Though retail spend is holding up, and the stock market is running off into the distance, Panjiva’s analysis of inbound purchased products to the US, representing a measure of global trade, suggests that organic demand in the economy remains weak. In fact the data suggests another slight fall: See September Data: Global Trade Declines.
Re-stocking at retail has slowed down, which has a knock-on affect to their suppliers, which together impacts imported procurement activities. Despite the current hype around “the recession is almost over” this data is a bit of a cold shower. Are we clear of the worst?
This data is hard to refute – its analysis is the tricky part. If retail re-stocking for Christmas is already over, and global trade is slowing again, then I would short retail stocks over the Christmas period. Despite the Dow hitting 10,000 today, Wal-Mart was apparently taking a bit of a beating. Are we set for a market sell off?
Look also at the Baltic Exchange Dry Index, and you see that prices for large capacity global freight remains low – another sign that global trade is not increasing that much, if at all.
If I could, I would go long with Wal-Mart (they have taken the hit already perhaps?) but go short for its big competitors until January. Or look for fall guys that will take a bigger beating…look into Panjiva’s segmented data.
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