Sometimes, you have to look beyond the standard data to get a sense of what's in store for the economy and financial markets. Alan Greenspan was a true genius at this. The legendary Federal Reserve chairman, of course, watched all the usual economic indicators: GDP, monthly unemployment and net jobs added, inflation indicators like the consumer price index and producer price index, etc. But the "Maestro" also loved less conventional indicators that gave him a bit of an edge on predicting where the economy and markets were heading. These included... - The price of scrap steel: Greenspan thought this price indicated whether U.S. manufacturing demand was beginning to rise.
- Cardboard box shipments: Greenspan closely watched figures from the Fibre Box Association to see whether box shipments were rising or falling. This gave him a sense of whether or not businesses and consumers were ramping up their buying and shipping of goods.
- Dry cleaning sales: The vaunted Fed chairman believed dry cleaning is an unnoticed luxury that people use more when they're optimistic about the economy, so he kept a watchful eye on this mom-and-pop industry.
- The sale of men's underwear: Yes, it's true. Greenspan thought that because nobody sees a man's underwear, it's the first item many men stop replacing when they turn bearish on the economy.
Of course, the economy has changed dramatically since Greenspan's Fed tenure (1987 to 2006). It's not as manufacturing dependent, there's a lot more cardboard box shipping - thanks to internet retailers like Amazon (Nasdaq: AMZN) - and demand for dry cleaning has been in decline for years. And men's underwear? Well, the jury's still out on that one. Post-COVID-19 Economy Accurately reading data is even more difficult today because COVID-19 shocked the world, shut down economies, and drove people to work, learn and socialize via the internet. Such a sudden change was unprecedented. But the pandemic also gave us a few new indicators to watch. And these may be beneficial to savvy investors looking to get an accurate, timely read on where the economy and markets are going. Here are a few that are on my dashboard. Offbeat Indicator No. 1: New COVID-19 Cases After spiking during the summer due to the delta variant, COVID-19 case numbers have been dropping like a rock in recent weeks. According to The New York Times, COVID-19 is in retreat. New cases fell by more than a third last month in the U.S. and by more than 30% worldwide. And if you consider that The New York Times rarely passes up a chance to find the gloomiest angle on a story, this may be even better news than it sounds. COVID-19 cases may seem like an obvious indicator, but they may be even more important to the stock market than you might think. I looked at the trajectory of new cases and the performance of the Nasdaq 100, which tracks the 100 largest nonfinancial companies listed on the Nasdaq. When cases surge, investors retreat to the safety of large cap tech stocks. So stocks such as Apple (Nasdaq: AAPL), Facebook (Nasdaq: FB) and Google parent company Alphabet (Nasdaq: GOOGL) do well (with a bit of a lag). When the pandemic fades and new cases drop, investors tend to reallocate their money out of those stocks and into other areas of the market (again, with a short lag). Since the surge of delta variant cases peaked in mid-September, the Nasdaq 100 is down around 6%. And, in fact, more than a quarter of stocks in the Nasdaq 100 are now in a bear market, meaning they're off at least 20% from their 52-week highs. So be sure to keep an eye on the COVID-19 case count, as tracked by the Centers for Disease Control and Prevention. Offbeat Indicator No. 2: Foodies and Jet-Setters Similar to Greenspan watching dry cleaners during his tenure, we should be watching airlines and restaurants. Many market analysts are monitoring these industries as a sign of how quickly Americans are resuming their normal routines. They can also indicate how people are reacting to the ebbs and flows of COVID-19. As flyers and diners return, economic activity and the stock market should respond positively. But if they begin to stay home again, watch out. The Transportation Security Administration (TSA) tracks security checkpoint traffic on a daily basis. And you can too. The data shows that the number of people moving through U.S. airports is nearing pre-COVID-19 levels. Take a look for yourself... Similarly, full restaurants are a great sign that the economy is rebounding. And OpenTable reports that restaurants have completely recovered the level of customers they served prior to the March 2020 plunge... If the number of COVID-19 cases rises again as colder weather sets in - or if another variant emerges - these indicators will be critical to watch. The bottom line here is that smart investors crave what is called "high-frequency data." Yet most economic data findings - including the indicators that move the market most, like unemployment and GDP - are monthly or quarterly. They're also dated, as the government reports many of them weeks after the period they reflect. Getting timely data from proprietary sources, like OpenTable, can give you a much better idea of what the economy is doing right now... and how you as an investor should react. Invest wisely, Matt P.S. And if these indicators continue to improve and investors migrate to microcap stocks, you'll want to know the best ones for your portfolio. That's where Chief Investment Strategist Alexander Green comes in. He's just identified a stock that checks all the boxes in his Dream Microcap Checklist. Just click here to learn more. | 
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