Shipping activity continues to impress on the upside. The Harpex index of shipping costs (an index which focuses exclusively on container ships and is thus largely independent of the commodities market) is now up 45% from its all-time lows of late last year. How can concerns over a possible Greek default manage to derail the strong global economic momentum reflected in this index? I think the market is just suffering from another case of the heebie-jeebies.
Maybe the same forces that derailed it before, knocking out 3/4 of activity, remain?
ReplyDeleteScott,
ReplyDeleteThis may be a little off topic for this blog post but Mastercard released their earnings today and they were quite good. They had improvement across all regions, including cross borders. It appears it is not just the US consumer that is beginning to feel better......despite the occasional posters we see around here from time to time.
Speaking of shipping look at page c1 of the WSJ today. China's imports of coal, are skyrocketing.
ReplyDeleteCoal must be shipped. Also, think about what China demand, and Chinese fiscal and monetary policy means for coal prices.
Mr. Grannis,
ReplyDeleteI find your thoughts the most reasoned and informative that I have found in my 50 years on WS.
I would only qualify that by saying that Uncle Miltie ( who I was priviledged to study with and then work with for almost 20 years) and Dr. Laffer, who through Dr. Freidman, I have been fortunate to communicate with over most of the last 15 years. Each of these estimed gentlemen have imparted life long foundations that endure. That said, your generous and on the money thoughts more than augment and reinforce all that I (might) have learned from them.
THANK YOU
Bob Seward
Scott,
ReplyDeletedomestic plastic, resin, cotton, etc shipped elsewhere, processed with external components into finished products, and returned to home sweet home. What impact does the decline in the dollar, and the price rise in commodities have on imports with domestic price drivers?
Glen Lake: Thank you so much for your kind words. I'm deeply honored to be placed in such company. I had the good fortune to meet Milton once and to hear him speak quite a few times, and I had the great privilege of knowing Art Laffer for most of the past 30 years and learning a great deal from him.
ReplyDeleteSteve: a weaker dollar and rising commodity prices must eventually feed into a rise in the general price level in the U.S. A weak currency is the very definition of inflation.
ReplyDeletelittle bit OT as well
ReplyDeletefrom bespoke:
"The April ISM Non-Manufacturing report released today was unchanged at 55.4, but after combining it with the 60.4 reading in April's ISM Manufacturing index, the sum of 115.8 is the highest monthly reading since December 2004. So while investors continue to get themselves worked up about problems in Greece, they are overlooking broadening strength in the US economy."
i am 65% cash now (usually 10-20%) and waiting...i have not seen enough reward in the risk posed by all of this concern over the PIIGS, so i am not going to step in any contrarian waters quite yet...interested to see if the ECB starts QE, not sure if trichet has the onions to use the big ben playbook
Christian,
ReplyDeleteFWIW I am making some small buys in POT and XLF this morning. I also like tech but as I am already somewhat overweight there I am holding off.
As you point out corporate profits are quite good. We will bounce from this correction UNLESS we are seeing the top of the cycle now. With interest rates this low I just can't swallow that argument.
Christian,
ReplyDeleteRe your EU questions, I expect the ECB to do what is necessary to save the Euro. They have already virtually eliminated any ratings standards for Greek debt loan qualifications (they accept Greek bonds as collateral for loans to Europe's banks who have bought the bonds). I have felt for some time this is kicking the can down the road so to speak, but the problem looks to be manageable in the short run. It is the primary reason for the stock market correction IMO and it is getting to be quite recognized.
I am looking for more small buys.
john
ReplyDeleteagree with views
re EU you say "I have felt for some time this is kicking the can down the road so to speak, but the problem looks to be manageable in the short run."
at least the EU (really IMF) is requiring austerity for bailed out member countries...more than i can say for the fed...
imagine what would have happened if ben said to nancy and harry in 2008, oh yes i can print a trillion and buy up mortgage debt and treasuries, but first you need to pass a balanced budget!
Christian,
ReplyDeleteWhat I can imagine is Nancy and Harry telling Ben to enjoy his final few months as Fed Chairman.
Christian,
ReplyDeleteOne further thought: Europe's debt problems are getting a pretty fair amount of press in this country. A silver lining to this is a lot of Americans are getting an education on the problems too much debt can bring. I have much hope that it will at some point down the road give our politicians (ALL of them) some political courage to address this country's unsustainable borrowing. IMO we are seeing a 'preview of coming attractions' in Europe today. Today we are a beneficiary as Europe's capital flight bids up our treasury bonds. But as we all know, the worm can turn. And when it does, we could find ourselves in Europe's shoes.
Still out in the future somewhere though - but nobody knows how far out.