Recession Warning: Freight Volumes Negative YoY for 11th Straight Month
|The Cass Freight Index once again warns again of economic contraction. Donald Broughton, founder of Broughton Capital and author the Cass Freight Index says the index signals contraction, possibly by the end of the year. That's just one one month away. "Airfreight volumes in Europe continue to suggest that the region’s economy continues to cool." Airfreight volumes in Asia suggest that the region is on the verge of, or is already entering, a recession. As we’ve highlighted before, when trade tariffs slow the rate of growth for our global trading partners, it poses a real threat to the U.S. rate of economic growth." "The inbound volumes for Shanghai plummeted and then stayed weak. 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." "At first glance, the GDP for the 1st through 3rd quarter seems very inconsistent with overall freight volumes. Using the Cass Shipments Index as a predictive proxy, we did not expect the GDP to be as strong as the reported 3.1% in Q1, or 2.0% in Q2, or even 1.9% in Q3. As we have already explained, dissecting the contributing factors explains much of the disparity, and should point out that freight flows are a leading indicator. It often takes two to three quarters for the trends in freight to become reported economic statistics." "Based on the trend since the beginning of the year, but especially the data over the last six months, the Cass Shipments Index continues to signal that the economy is beginning to contract and that the GDP could go negative, or at least come close to being negative, in Q4’19 and or Q1’20." Jerome Powell may have had his "Bernanke Moment" today in Congress. Powell told Congress "Day of Reckoning" Far Off and "there’s nothing that’s really booming now that would want to bust." Uh... What about the stock market? Powell's testimony today sounds exactly like Bernanke's proclamation to Congress right before the Great Recession, "there is no national housing bubble to bust."Six Key Points
Storm Clouds
Shipments
Eurozone Airfreight
Asia Pacific
Shanghai
Cass Shipments vs GDP
Cass vs Jerome Powell's Bernanke Moment (Just Today)
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