Suppose you have a way of knowing these numbers ahead of time, before other traders and market participants. Suppose you know ahead of time with good probability what these number will be relative to expectations before they are released, you will have an advantage if you are a shorter term investor/trader - the Warren Buffett Way is not the only way to make money. Enter the Ceridian-UCLA Pulse of Commerce Index.
Researchers at UCLA found a way to measure the overall economic activity in realtime by tracking the volume and location of fuel purchased. This index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers. The researchers back tested their numbers and found that is highly correlated with the govt numbers released later in the month[Link to White paper]. Of course, a widely known useful index published on the Internet would have been factored and discounted by the stock market....however, UCLA only started publishing the Ceridian Index in Feb 2010 so it is still not widely used and the vast majority of investors still don't know how well it correlates with other economic numbers.
The coming weeks will be very interesting for several reasons. After the stock market sold down in May 2010, there is wide spread belief on Wall Street is that the US economy has slowed due to the "European crisis". This belief has also been reinforced by the disastrous disappointing jobs report release in early June [Link]. The Ceridian Index shows a completely different picture - the index had a massive surge of 3.1% in May, the one of the biggest, if not the biggest, rise in this recovery. The US govt will be releasing more numbers in the coming days/weeks for the performance of the US economy in May 2010 and it will be interesting to see if the Ceridian Index will be proven correct over the more pessimistic views of most analysts. The stronger than expected US economy and ample liquidity is the main reason for my projection that the stock market will rally until some time in end Jul.
The mainstream financial media is starting to report on the Ceridian Index but it still calls it a "little noticed indicator" [Read : Truckers Say Market's Wrong, Economy Grows]. Over time as more people watch the Ceridian Index, its utility for traders will decline but I think we still have some time to exploit this.
For the longer term, I believe the prognosis for global economy is poor. We are coming to the tailend of a stimulus driven recovery and many govts around the world have began to realise that growth cannot be sustained without addressing the high level of debt in the system. Many have began to implement austerity (painful?) measures and the global economy may have to go through some adjustment before it can get on a more sustainable path of recovery. The UK govt emergency budget based UK growth on several assumptions UK's ability to grow its exports and demand from surplus nations to replace the growth generated by govt spending and financial sector growth. Its austerity measures will start to bite faster than the global economy can change to provide support for UK growth.