Chart #1
Chart #1 is an updated version of what has become a perennial favorite chart, which shows that the growth of stuff carried by the nation's trucks is decently correlated with equity prices. Truck tonnage has been rising at a 3-4% annual rate for the past several years, and equity prices have been moving higher as well. This at the very least suggests that the damage from Trump's trade wars is still relatively minor, even though the manufacturing sector has taken a noticeable hit.
Chart #2
As I explained previously, the raw data for truck tonnage has been unusually volatile of late, so I've switched to a 3-mo. moving average, which appears to do a good job of filtering out seasonal adjustment defects. Chart #2 shows both the raw data (white) and the moving average (magenta).
The most overblown story in decades has been "Trump's Trade War."
ReplyDeleteThe US economy is running around $20 trillion annually, and the Sino economy roughly the same, depending on what metrics you go by.
The "trade war" is not a trade war as traditionally thought, that is including blockades and sanctions.
Trump responded to rather overt Beijing violations of international trade laws by applying tariffs, and the Communist Party of China has responded in kind.
So Trump has applied tariffs---not quotas or a ban---on about $350 billion of imported Sino goods. However, consumers and industry can still source those goods internationally and domestically. Substitution and conservation, those great attributes of markets.
Yet, to believe the globalist hysterics, this limited trade dispute will trigger a worldwide recession.
The multinationals are very powerful presence in Washington DC and New York, and pour money into media, academia, trade associations, Lobby groups, think-tanks, foundations, and even directly into political campaigns.
The multinationals have a huge stake in the manufacturing platform of China, and want access to the world's fastest-growing consumer market, and also have fiduciary obligations to a global shareholder base that preclude any sort of loyalty to a city, a region, or a nation.
President Trump, for all of his manifest flaws, has a different agenda in mind.
Trump may be wrong or right in his pursuit of trade policy, but the framing of the issues in the modern mainstream media leaves much to be desired.
Besides that, Keep On Truckin!
And the shape of the yield curve "normalized". Or at least got more positive slope than it has been in months.
ReplyDeleteDoesnt look like its backing up the folks that are hoping for recession.
And jobs popped better than expected.
ReplyDeleteMore bad news for the doom crowd.
Scott, thanks for this update. I too like the truck tonnage data.
ReplyDeleteAfter the latest Fed cut, I was wondering if you'd update the chart showing the real Fed Funds vs. the five year TIPS? Thanks, and keep up the quality work.