Apropos of the GDP outlier, Jason Fraser of Ceredex Value Advisors forwarded an article from CNBC, of all places, on the impact of this inventory cycling on US trade. Specifically, container traffic in imports has turned lower in November when it normally would do otherwise – and had for the three previous years.

ABOOK Dec 2013 Container Imports

Traffic had been slightly below 2012 levels until June when, like many other indications, it suddenly broke upward.

Commenting specifically on the topic du jour, Cass/INTTRA noted import traffic fell 6.1% from October to November; again a month normally where imports begin to tick back upward. The culprit?

“Retail and wholesale inventories have reached levels above their pre‐recession highs without the spending activity to support the growth,” the ocean freight outfit said in reporting their figures. “The expected 3.9 percent rise in spending for the entire holiday season is not going to draw down inventory sufficiently to support strong imports in the near future.”

If a 4% holiday season isn’t enough to draw down inventory, a 0% (or less) season is going to play hell with the next part of the mini-cycle.

I think it adds to the weight of evidence on the QE-led myth that various parts of the US economy used to forecast demand. It was simply assumed that this holiday season would be robust because the Fed did something “big” last year, an enduring faith that may die too hard. Given the timing of the surge (without a more precise estimate on order lags and timing vs. actual shipments) in the middle of this year, it appears as if it wasn’t just QE but rather that the talk of taper that ultimately convinced many businesses to tick up ordering levels. Why else would “demand” suddenly rebound just as interest rates starting rising dramatically? The contrast here with mortgage activity is striking in that regard.

In the end, I suppose that was the FOMC’s goal. Have economic actors believe in the magic of monetary momentum, then “prove” such mysticism by promising that conditions were so good that QE required a coming deceleration in the near future. If this wasn’t such a burgeoning Greek tragedy it would be pretty entertaining as almost pure farce.

As to the other side of trade, exports, the picture is beyond grim. If US imports of container shipments are an indication of US demand for goods made elsewhere, what does the state of US exports say about global demand in other places?

ABOOK Dec 2013 Container Exports

These are not surveys or adjusted statistical machinations but hard data.

 

Click here to sign up for our free weekly e-newsletter.

“Wealth preservation and accumulation through thoughtful investing.”

For information on Alhambra Investment Partners’ money management services and global portfolio approach to capital preservation, contact us at: jhudak@4kb.d43.myftpupload.com or 561-686-6844 . You can also book an appointment for a free, no-obligation consultation using our contact form.