Here are a few charts that show a structural shift. April's container traffic is out.
This first chart shows the combined inbound cargo containers into Los Angeles and Long Beach.
The following chart is an attempt to seasonally adjust the data using the X-12-ARIMA Seasonal Adjustment Program.
This last chart adjusts the data in the previous chart by the US population in an effort to see how each individual consumer is doing.
This is a structural shift. It is no longer following a very well established exponential growth trend (nor is it likely to return to it). Further, I'd like to point out that this isn't just a case of data mining to find patterns. Data mining is dangerous because looking through the data to find patterns isn't nearly as strong as starting with a theory and then using the data to back that theory. The theory came first in this case. I've been bearish since 2004 (long before inbound container traffic turned down). It was and is my belief that our massive trade deficit combined with negative real interest rates was not the sign of a healthy sustainable economy. I have/had many questions and I'm really not liking the answers so far.
September 11, 2007
Trade Deficit, Part 3
Are we becoming tapped out?
Yes.
If we become tapped out, will Ben Bernanke live up to his helicopter nickname even if oil is $80 a barrel?
Yes.
Devaluing our way back to prosperity isn't working though. "AMERICA'S OIL CRISIS" is now seemingly a permanent fixture at the top of CNBC. That's probably a sign we're close to a top though. Heaven help us if we're not. Even if oil does back down from here the long-term inflationary pressures will still remain (countering the long-term deflationary pressures of falling house prices and a slowing consumer).
It takes time for higher oil prices to trickle through the system. It seems very likely that 2008 oil prices will average more than 2007 oil prices. That could very well be the undestatement of the year. Crude oil (WTI - Cushing, Oklahoma) averaged just $72.34 in 2007.
Source Data:
Port of Long Beach: Statistics
Port of Los Angeles: Statistics
The X-12-ARIMA Seasonal Adjustment Program
St. Louis Fed: Population: Mid-Month
Looking at these graphs makes me think we're in a recession. Or soon will be.
ReplyDeleteBut Cramer says we're going to be saved by the big earthquake in the backwoods of China. And we still got the Olympics going for us. Why doesn't anyone mention the Olympics anymore?
Not that I care. The big rally in US equities from the Jan (er, March) lows saved me. I told my wife we'd be out by Memorial Day, and gosh darn it, even though the exit got crowded here at the end, we got out. And none too worse for the wear compared to Jan when my wife was insisting I commit seppuku. Yeah, I explained seppuku doesn't count if someone else is forcing you to do it, and it's Japanese anyway, the Olympics are Chinese. But she's a "practical woman" and didn't much care for any of my "excuses". Well amazingly through it all we're still married so we got that going for us.
AllanF,
ReplyDeleteBut Cramer says we're going to be saved by the big earthquake in the backwoods of China.
I'm surprised China's government didn't do it to themselves on purpose using this logic. It would have given hungry people who didn't have a job a reason to riot productively.
Spiraling Food Prices Result in Deadly Violence Around the World
http://www.naturalnews.com/023277.html
AllanF,
ReplyDeleteYeah, I explained seppuku doesn't count if someone else is forcing you to do it...
You need to be very careful from this point out. Avoid risk. Trust me on this.
Seppuku
http://en.wikipedia.org/wiki/Seppuku
While the voluntary seppuku described above is the best known form, in practice the most common form of seppuku was obligatory seppuku, used as a form of capital punishment for disgraced samurai, especially for those who committed a serious offense such as unprovoked murder, robbery, corruption, treason, or stock losses.
(Okay, okay, I modified the that last words to modernize it a bit.)
Mark-
ReplyDeleteCan you run those first three charts going further back -- like to your favorite year of 1972? Right now, the charts are saying *something*, but without any real recessions in the dataset, it's hard to know what.
-dex
Oh, and most seppuku was 'fan seppuku' -- the victim mimed the movements with a fan and the second lopped their head off.
ReplyDeleteAny relationship to equities or China is purely coincidental.
-dex
dex,
ReplyDeleteCan you run those first three charts going further back -- like to your favorite year of 1972? Right now, the charts are saying *something*, but without any real recessions in the dataset, it's hard to know what.
I really wish I could but the public data from the ports only goes back that far. I can offer you this though (a table of total trade by dollar amount).
http://www.census.gov/foreign-trade/statistics/historical/gands.txt
Note that there was actually a momentary trade surplus in 1975 (during a very deep and nasty recession). The trade deficit shrank from 1978 to 1981 (VERY bad times, two recessions back to back in 1980 and 1981). The trade deficit shrank from 1987 to 1992 (our last consumer recession was in 1990-1991). The trade deficit shrank in 2001 (recession). We're now told that our shrinking trade deficit is a good thing. It is in some ways (since it is so unsustainable), but not in all ways clearly.
US Trade Deficit Shrinks: Good Or Bad?
http://www.fxstreet.com/fundamental/market-view/news-and-opinion-from-the-ground/2008-05-09.html
Any relationship to equities or China is purely coincidental.
Got it. So I shouldn't assume the Japanese fan was Made in China. ;)