The other day I wrote a response to a reader’s request that I check out an analysis from someone selling his proprietary charting data. Below is a sentence from the column …
Sounds like a lot of hocus pocus to me. I like to deal in reality, so I look to the fundamentals above everything else.
I thought it might be helpful to wade a bit deeper into this concept, as I believe that the most successful trader/investors are those that actually school themselves to be current on all facets of the global economy. For example, if you trade forex, can you be consistently successful without understanding the global economic influences that affect currencies? I suppose it is possible, if you are a Master Technical Analyst, but, realistically, most of us need to know what is going on, we need to understand the economic fundamentals to make money consistently.
In that same column, I gave an example of information I review to understand the global economic picture (global M&A activity), and so I will do the same today …
Asia’s developing economies are expected to grow by just under 8% in 2011, according to the Asian Development Bank (ADB). In its annual Asian Development Outlook it predicted that the region would expand solidly over the next two years.
This pace of growth clearly shows that Asia (including India) will remain the driver of global economic growth, at least until the U.S. and Europe get back to a solid 3-4% annual growth rate. Now, one could argue that 8%, more or less, is an inflationary pace, and one would be correct, but when one looks deeper, it is easy to see that China (the leader in Asia) understand this and it is raising interest rates (among other things) to curb its overheated growth …
Participants there shrugged off yesterday’s news of another 25 basis point increase to one-year lending and borrowing rates by the People’s Bank of China. That was the fourth such move in less than six months … China’s latest data featured the HSBC PMI Services Index for March. It came in at 51.7, which is down slightly from the 51.9 that was posted for the prior month.
It is not difficult to acquire such information daily. Simply subscribe to news feeds, set up alerts on economic or financial websites, or subscribe to any reputable financial online magazine. As another example, if you would like to see what draconian budget cuts do to an economy in recovery, look to the information below.
Industrial production in the United Kingdom during February reportedly fell 1.2% after it increased by a downwardly revised 0.3% in the prior month.
Since Britain is the third largest economy in Europe, its status is quite helpful in understanding how the European Union economic recovery is going, as it is equal to the U.S. in economic size. To do well in this arena, do what you do, but do not neglect the fundamentals.
Trade in the day – Invest in your life …
