Brief financial analysis pointer

To tune into the state of the market does not always require a deep intuitive insight. Sometimes it just requires a brief, but accurate reading of information. For example, I subscribe to the Wall Street Journal’s news alerts and yesterday they sent out the following e-mail:

“Minutes from the Federal Reserve’s September policy meeting indicate that members expressed differing views on the inflation outlook and whether to curtail or expand mortgage-backed securities purchases.”

The specifics of this e-mail alert are not what is important in my mind. So what is important?

1. That this e-mail represents an insight into the thinking of the Federal Reserve Board’s thinking.

2. That the recently consensus Fed (the proper context) now is experiencing “differing views” about economic statistics. That in turn means…

3. That the Fed has “differing views” about the economy (a conclusion).

4. The Fed can be relied upon to have their fingers on the pulse of the economy (an assumption). Consequently, the Fed’s differing views about the economy means that the economy must be mixed (a conclusion).

5. The economy has sucked for a while now (a fact). So a mixed view of the economy by the Fed means that change is afoot.

6. Most economic statistics have been weakly positive (a fact). So the change that is afoot is that the economy is improving.

*****

From very few words in the e-mail there was a lot of information contained within. Consequently, as individual investors we don’t need to have a huge staff of analysts, we just need to be able to process the news effectively.

Jason