Economic Data That Moves Markets - Adviser Investments

Economic Data That Moves Markets

Floods of fresh data and bold headlines come out every day claiming to provide insight on our economy. How do we separate the signal from the noise? In our webinar Rocket or Rollercoaster: Where Will the Markets Go From Here?, Chief Investment Officer Jim Lowell talked about the indicators we watch to help us understand and anticipate market moves.

Please enjoy the excerpt below and click here for the full webinar replay to hear more.

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Jim Lowell

What economic data matters most to us and what news moves markets? From a macro perspective we’re always interested in whether the Fed is being more or less accommodative, including whether they are creating an environment that’s conducive to more rather than less economic activity.

We also look at policies that may or may not impact or impede economic activity. In that regard, we’re mainly concerned with the US and China, the two world superpowers and super economies to see how they’re faring in terms of rates of economic growth, how sustainable they may or may not be.

The economic data we monitor really runs the gamut. The manufacturing side of the economy gets a lot of headline press but only accounts for about 10% of our overall economic activity. So, we watch it.

But for a consumer-driven economy like ours, of course, the consumer is paramount. We look at income, spending, savings, household, debt, the health of the US consumer, and that often correlates to the jobs data and whether or not we’re seeing a fully employed and increasingly higher salary workforce that can spend more in the economy and continue to help generate not just the activity but growth.

What else? We look at earnings, of course. We often say that the earnings drive the markets. Twelve months ago, when we were looking at earnings, we knew that things were going to be messy this year. And we pretty much ignored guidance because nobody knew what the way forward was.

At this juncture, as we’re beginning to see Q2 earnings flood in, we’re paying attention not just to earnings, but also to guidance because we think guidance is becoming again, more relevant.

*Webinar recorded after the market closed on Wednesday, July 28, 2021.

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