Glossary

Plain-English definitions of the market, macro and AI terms used in our reports — including the vocabulary of causal analysis that CausifyMarket is built on.

A

Algorithmic trading: Buying and selling securities using computer programs that follow predefined rules, often at speeds and volumes no human could match.
AI hallucination: A statement produced by an AI model that sounds plausible but is false or unsupported, such as an invented figure or event. More in the FAQ.
Asset class: A group of investments with similar characteristics and behaviour — for example equities, bonds, commodities, currencies or digital assets.

B

Basis point (bp): One hundredth of a percentage point (0.01%). A rate rise from 4.00% to 4.25% is a 25 basis point increase.
Bear market: A decline of 20% or more from a recent peak. Bull vs bear markets.
Bid-ask spread: The difference between the highest price a buyer will pay and the lowest price a seller will accept. Narrow spreads signal a liquid market.
Black swan: A rare, unpredictable event with extreme impact that seems explainable only in hindsight. More in the FAQ.
Bond yield: The return an investor earns on a bond, expressed as an annual percentage. Yields move in the opposite direction to bond prices.
Bull market: A sustained rise in prices, commonly identified after a 20% gain from a low.
Buyback: When a company repurchases its own shares, reducing the number outstanding and often supporting the share price and earnings per share.

C

Causal inference: Methods for estimating cause-and-effect relationships from data rather than simple associations. More in the FAQ.
Causal read CausifyMarket: The part of each key event in our reports that explains why the event plausibly moved prices: a mechanism, the confounders considered and a confidence level. How to read a causal read.
Confidence level CausifyMarket: How strongly the data supports a causal read: high when the mechanism is directly evidenced, medium when plausible but inferred, low when speculative, undetermined when the event's effect cannot be separated from confounders.
Confounder: A factor other than the event being analysed that could explain the same price move — a sector-wide rally, macro news, or earnings-season timing. Every causal read lists the confounders considered.
Consumer Price Index (CPI): A measure of the average change in prices paid by consumers for a basket of goods and services; the most watched inflation gauge. Why CPI moves markets.
Correction: A decline of 10% to 20% from a recent peak.
Correlation: A statistical measure of how two variables move together, from −1 (opposite) to +1 (in lockstep). Correlation alone does not show that one causes the other. Why it matters.
Credit spread: The extra yield investors demand to hold a corporate bond instead of a government bond of the same maturity. Widening spreads signal rising perceived risk.

D

Diversification: Spreading investments across assets, sectors and regions so that no single loss dominates a portfolio.
Dividend: A share of company profits paid to shareholders, usually in cash and on a regular schedule.
Dollar index (DXY): A measure of the US dollar against a basket of six major currencies, dominated by the euro.
Duration: A measure of how sensitive a bond's price is to changes in interest rates. The longer the duration, the larger the price move for a given rate change.

E

Earnings per share (EPS): A company's net profit divided by its number of shares outstanding.
Earnings season: The weeks after each quarter ends, when most listed companies report their results.
ETF (exchange-traded fund): A basket of securities that trades on an exchange like a single stock, often tracking an index. More in the FAQ.
Expense ratio: The annual fee a fund charges, expressed as a percentage of the money invested.

F

Federal funds rate: The interest rate at which US banks lend reserves to each other overnight; the Federal Reserve's main policy rate.
FOMC: The Federal Open Market Committee, the body of the Federal Reserve that sets US monetary policy. More in the FAQ.
Forward guidance: Communication by a central bank about the likely future path of policy, used to shape expectations before decisions are made.
Fundamental analysis: Evaluating an asset's value from financial statements, earnings, competitive position and the economy.

G

GDP (gross domestic product): The total value of goods and services produced in an economy over a period; the broadest measure of economic activity.
Guidance: A company's own forecast of future results, such as expected revenue growth or margins. Explicit guidance changes are among the strongest anchors for a high-confidence causal read.

H

Hedge: A position taken to reduce the risk of losses in another investment, such as buying protection against a currency move.
High-yield bond: A bond issued by a borrower with a lower credit rating, paying a higher interest rate to compensate for higher default risk.

