Fundamental Analysis Definitions

Federal Open Market Committee – FOMC

The Federal Open Market Committee – FOMC is the body that sets the interest rate and credit policies of the Federal Reserve System.

Federal Discount Rate

The interest rate at which an eligible financial institution may borrow funds directly from a Federal Reserve bank. Banks whose reserves dip below the reserve requirement set by the Federal Reserve’s board of governors use that money to correct their shortag

Fed Funds Rate

The Fed Funds Rate is the interest rate at which banks make overnight loans to eachother.

FDIC

FDIC stands for Federal Deposit Insurance Corporation. Created by the US Congress, FDIC maintains the stability and public confidence in the US financial system by insuring deposits. Federal deposit insurance protects the first $100000 of deposits that are payable in the United States. See: fdic.gov

BLS

BLS stands for the Bureau of Labour Statistics. It is the principal fact-finding agency for the Federal Government in the broad field of labor economics and statistics. See also: BLS.gov, Employment Report

Big Mac Price Index

Introduced in September 1986 by the Economist magazine, the Big Mac Index has achieved notoriety as a financial indicator. The Index is a humerous guide to whether currencies are at their “correct” level – based on the theory of purchasing-power parity (

M3

A measure used to guage the entire supply of money within an economy. The ECB closely monitors M3 as it is seen as an important indicator of inflation.

Stagflation

Stagflation describes the combination of slow economic growth and high unemployment (stagnation) along with rising prices (inflation).

Establishment Survey

The establishment survey is a survey of businesses used in the Employment Report published monthly by the Bureau of Labour Statistics.

Balance of Trade

Balance of trade refers to the value of a countries exports minus it’s imports.