. I would call this one "the MBA grad's guide to economic indicators," or maybe "the junior analyst's guide to economic indicators." If it were truly aimed at traders, it would (or should) have more to say about prioritizing information flow, gaming expectations, and paying attention to context, context, context.

As it stands, Yamarone has put together a decent reference source to grab off the shelf when a wallflower data set becomes the latest belle of the Wall Street ball. By that measure, it's a worthwhile purchase.

15 of 15 people found the following review helpful:

5.0 out of 5 stars Superb Overview of Major Economic Indicators for Traders, June 23, 2004

By 

Donald Mitchell "Jesus Loves You!" (Thanks for Providing My Reviews over 109,000 Helpful Votes Globally) - See all my reviews
(VINE VOICE)    (HALL OF FAME REVIEWER)    (TOP 100 REVIEWER)   

This review is from: The Trader's Guide to Key Economic Indicators (Hardcover)

Even if you once knew all the ways that economic indicators are defined, data collected and reported, chances are that all of this has changed (unless your knowledge is less than 2 years old). In addition, the best way to use these indicators is constantly changing as new analytical tests are developed and back-checked. So if you are the chief economist for a Wall Street investment bank or brokerage firm, you probably don't need this book. But if you hold stock and bonds in the United States less often than 10 years, you can profit from this book.

Each chapter provides a delightful history of how a relevant indicator was developed, how the measurements are made now, how to apply the indicator for stock and bond investing and the latest technique for getting an "edge" on just looking at the indicator alone. The material is written in the kind of simple language that almost anyone can easily understand. The math is simple, too. If you can do arithmetic, you can understand this book.

There are individual chapters GDP; leading, lagging and coincident indicators; employment; industrial production and capacity utilization; indices from the Institute for Supply Management; manufacturers' shipments, inventories and orders; manufacturing, trade inventories and sales; new residential construction; consumer confidence and sentiment; advance monthly sale for retail trade and food services; personal income and outlays; and the consumer and producer price indices. Each discussion looks at how these data help you understand the future business cycle, interest rates, corporate profits and Federal Reserve actions.

I thought that the graphs were one of the best parts of the book. You can judge for yourself how powerful the relationships are that Mr. Yamarone outlines.

As I finished this book, I realized how nice it would be to have similar books for consumer decisions (like when to refinance your home, etc.) using the same kind of indicators in different ways.

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9 of 9 people found the following review helpful:

3.0 out of 5 stars not bad, Baumohl's better, May 23, 2009

By 

Dave Backus @ NYU - See all my reviews

This review is from: The Trader's Guide to Key Economic Indicators (Bloomberg Financial) (Hardcover)

I teach MBA students at NYU and have read pretty much everything that's out there on macroeconomic indicators. The Economist Guide has its usual lively style, but gives you a weird mix of data and theory (bad theory, in my view). This book is better, written pretty well and focused on how you'd use various indicators. Almost as good and much shorter is the Econoday guide, most easily found via Bloomberg's Economic Calendar (go to Bloomberg, look for the calendar under Market Data). I also liked the JP Morgan Global Data Watch Handbook, but they seem to have retired it.

Right now the best of the lot is Bernard Baumohl's book, The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities, 2nd Edition. It gives you a clear and precise description of the most important economic indicators (what they are, how they're used). Also covers countries outside the US, which is a must for my students.

For the reviewer who complained about access to data, the best source to public data is FRED: [...]