I

Inflation: The rate at which the general level of prices rises, reducing the purchasing power of money. How inflation affects stocks.
Inverted yield curve: When short-term government bond yields are higher than long-term ones — a signal that has preceded many recessions. More in the FAQ.
IPO (initial public offering): The first sale of a company's shares to the public, followed by its listing on an exchange.

L

Large language model (LLM): An AI system trained on large amounts of text to understand and generate language. CausifyMarket uses LLMs as analytical assistants, not autonomous authors.
Leverage: Using borrowed money or derivatives to increase exposure. It magnifies both gains and losses.
Liquidity: How easily an asset can be bought or sold quickly without significantly moving its price.
Lock-up period: A period after an IPO during which insiders are not allowed to sell their shares.

M

Market capitalization: The total market value of a company's shares: share price multiplied by shares outstanding.
Mechanism CausifyMarket: The proposed chain of cause and effect from an event to a price move. It must be anchored to specific data — a guidance figure, a quantitative comparison or second-level data such as options volume — or it is left empty.
Monetary policy: A central bank's decisions on interest rates, its balance sheet and liquidity, aimed at price stability and, for some banks, employment.

N

Nonfarm payrolls: The monthly count of US jobs added outside agriculture, published in the Employment Situation report. More in the FAQ.

O

OPEC+: A group of oil-producing countries that coordinates production decisions, a major influence on oil prices.
Options: Contracts giving the right, but not the obligation, to buy (call) or sell (put) an asset at a set price before a set date. Unusual options volume can be second-level evidence in a causal read.
Outlook indicator CausifyMarket: The bullish, neutral or bearish label assigned to a sector in our reports. It summarizes the weight of evidence from that sector's causal reads — not the tone of the headlines.

P

P/E ratio: Share price divided by earnings per share; how much investors pay for each unit of annual profit. More in the FAQ.
Prediction market: A market where people trade contracts that pay out based on the outcome of future events; prices can be read as implied probabilities.
Priced in: Information already reflected in current prices because investors anticipated it. More in the FAQ.

Q

Quantitative easing (QE): Large-scale purchases of government bonds and other assets by a central bank to lower long-term rates and add liquidity.
Quantitative tightening (QT): The reverse of QE: a central bank shrinks its balance sheet by letting bonds mature without reinvesting, or by selling them.

R

Recession: A significant, widespread decline in economic activity lasting more than a few months. More in the FAQ.
Relevance score CausifyMarket: A 0–10 score for each news item, based on market impact potential, geopolitical significance and sectoral reach. Only events scoring 7 or more receive a causal read.
Risk-on / risk-off: Market moods: confidence drives money into riskier assets (risk-on); fear drives it into perceived safety (risk-off).
Risk premium: The extra return investors demand for holding a risky asset instead of a safe one.

S

Safe haven: An asset expected to hold or gain value during market turmoil, such as US Treasuries, gold or the Swiss franc.
Second-order effect: An indirect consequence of an event, often priced more slowly than the direct one. More in the FAQ.
Sector rotation: The movement of money from one sector to another as economic conditions change.
Sentiment analysis: Measuring the tone of text — news, social media, earnings calls — as positive, negative or neutral. Tone is not cause.
Short selling: Selling borrowed shares in the hope of buying them back later at a lower price. Losses are theoretically unlimited.
Soft landing: When a central bank slows inflation without causing a recession.
Spurious correlation: A statistical relationship with no real causal link, usually coincidence or a hidden third variable.
Stagflation: Stagnant growth combined with high inflation and rising unemployment.

T

Tariff: A tax on imported goods. How tariffs affect markets.
Technical analysis: Studying price and volume patterns to identify trends and key levels.
Treasury yield: The interest rate on US government debt; the 10-year yield is a global benchmark for borrowing costs and valuations.

U

Undetermined CausifyMarket: The confidence level used when an event's effect cannot be separated from its confounders. The mechanism is then left empty on purpose. Why we say undetermined.

V

Verified market data CausifyMarket: Prices with an API source and timestamp. Points that fail verification are dropped and shown as gaps — never estimated or filled.
VIX: The Cboe Volatility Index, a measure of expected 30-day volatility of the S&P 500, often called the "fear index".
Volatility: How much and how quickly prices change, often measured as the standard deviation of returns.

Y

Yield curve: A line plotting government bond yields across maturities. Its shape reflects expectations for growth, inflation and interest rates.