Sunday, September 20, 2009
Goods Transport Data
The U.S. is 25% of world goods consumption.
Therefore, rail traffic across North America and ship traffic to and from North America bear close watching.
For July and August the Baltic Exchange Dry Goods Index fell hard. Now the first 2 weeks of September's Railfax rail traffic report appears to show a sharp decline in goods transport across North America's railways.
These data points underscore the poor employment picture, particularly the lumber and crushed stone transport data for the past 4 weeks.
If one compares the U.S. equity market to Gold, and NOT to US$, the stock market has gone nowhere since March - the Dow was trading less than 10X Gold in March, and is now trading just under 10X Gold.
In other words, in REAL terms, there has been NO improvement in the markets, employment, tax revenues, etc... the Fed and the Treasury have merely succeeded in devaluing the US$ and causing both price AND monetary inflation.
This does not mean that the U.S. equity market will go up OR down (but the trend is your friend) but it would seem to support energy prices, and PERHAPS energy equities.
Any REAL expansion of US GDP will absolutely, positively require oil imports to rise. Just remember that in NOMINAL terms no such requirement exists. So keep your eye on the EIA import data released every wednesday.
The market appears over-bought, and the rail and baltic dry goods index do not warrant increased risk. On the other hand, any and all liquidity appears to find its way ONLY into the financial markets, not the real economy.
Posted by The Short Story Man at 12:29 PM