Watch These Indexes This Summer

You might think your summer vacation is nothing more than a week of lazing around, working out how some of those applications on your iPhone actually work, and getting reacquainted with your family.

Not so.

If you are smart, you can tell a lot about how the markets are going to evolve just by keeping a close eye on what is happening around the pool of a luxury five-star resort in Sardinia, Crete or the Algarve.

By the time you get back to your desk after a few weeks off, you will have a pretty good grasp of the world economy and know what to do with your investment portfolio.

Here’s a list of the main indexes you need to be tracking as you lie back on that sun lounger:

The Blackberry Index:
The mergers-and-acquisitions market doesn’t take a rest for the holidays. Blockbuster bids for the European fall are being plotted right now. M&A bankers working on a deal can’t afford to stay out of the loop for more than a few hours. If there are lots of people scrolling furiously on their BlackBerrys and wearing out their fingers composing memos on a tiny keypad, expect plenty of big deals in September. If the BlackBerrys remain silent, assume the markets are dead.

The Private-Jet Index:
After a couple of days, you will have a fair idea of when the scheduled planes land at the closest airport. But private jets operate on their own timetable, and the families traveling on them might show up anytime. The more people flying in privately, the better the markets are looking. This index can mainly be used as a measure of the private-equity industry. Those guys never fly public if they can help it.

The Towel Index:
Take a look at how many towels are left by the time you finally saunter down to the pool in the morning. If there are none to be had, that can only mean one thing: The Germans are back, and talk of the demise of Europe’s export machine will have been exaggerated. Conversely, if there are plenty of towels available, that means the heart of the European economy is still in terrible shape, and there is zero chance of a sustained recovery this year.

The Nanny Index:
Why exactly having a husband who works for a hedge fund means a woman can’t look after her own children is something even the most distinguished biologists have never been able to explain. It is, though, an indisputable fact. If you see a lot of stressed-looking women struggling to figure out how to get sun cream on a 2-year-old, assume redemptions at the hedge funds are still running high. If they are flanked by nannies taking care of everything while the woman of the house works on her tan, you can assume those long-short currency-commodity arbitrage strategies are raking in the cash again.

The Paperback Index:
Take a good look at what your fellow guests are reading around the pool. If they are gripped by some frightening-looking tome explaining why the world is heading for a new Stone Age, you can be sure their company/bank/fund is teetering on the edge of bankruptcy and they are trying to understand why. If they are just relaxing with the latest bestseller, you can deduce that things aren’t so bad.

The Crane Index:
In the last decade, much of southern Europe, and Spain in particular, has been turned into a forest of cranes. New apartment blocks, preferably with views over the sea, were being thrown up every minute and sold just as quickly. From your pool, you may be able to count a dozen or more cranes. But is anyone working on them? If they are, credit must still be flowing through the system. If there are lots of abandoned cranes on building sites, there is only one conclusion: There is still a lot of pain ahead in the property market, more trouble for banks, and you need to scurry back into cash fast.

The Natasha Index:
Anyone visiting a swank Mediterranean resort in the last few years will have noticed the way they have been taken over by Russian oil moguls, usually with a team of gorgeous, if slightly icy-looking, blond women in tow. With the commodity markets in freefall, many oligarchs have been canceling their holidays, or at least cutting back on the number of women they take with them. So take a close look (not too close -- these guys get jealous) at the throng of bikinis. The more Natashas you see, and the more stunning they look, the better the outlook for the oil and commodity markets.

Armed with all that information, you should be able to figure out precisely where the markets are going. You could even Blackberry the data back to the office, along with a few fancy graphs, then reclassify the trip as research, and claim the whole thing back on expenses.