Chapter 3. Betting with the House

Better Than Forecast

These three simple words have unbelievable power to influence financial markets: “Better than forecast.” Most calendar weeks are crowded with significant financial news; each announcement is preceded by a flurry of forecasts and predictions. Financial instruments often react violently to the differences between an announced economic metric and its consensus estimate. Examples include the Consumer Price Index (CPI), Producer Price Index (PPI), Jobless Claims, Housing Starts, New Home Sales, Balance of Trade, Durable Goods Orders, Consumer Sentiment Indexes, and a variety of metrics regarding manufacturing, productivity, and spending—the list is long enough to guarantee a few significant ...

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