Corporate Bond: a debt instrument issued by a corporation to raise money effectively in order to expand its business. The term “corporate bonds” tend to refer to longer-term debt with a maturity date falling at least one year after the issue date. “Commercial paper” typically refers to debt with a short maturity.
Source: Wikipedia
Cyclical Sector: A sector that is sensitive to economic fluctuations and tends to exhibit more radical swings, correlated with the overall business cycle, such that revenues are generally higher in periods of economic prosperity and expansion, lower in periods of economic downturn and contraction. There are nine sectors considered cyclical: basic materials, capital goods, communications, consumer cyclical, energy, financial, health care, technology and transportation.
Sources: Investopedia, About.com, Mindxpansion
Dark Pools: Large trades by financial institutions that are offered away from public exchanges so that trades are anonymous. Benefits of a dark pool include: anonymous trading with minimal market impact, price improvement and opacity, lower transaction costs, less information “leakage” and access to as much liquidity as possible through technology. Some traders that use an investment strategy based on liquidity feel that dark pools should be publicized in order to ensure trading is “fair” for all parties involved.
Source: Wikipedia, PriceWaterhouseCoopers, Investopedia
Decouple: A situation in financial markets where the return on two asset classes deviate from their expected or normal patterns of correlation. Decoupling occurs when two different asset classes that usually rise and fall in unison begin to move in opposite directions, such as one increasing in value and the other decreasing in value.
Source: Investopedia, Wikipedia
Deposit Facility: Within the Eurosystem, a system for overnight deposits at a national central bank. Deposits of this type are repaid at a pre-specified interest rate. With the new rates announced by the ECB, banks will pay the ECB 10 basis points to hold their money.
Source: European Central Bank Online Glossary
Durable Goods Orders: Durable goods are products consumers purchase that last longer than a one-time use. Durable goods orders are economic indicators released by the Bureau of Census that reflects new orders placed with domestic manufacturers for delivery of factory hard goods in the future. Orders placed in current months may provide work in factories for many months to come as they work to fill the orders.
Source: Investopedia
Earnings Season: Four times in a year when a majority of public companies release financial information. Earnings season typically lasts about a month and starts the second week of January, April, July and October. Often communicated by press releases, conference calls and filings with the SEC—companies share earnings-per-share, financial statements and commentary from management.
Earnings season can be a time when markets experience of more volatility and trading volume. Much of this reaction is based centers on the difference between what companies were expected to report and what they actually reported.
Source: InvestingAnswers
ETF: An ETF is an abbreviation for exchange-traded fund, which is an investment fund traded on stock exchanges such as the NASDAQ-100, S&P 500, Dow Jones, etc. ETFs hold assets such as stocks, commodities or bonds and they trade close to its net asset value over the course of the trading day. As one investor put it, ETFs don’t try to outperform their corresponding index. Rather, they want to replicate its performance. ETFs have been in existence since the 1980s but have risen in popularity in the last 10 years or so.
Source: NASDAQ.com and Investopedia
European Central Bank (ECB): Formed in Germany in 1998, the central bank responsible for the monetary system of the European Union (EU) and the euro currency. The ECB works with the national banks of the 27 EU members to formulate monetary policy that helps maintain price stability in the EU.
Source: Investopedia, Wikipedia
European Debt Crisis: A period of time in which several countries in Europe faced the collapse of financial institutions, high government debt and rising bond yield spreads in government securities. It first began with the collapse of Iceland’s banking system in 2008 and ultimately spread to Greece, Ireland and Portugal, among other countries. The crisis made it difficult for many countries to repay their government debt without the assistance of a third party organization such as the European Central Bank. The crisis eventually led European nations to create and implement several financial support measures such as the European Financial Stability Facility and the European Stability Mechanism.
Sources: Wikipedia, Investopedia, Business Dictionary
Eurozone Purchasing Managers Index: The Eurozone Manufacturing Purchasing Managers Index (PMI) assesses business conditions in the manufacturing sector. This index is an indicator that is followed closely because the manufacturing sector represents nearly a quarter of total Eurozone GDP. It is believed to be a good reflection of business conditions and the well-being of the economy. Values above 50 signal an expected increase of business activity and values below 50 indicate an expected deterioration.
Source: FX Words
Federal Funds Rate: The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. Note: The federal funds rate is often confused with the discount rate, which is the interest rate the Federal Reserve charges on loans directly from the Federal Reserve Bank. But they are not the same.
Source: Investopedia, Investing Answers
Federal Open Market Committee (FOMC): The branch under the Federal Reserve system that determines interest rates as well as growth or expansion of the money supply in the U.S. Members include seven board of governors and five reserve bank presidents. They typically meet eight times a year.
Source: Investopedia, Wikipedia
Federal Reserve Board: The governing body of the Federal Reserve is made up of seven individuals. The governing board members are appointed by the President of the United States and must be confirmed by the Senate. A full term length is 14 years, and one term begins every two years. A member who serves a full term may not be reappointed but a member who completes an unexpired portion of a term may be reappointed.
Sources: Investopedia, Federal Reserve
Federal Reserve Chairman: The chairman of the Federal Reserve Board is appointed by the president and approved by the U.S. Senate. The board is the governing body of the Federal Reserve System, which sets policy for discount rates, reserve requirements and other key economic decisions.
Source: Investopedia
Fiat Currency: legal tender that is not backed by a physical commodity such as gold or silver. The relationship between supply and demand determines the value of fiat currency. Since fiat currency is not linked to a physical commodity, it can become worthless due to inflation. If faith is lost in a nation’s paper currency, then the money ceases to hold value.
Source: Investopedia.com
Fiscal Cliff: A term used by economists regarding the implications of the expiration of income-tax cuts first enacted under President George W. Bush, the end of payroll-tax reductions and automatic decreases in government expenditures. There is concern that the combined effect of spending cuts and tax increases will be a clip of 3 percentage points from growth if allowed by Congress and the President to occur in 2013.
Source: Wikipedia