Friday, October 25, 2013

Truck tonnage rules out a stock market bubble

This chart is the perfect comeback to those who argue that the stock market is once again in bubble territory. What it shows is that the real value of the stock market is positively correlated, over time, with the amount of freight hauled by the nation's trucks. In other words, the physical size of the economy has a lot to do with the real, inflation-adjusted value of the economy.

Truck tonnage in September hit another all-time high, up 8.4% in the past year, and up almost 30% since the economy began to recover in mid-2009. The physical economy is apparently growing much faster than the official GDP statistics suggest (real GDP growth has been about 2% per year during the current recovery). This is comforting, to say the least. And as the chart shows, since the real value of the stock market hit its all-time high in early 2000, the economy has improved dramatically, while stocks are still struggling to regain their previous high. If stocks were in bubble territory back then, it's far less likely that they're in bubble territory today.

As Calculated Risk notes, the strong performance of the trucking industry owes much to the "robustness to the sectors of the economy that are growing fastest, like housing construction, auto production, and energy output. These industries produce heavier than average freight, which leads to faster growth in tonnage versus a load or shipment measure."

UPDATE: The Chemical Activity Barometer also shows increased physical activity, which at the very least rules out a recession:

3 comments: said...

The AAR indicated the amount of oil shipped by U.S. railroads for the year through the most recent week (ended October 24) increased 34.8 percent compared to 2012.

As long as there is no Keystone Pipeline, Warren Buffett is more than happy to haul the oil by rail, as well as shipping in the fracking sand. Energy and materials stocks are firing on all cylinders. Even the coal stocks have rebounded.

With the return of cheap, abundant energy, what will be the fate of windmills, electric/hybrid cars, and solar?

theyenguy said...

The stock market bubble of all times has formed as is seen in the leverage off stocks, ETFs, and mutual funds over debt

World Stocks relative to Aggregate Credit, VT:AGG

Eurozone Stocks relative to EU Credit, EZU:EU

Nation Investment relative to World Treasury Bonds, EFA:BWX

Vice Stocks relative to Distressed Debt, VICEX:FAGIX

The chart of the S&P 500, $SPX, shows an Elliott Wave V High Top at $,1759

A summary of this week’s trading presents the following trading activity

World Stocks, VT, +0.6; a market top on Tuesday, October 22, 2013

Naton Investment, EFA, +0.6; a market top on Tuesday, October 22, 2013

Global Financials, IXG, -0.4; a blow off market top on Wednesday, October 23, 2013

Please consider The Dispensation Economics Manifest, ... ... which is based upon Ephesians 1:10, the biblical revelation that Jesus Christ, is operating in dispensation, that is the household management plan of God to complete and fulfill all things in every age, epoch, era and time period.

The Dispensation Economics Manifest presents Fifteen Corollaries, that is Fifteen New Things, which are coming by the Economy of God to establishing the New Normal.

On Wednesday October 23, 2013, Jesus Christ pivoted World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, Major World Currencies, DBV, and Emerging Market Currencies, CEW, lower from their recent rally highs, on fears that the world central banks’ monetary policies are no longer able to stimulate global growth and trade, nor able to maintain corporate profitability, nor secure ongoing democratic nation state treasury values, and is so doing pivoted the world out of the paradigm of liberalism, which featured the democratic nation state banker economy, and into the paradigm of authoritarianism, which features the regional governance and totalitarian collectivism beast economy. In so doing he destroyed the fiat money system and introduced the diktat money system.

The ANSAMed Anna Foundation report Italy's Debt Hits Record High Of 133.3% Of GDP In 2nd Quarter, indicates the true nature of Italy’s sovereign capability. Its level of Treasury Debt, suggests that it is an insolvent sovereign. Its seigniorage does not come from risk appraisal between bond buyers and sellers, but rather from the ECB’s monetary policies of LTRO 1 and 2, as well as OMT. And the only reason why it has fiscal capability is because of what amounts to seigniorage aid from the word, will and way of central banker Mario Draghi.

The reality is that the periphery European nations, specifically the PIIGS, that is Portugal, Italy, EWI, Ireland, EIRL, Greece, GREK, and Spain, EWP, are insolvent sovereigns, and the European Financials, EUFN, are insolvent banks. These cannot provide stable governance; it is only through regional integration and regional governance, with a footprint of supervised banking, leading to a banking union, as well as fiscal union, and statist economic governance overseeing the factors of production, as well as commerce and trade, that regional security, stability, and sustainability can be achieved.

Liberalism’s banker regime is being replaced by authoritarianism’s beast regime; and the only two forms of sovereign and sustainable wealth are diktat, and the physical possession of gold and silver bullion.

Unknown said...

Bad news is back to being Good news ... ... good thing Polar-Bears can swim when conditions require it.