STEP 1Splitting a headline into three boxes
A headline is a summary, so a lot is left unsaid. To fill in what's missing, first split the sentence into three boxes.
An easy analogy · a weather forecast sentence
When we see the sentence 'Typhoon heading north, flight cancellations feared tomorrow', we naturally think 'typhoon (cause) → cancellations (reaction) → my travel plans (impact)'. Economic headlines are the same. The difference is that newspapers usually go only as far as the cause and the reaction, and we have to fill in the impact on our own stocks.
As an example, let's split 'US CPI above expectations, Treasury yields surge'.
CauseUS inflation came in higher than the market expected. The key is not that it is 'high' but that it is 'higher than expected' (Lesson 20).
ReactionTreasury yields rose on the thought that rate hikes would continue. The dollar usually strengthens too (Lessons 14 and 24).
ImpactThe multiple dial is pressed down. Growth stocks, with a bigger share of distant future earnings, hurt more, and banks hurt relatively less (Lessons 17 and 18).
Splitting into three boxes reveals what the headline didn't say. This headline has no word for 'stock prices', but it connects through the rates in the reaction box to stock prices in the impact box. The of a headline is the shortest way to apply 'stock price = earnings × multiple' from Lesson 1 to real news.
Words carry signals too. 'Above/below expectations' and 'surprise/shock' mean the gap versus expectations was large, while 'priced in' and 'catalyst exhausted' mean it was already in the price (, Lesson 14). 'Surge/plunge' describes the size of the reaction, and 'worries/hopes' describe a future that has not happened yet.
Quick checkSplit 'Korea's September exports surge 83.5%, semiconductors at a record high' into three boxes. What goes in the impact box?
A sector whose earnings dial is getting stronger. The cause is the export surge, the reaction is pressure for a stronger won and interest in exporters, and the impact is growing earnings expectations for semiconductors and export sectors (Lesson 26). However, if the figure was already expected, the reaction may be small.
STEP 2Interpreting with five questions
Asking the same questions in the same order each time you fill in the three boxes reduces mistakes. The lessons you have learned so far are built into each question.
| Order | Question | Lesson to recall |
|---|
| 1 | How different was it from expectations? | Lesson 20 surprises, Lesson 8 CPI |
| 2 | Is it the earnings dial or the multiple dial? | Lesson 1 two dials |
| 3 | Which way will rates and the dollar move? | Lesson 14 market rates, Lesson 24 exchange rate factors |
| 4 | Which sectors win and which lose? | Lesson 18 rates and sectors, Lesson 25 weak won, Lesson 29 oil prices |
| 5 | Is it a one-day event, or is the trend changing? | Lesson 21 the fork, Lesson 34 stock prices leading |
Of these , the ones most often gotten wrong are questions 2 and 5. Question 2 is confusing because the same news can sometimes shake the two dials in opposite directions. As seen in Lesson 21, weak employment triggers both rate cut expectations (multiple ↑) and growth worries (earnings ↓). In that case, what decides it is 'which is the market more worried about right now: inflation or the economy?'
Question 5 matters because a one-day reaction often does not carry on. Right after China announced large-scale stimulus in September 2024, steel and chemicals rose together, but three months later the energy and chemicals sector was 18.9% below its starting point (Lesson 33). You need a to see whether it is still moving the same way the day after the headline and a week later.
Common misconceptions
- "Good news lifts stocks and bad news lowers them?"
- The market reacts not to good or bad but to the gap versus expectations and the effect of that news on interest rates. 'Good' news, like the February 2023 jobs surprise, can push rates up and become a burden.
- "The bigger the number in the headline, the bigger the reaction?"
- More than the big number of 9.1% CPI, the 0.3 percentage point gap from the 8.8% forecast created the reaction. A big number that was already expected causes a small reaction.
- "The one-day reaction is the right answer?"
- The first reaction is often reversed. Confirm your interpretation over a flow of several days, not one day.
Quick checkThe headline 'US jobs far below expectations' appears, but inflation is already stable. Which side will the market focus on more?
Most likely rate cut expectations. When there is no inflation worry, weak employment tends to be read as 'room for the Fed to cut rates'. However, if the unemployment rate rises quickly, it can tip over into recession fear (Lesson 21).
STEP 3Solving 10 real headlines
Now let's solve them ourselves. For each headline, pick the dial and the direction of rates, the dollar and stock prices, then press 'Show answer'.
Dollar
Stock price
Headlines are sentences summarized by MoneyCalcs based on reporting at the time. The 'answer' is the direction expected by the textbook; for the dollar, US news refers to the value of the dollar and Korean news to the USD/KRW exchange rate. Sources for actual results: FRED (SP500, DGS2, DGS10, DCOILWTICO), BLS, Naver Finance, Ministry of Industry and Trade, Yonhap News, CNBC, WSJ, Reuters and others (same as the source notes in each lesson). Checked 2026-10-05.
Once you have solved all ten, check two things. First, the questions where the textbook direction and the actual result differ are mostly explained by 'what the market was worried about at the time'. Second, Korean news (exports, exchange rate) often shakes both the earnings dial and foreign investor flows. When you read the 5 market movers on Home each morning, use these five questions as they are. The path from indicators to sectors is in the causal chain on the Macro Map, and upcoming release schedules are in the Calendar.
For stocks, this means: the habit of taking headline notes
| Box | Note example |
|---|
| Cause | US September jobs 29,000, far below the 90,000 expected |
| Reaction | 10-year yield falls, S&P 500 rises (rate cut expectations side) |
| Impact | Favorable for growth stocks and long-term bonds; check whether the unemployment rate keeps rising in the next jobs release |
Not always. The same headline can trigger different reactions depending on the interest rate level at the time, what the market is worried about, and which expectations are already priced in. This exercise is meant to build the habit of interpreting in order; it is not a recommendation to buy or sell any particular stock or product.
Quick checkThe stock price jumped on the first day of the headline. What else should you check before finishing your interpretation?
Check whether it still points the same way a few days later. First reactions often reverse. Only by checking whether rates and the exchange rate hold their direction, and whether earnings forecasts for the related sectors actually change, can you tell if the trend has really shifted.