Our first conversation tidbit today is really a lot more interesting than the run-of-the-mill, daily installment of political chicanery and spin by the co-opted corporate media. We prefer to study real data which suggests that yes, there really is reason for concern about the near-term future of the economy.
Besides market futures being not-far from flat at click time.
Let’s line ’em up on a log out back on our pistol range and take some pot-shots at ’em, shall we? Then tell me what you think in the Comments section. Here we go:
Here’s our morning “stage-setter” China’s economic growth drops to lowest level since 1992.
First data point is the Fed. Options expire today, and we would normally expect prices to sag a bit. The Big Guys who can afford S&P 500 options, don’t like prices for the underlying to go up too much on options day. In case they need to “buy to cover” they can do so at less than the exercise price of index options Thursday. Yeah, sure, call it a crackpot theory, but there it is.
Second target at the Fed. Is how they have been pouring financial gasoline on markets this week to the tune of more than $100-billion in order to establish plausible deniability with both the president (who keelhauls them regularly) and the long wave economic wonks (like me) who see the Fed’s manipulation attempts as a desperation ploy that will only make things worse downstream with the house of card comes down. But hey! Who cares about history when everything is different thing time, right?
The latest H.6 money stocks, reported Thursday through the end of August (e.g. to September) in Table 1 was running 7.6% basis the 90-day print run rate annualized. While the more recent data (Table 2.) shows the equivalent for the period ending October 7 as only 7.0 percent. When next week’s data comes out, we anticipate the current run-rate will jump up based on the incendiary printing.
But the only way any of this is useful is to subscribe to the NY Fed trading data and frankly, that verges on real work. Disclosure: At age 70, easy work (like writing and editing) is prefferable. Deep statistical analytics of rolling NY Fed “backdoor quantitative easing” via their trading desk is a different kettle of fish.
A “free lunch bubble” may be seen bursting, however, in Bitcoin. It’s barely holding on to $7,900 today. Which means despite all the hype about how people in Hong Kong will move to BTC to keep the ChiComs off their financial backs, people know that the State always wins against the Individual. Anyone who can’t grok that has their head in a personal carry-around “no daylight” region that smells bad and is a pal of Charmin.
With little more than the Leading Economic Indicators – and we all know what LEI is an anagram for, right? – today promises to be boring as hell…
Except for the Real Data
My consigliere, who, disguised as a mild-mannered tax attorney, fighting a never-ending battle for truth, justice, and tax relief (while still able to leap huge data-swamps in a single bound), called this week to advise that an airline passenger index (Gloomberg) had taken a schnoz-dive.
“This kind of thing is something to watch closely because when consumers plan far-ahead, you can see their real sympathies about the economic outlook…” Bad.
Maybe yes, maybe no. Airline travel will vary based on the overall health of Globalism, methinks. More to our way of thinking is: “New York Fed Factory Index Shows Manufacturing Remains Subdued.” Where’s the growth candy?
That’s still only another coincident indicator, you see. We like big-sample, robust data sets like West Coast Port Traffic. I mentioned the drop in Los Angeles Port Traffic to our Peoplenomics.com subscribers Wednesday. Now that they have had a “head-start” in their thinking (which is the point of subscribing for a measly $40-bucks a year, huh?) here’s what Los Angeles reported this month:
As you see, the result of the trade war, raging on the financial pages, has resulted in a real drop in exports. “Strong dollar” sounds good until we price ourselves out of exports.
Although there is monthly back-and-forthing between L.A. and the Port of Long Beach, just west, look at their fiscal year to date over there:
Eyeballing it, we’d have to call the Exim business, at least in SoCal, down somewhere around 3-percent.
In fairness, however, just as there’s some rivalry between PoLA and PoLB, there is also some “destination flex” in shipping out of Asia. We can get some small inference of this in a review of the Northwest Seaport Alliance data.
That’s what the former Port of Seattle and Port of Tacoma up in the are calling themselves these days. In August, they were hyping a traffic increase:
“The Northwest Seaport Alliance’s total container volumes from January through August 2019 reached 2,562,328 twenty-foot equivalent units (TEUs), a 5.8% increase from the same period last year. Import and export volumes grew 3.4% and 8.5%, respectively..”
I’d like to be able to report their September data, but true to tradition from when Seattle was my local beat, the PNW runs on an even slower version of government time than even California. Quite remarkable, really. We’ll pass the September data along to PN subscribers when the PNW-NSA PR folks get back from lunch. Any day now.
Our last data point to update is the RailTime Indicators from the American Association of Railroads.
I like the railroad data; perhaps a personality fault dating back to my 0.27 gauge model railroading childhood. Which was wrecked because my pal ( the Major), who I grew up with, had an O-gauge set-up and the scaling just wasn’t right for sharing rolling-stock. Not only that, but his O-gauge engine would blow smoke while my O.27 gauge engine wouldn’t. That lack of blowing smoke led to me being a reporter (and him an Army officer), I figure. But, I digress….
The data shocker in the AAR data out (and largely ignored) was this heart-stopper:
For this week, total U.S. weekly rail traffic was 510,820 carloads and intermodal units, down 7 percent compared with the same week last year.
Which leads to a sucking-in of the breath (with resulting light-headedness, let’s do that again…) as the adrenaline kicks-in and your eyes begin to strobe as a rising sense of panic approaches…
“WTF? Why did the markets go up, then, Ure???”
Magic wand of excess liquidity , mon frer. Read on:
“Total carloads for the week ending October 12 were 243,807 carloads, down 7.5 percent compared with the same week in 2018, while U.S. weekly intermodal volume was 267,013 containers and trailers, down 6.6 percent compared to 2018.
