Skip to main content

Inventories Decline, Sentiment Up Slightly, Shipping Still Weak

Wholesale Inventories Decline 
Wholesale inventories dropped 0.4% in September, the most in nearly two years, and worse than the consensus of -0.3%. It was led by a 0.9% decline in nondurable good inventories, mostly in farm products, drugs, and petroleum, partly reflecting lower prices of those goods. Wholesale sales were unchanged. The inventory-to-sales ratio held at 1.36 for the fifth straight month, its highest level since May 2016. It had spiked since mid-2018, as the U.S./China trade war intensified and businesses accumulated inventories ahead of expected tariffs. With some talk of tariff rollback as part of the phase-one trade deal between the U.S. and China, we could see some reversal in the wholesale inventory build-up. If this is indeed the case, it would lead to better alignment between demand and supply, but could be a short-term drag on GDP growth (through a negative contribution from the inventory component). While still very early in Q4, the GDPNow Model is tracking just 1.0% real GDP growth for the quarter, with -0.5 ppt contribution from inventory investment.

Consumer Sentiment Up Slightly 
The Reuters/University of Michigan Consumer Sentiment Index ticked up 0.2 points in the preliminary November survey to 95.7, contrary to the consensus of a same-size decline to 95.3. Consumer expectations rose 1.7 points, its third gain in a row, but current conditions flopped 2.3 points. Sentiment peaked in March 2018, but remains elevated and range-bound longer-term, which suggests that consumer spending will continue to support the ongoing economic expansion. Nevertheless, the y/y momentum in sentiment has weakened, implying a slower pace of real GDP growth ahead.

Cass Shipping Index Contracts Again
  • Consistent with disappointing housing starts (down -1.8% YTD) and lackluster auto sales (down as much as -4.8% in April and -1.2% YTD), spot pricing in transportation has declined dramatically.
  • Airfreight volumes in Europe continue to suggest that the region’s economy continues to cool.
  • Asian airfreight volumes were essentially flat from June to October 2018, but have since deteriorated at an accelerating pace.
  • Even more alarming, the inbound volumes for Shanghai have plummeted. This concerns us since it is the inbound shipment of high-value/low-density parts and pieces that are assembled into the high-value tech devices that are shipped to the rest of the world. Hence, in markets such as Shanghai, the inbound volumes predict the outbound volumes and the strength of the high-tech manufacturing economy.

Source: Ned Davis Research, Cass Information Systems


Popular posts from this blog

The Hidden Agenda Behind the Global Warming Hysteria

Climate change activists are not just interested in reducing carbon emissions in order to "save the planet." Their underlying desire is to overturn capitalism and replace it with socialist governments worldwide. 

Our story starts with the IPCC, or the Intergovernmental Panel on Climate Change, a U.N. organization. "And any settlement of the Global Warming issue by the UN would entail massive transfers of wealth from the citizens of wealthy countries to the politicians and bureaucrats of the poorer countries." (1)

In 1992, at the first U.N. Earth Climate Summit in Rio de Janeiro, Brazil, Program Executive Director Maurice Strong stated, very candidly: 

"We may get to the point where the only way of saving the world will be for industrialized civilization to collapse. Isn’t it our responsibility to bring this about?" (2)

Former U.S. Senator Timothy Wirth (D-CO), then representing the Clinton Administration as U.S. undersecretary of state for global issues, join…

IRA Taxes: Rules to Know and Understand

Article from

Individual Retirement Accounts (IRAs) can be a great way to save for retirement because of the tax benefits they can provide. If you’re eligible, you can choose a traditional IRA for an up-front tax deduction and defer paying taxes until you take withdrawals in the future. Or, if eligible, you might opt for a Roth IRA and contribute after-tax money in exchange for tax-free distributions down the road.

So, what's the catch? There are a few. If you run afoul of some of the IRS rules surrounding these accounts, the penalties can be quite stiff—all the way up to a disqualification and taxation of your entire account.

Ignorance of the law is no excuse, and with few exceptions, the IRS isn’t very forgiving of mistakes. Knowing the rules can help you navigate the many potential IRA tax traps you might encounter on your way to retirement.

Keep in mind that when we discuss taxes and penalties, we’re referring to those at the federal level. In most states, you will also…

Critical Financial Steps When Buying a Home

In my lifetime, I have bought six houses, and sold five. I currently live in the sixth, which was new construction, which was an adventure unlike purchasing an existing home, But the principles of buying a home are the same, whether you are purchasing a new home, or an existing home.

1. Understand why you want to buy a house
Purchasing a home is a major decision that shouldn’t be taken lightly. It’s important to define your personal and financial goals before proceeding. Think about factors such as whether you’re craving more stability, whether it makes sense financially and whether you’re prepared for the responsibility of maintaining a home.

You should explore some resources on Renting vs. Buying before you make the decision. I posted a article with a couple of good videos on this subject, and as an informative article here
2. Dig Into Your Credit Reports and Credit Scores Your credit score and history are the first things all lenders will look at to decide whether or …