What Is Port Data Telling Us?

First a bit of a disclaimer. Most of the time when you see port data you are looking at Long Beach and/or Los Angeles as no other port in United States releases their data on a monthly basis. That being said LA and LB account for almost 50% of all port traffic in the United States. Finally this port traffic is comprised almost entirely of trade with Asia whether it be China, India, Thailand, Mongolia, etc. If it ships from Asia it usually finds its way to one of these ports.

So what is port date showing? Well at first glace the chart below shows that over the past few months trade has fallen off a cliff. On further review however you will notice that there are very pronounced seasonal tendencies in port data. From November through February each year port traffic slows down considerably. That being said you can still see that even with the seasonality factored in, that trade is nowhere near where it was pre-crash.

Combined LA and Long Beach Port Data

port-data

The green line represents all trade both imports and exports. It has yet to make a new high and is currently in a free-fall. The blue line represents imports and it looks even weaker as it has yet to make a high since 8/1/06. This tends to show that not only are we as consumers not consuming quite like we were but companies are not ordering like they were. The much vaunted inventory rebuild of the past year was barely enough to take import levels back above the high in 2008. Finally we have the red line which is exports. In a way this number is actually looking the best as it is steadily climbing. Still it is a long ways away from its peak formed in 8/1/08.

Port data is giving signals for a variety of things. How does this impact China, India, and the rest of Asia? How does this affect consumer discretionary stocks? We know that Apple has almost all of these containers filled with I-Pads, I-Pods, and I-Phones :-) so who is not importing anything anymore? How does this affect shipping stocks? Why has the seasonality been so pronounced for so long? Don’t corporate purchasers look at the data and try to game shipping costs by ordering a few months earlier? And finally how is global trade going? As we can see it has improved but have the markets gotten ahead of themselves?

These are all questions where port data can be used to arrive at a conclusion. We are constantly surprised how few investors use these and other obvious, to us anyways, data points that can help you make an informed decision.

Happy Trading,

Dave@TheMacroTrader.com

Disclaimer-We are long some stuff and short some stuff but none of it is directly related to port data.

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Is Global Trade Heating Up? Or Is It Just Leveling Out?

One of the best indicators to see how the global economy is doing is to just look at the CRB index. While we don’t expect it to be hitting new highs anytime soon, it would be nice to see it moving up at least a little. Instead as you can see in the chart below it has only managed to find some type of bottom. If it’s “The Bottom” or just “A Bottom” is besides the point for now. It is enough to see that it is not trending up.

CRB Index

crb

Another good indicator to look at to gauge the strength of the global economy is that of the Baltic Dry Index. Over the last couple of weeks we have seen many blogs and other market commentators mention that the index has been climbing. Of course what they fail to mention is that if you look at the longer term chart of the index, it is still down significantly and it makes the recent rally look insignificant.

Baltic Dry Index-Short Term

bdi

Baltic Dry Index-Long Term

bdi2

Needless to say we think that many commentators are getting ahead of themselves in saying that the economy has bottomed. In fact the vast majority of the economic indicators that we follow are still pointing straight down, without any “green shoots” characteristics. Until we can get some historically reliable indicators pointing to a bottom and/or a rebound we will be cautious as capital preservation is our first priority.

Happy Trading,

Dave@TheMacroTrader.com

P.S. If you are getting value out of our posts, you can do us a favor by linking to us with your site or blog and mentioning The Macro Trader to any of your friends that trade.

Port Traffic Rebounds….Sort of

Over on the Calculated Risk blog we saw today how they were talking about the rebound in port data using Los Angeles port data. Since we track the LA and Long Beach ports (they both publish data on their websites) we decided that we would take a closer look at this supposed 28.9% rise in total loaded containers.

Looking at the combined data we can see that not only have we had a strong rebound as of late but that it appears to have happened several times over the past few years.

Combined Port Data

loaded

After noticing that each year around this time ports have a drastic increase in total volume we broke the data down by month.  In the chart below you can see the March data from 1995 to now.

March Data

march

As evidenced by this chart it is obvious that March typically is a strong month.  In fact from 1995 to now it is on average the strongest month of the year.  The average gain from February to March is 10.69%.  The next best month on average is April with an average gain of 5.96%.

What this data shows is that while we did have a rebound of sort it appears to be a seasonal pattern that shows up almost every single year.  That being said the data is up and the economy could have turned and things could have changed……but we doubt it.

Happy Trading,

Dave@TheMacroTrader.com

P.S. If you are getting value out of our posts, you can do us a favor by linking to us with your site or blog and mentioning The Macro Trader to any of your friends that trade.