Two of the 10 carload commodity groups posted an increase compared with the same week in 2018. They were petroleum and petroleum products, up 912 carloads, to 12,717; and chemicals, up 439 carloads, to 30,855. Commodity groups that posted decreases compared with the same week in 2018 included coal, down 12,263 carloads, to 73,902; metallic ores and metals, down 3,402 carloads, to 19,720; and motor vehicles and parts, down 2,305 carloads, to 15,295.
For the first 41 weeks of 2019, U.S. railroads reported cumulative volume of 10,355,081 carloads, down 4 percent from the same point last year; and 10,924,972 intermodal units, down 4.2 percent from last year. Total combined U.S. traffic for the first 41 weeks of 2019 was 21,280,053 carloads and intermodal units, a decrease of 4.1 percent compared to last year.”
The Bigger Picture
Is simply that we’re screwed.
The Fed can make up money all day long. But, where the steel meets the rails, and down around the docks, there’s an appreciation that all is not as it seems.
A combination of the impeachment/witch hunt as a distraction from reality, while the trade war rages, and odd Youtube videos like this one predict a terrorist attack on Seattle on November 3rd, all give us a growing sense of dis-ease.
Our rational bottom line to all this? Be skeptical of the Trump “economic expansion claims because the Trade Warfare and the GM Strike put holes below the nation’s waterline. And while this plays out, the Fed’s gone mad with one stealth “easing” after another, while the circus-like atmosphere of a witch hunt backed up by digital mob rule and the soft coup by the Deep State continues to keep the inept, over-built news media hip-deep in click bait.
If you get the sense that I’ve been waiting all week for Friday, whatever gave you the clue?
We now return you to the short version of “Mad World.” (Click for theme music after you skip the ad…)
In the Shorts
Reality is still out there: World Stocks Drop, Futures Tread Water After China Reports Worst GDP Growth In 30 Years.
Witch-hunters have their BIC’s out and they’re flipping them with delight as Trump under more scrutiny with announcement of his Doral resort hosting G7. Could the Doral have been the legit low bidder, maybe? Wouldn’t matter in the PFW (Post-
Meanwhile, Trump’s Acting chief of staff backtracks on apparent confirmation of Ukraine quid pro quo. Not sure he wasn’t taken out of context in the first place. Again, conviction in the media is all it takes to wreck things. Who needs Courts and a Justice System when you have CorpNews and Social Media mobs?
Trade troubles “to the MAX” in EU will hit U.S. in time with tariffs over Boeing: Malmstrom evolve. Pardon our labeling ’em Europricks, but jealous megalomaniacs is just so, you know, clinical.
Oxy’s for breakfast department: Judge Summons Drug C.E.O.s for Talks on Sweeping Opioid Settlement.
Them “suspicious blackouts” continue to hold our attention as Fortune rolls out How 3 PG&E Execs Decide When California Businesses Go Dark to Stop Wildfires.
Well, enough of this rolling news crap, let’s get to the useful stuff…
Around the Ranch
Nailing down projects and follow-up time.
Ham Radio: The “mega antenna” works pretty well in first testing done Thursday. The SWR readings indicate I need to add about 6-feet to the open-wire feedline to bring the 40-meter resonance down a bit. But, most satisfactory. Best SWR was about 7.5 MHz so I need things lengthened to get best results/gain down on the bottom-end of the Morse code portion of 40-meters where the computer-modeled gain figure could approach 9 db on the major lobe pointed at the PNW.
Kitchen Sink Project: Here’s another example of how doing the actual work of installing a new faucet takes one-third the time of prepping the worksite. The old faucet was a beast to get out. My review of the WEWE Single Handle High Arc Brushed Nickel Pull out Kitchen Faucet,Single Level Stainless Steel Kitchen Sink Faucets with Pull down Sprayer ($79, the ‘Zon) and my review (pending approval) gives it 5-stars.
Main reason in the old, American-made, faucet has a gdo9b of stuff 6-inches down from the bottom of the stem. You get to install faucet hoses, right? With the WeWe, they build-in 18″ (or so) hoses which is ultra convenient and eliminates two p[otential leak points. Why couldn’t American engineering have gotten this right like, oh, you know….30 years ago?
Speaking of The Major: Congratulations to his son. Truly one of the smartest people I know. AF Academy, MIT Masters, and teaching the fine art of supersonic flying somewhere over Mississippi for Uncle, he’s been upped to O4 (Major) at the tender age of 31. I’m betting Lt Col by 35 – the kid’s that sharp…so congrats and a hearty “Thank you for your service.”
Seeing people like him at the “sharp end of the sword” take the sting our of the 5-figure annual income tax bill.
The most interesting part of the promotion (did I mention this before?) is the saluting protocol problems this sets up in the household. Since the Major‘s doctor-wife left the Army as a Captain, the question becomes whether Mom has to salute Son? And while the Major can shake hands for now, with the (I figure sooner than later) bump to Lt. Col. my pal will be having to salute his son….
Meantime, on the young-un’s of our brood, George II is about the halfway point in his firefightrer I/II academy which is neat. I figure around the first of the year he’ll be shopping for F/T firefighting and then finish his medical studies. The current thinking is fireighter, then finish paramedic. Do a career in the fire service while getting a PA ticket…and then income concerns ought to be mostly gone from his life.
Daughter #1 is about to begin her intereship to finish off a degree and daughter #2 is nailing her training as she moves up the insurance food chain…
It’ll be a busy winter for ’em all…and nice to see ’em rocking life. Now, if we could just pass along better government to ’em…
Write when you get rich, remembering the real riches are between your ears….