Starting with the Mortgage Bankers Association's weekly report on mortgage applications at 7am ET
At 8:30am ET, we'll get the August report on import and export prices, along with the Empire State manufacturing survey
At 9:15am ET, the Federal Reserve will be out with August figures on industrial production and capacity utilization. Economists are expecting industrial production to be higher by 0.3%, following July's 1.0% rise, while capacity utilization is expected to increase to 75.0% from July's 74.8%
At 10:30am ET, the Energy Department will issue its usual weekly report on crude oil and gasoline inventories
Your Ultimate Cheat Sheet to the Big Mac Index
By Jake Filip
With close to fifty billions burgers sold and available in nearly every region in the world, it’s no surprise that
The Economist uses the beloved Big Mac as a relatable figure of global exchange rates.
What is the Big Mac Index?
“Burgernomics” in the form of a Big Mac Index is a simple and direct means of calculating a global comparison of purchasing power parity. The index compares the strength of different currencies by looking at the prices of a Big Mac in different countries around the world, translated from original currency into the US dollar. We can use this to compare the strengths of different national currencies, assuming the costs of production to be similar in each country.
The Big Mac Index is an important indicator of currency values in different nations. In general, we can see whether currencies are under or overvalued.
In theory, prices will eventually converge to a similar number for an identical basket of goods and services in a country. In Europe, for example, the currency exchange rate is much higher, as evidenced in Norway where the average cost of the Big Mac is $7.20 compared to the American standard of $3.73. Conversely in any given McDonald’s (MCD) in Argentina you can get your hands on a burger for $1.78.
How Valuable is the Big Mac Index?
But like the fries they come with, the Big Mac Index should be taken with a grain of salt. While the Big Mac Index gives us a general idea of purchasing power, enlightenment is not found through the golden arches.
There lies problems within the index for not holding regional adjustments for the prices in assembling two all beef patties, special sauce, lettuce, cheese, pickles, and onions on a sesame seed bun. Asia — where the Big Mac is cheapest — can hold prices much lower.
However to produce more accurate results of purchasing power, UBS Wealth Management created an expanded index by figuring out the average income of workers and then finding out how long it takes to earn enough for a Big Mac. So while the Big Mac Index is fun, it still has flaws, and fails to produce anything more than a quantitative perspective on prices fast food junkies pay to eat.
Book Review
I just finished reading Tom Lydon’s book on ETF Trend Following. I know writers put in a lot of hard hours writing a book, so I always try to give them a fair shake, but I cannot put recommend this book. The book was too bogged down in investing basics and never really got into the meat of trend following. To sum the book up in a few words: Buy when your ETF crosses above the 200 day moving average and sell when it crosses below. That is the whole book in one sentence. I was disappointed because it didn’t explore other options like the 50 day moving average, etc…..
Overall: Don’t buy. Use that money to go to dinner.