Thursday, November 30, 2006

World Economic Slow Down

The BDI (Baltic Exchange Dry [freight] Index) is a good indicator of world economic activity. It put in a major top at the end of 2004. That can be seen here:

What can also be seen is that the BDI is currently up against a resistance level. It could be making a lower top.

Currently happening in the US - from The King Report :
(right now, on the home page, is the real scoop on the US government's just released employment numbers)

"Merrill’s David Rosenberg: "Truck tonnage for October just came out and looked borderline recessionary, for lack of a more polite term. It was down 4% y/y in the largest decline since February 2001 (-1.8% m/m, and down now in two of the past three months) - and now down for 10 months in a row y/y (!). You have to - again - go back to the March/00 to Feb/01 period to find the last time year-on-year comparables were in the red for such a long stretch of time (and guess what happened in March/01?)."

Mr. Rosenberg notes it’s "extremely rare to have truck tonnage decline in October ahead of the holiday shopping season." The last times this occurred were 1981, 1982 (recession years), 2001 and 2002…"

The inverted yield curve on US Treasuries for over 3 months is saying the same thing.

A serious decline in economic activity means a serious decline in tax receipts for national, state, local governments that, combined, have massive unfunded promises to keep.

This means that managers at the central banks of large, government top heavy, countries are going to have to crank up the volume of that old '60s Stevie Wonder song 'Fingers' - parts I & II to properly motivate the employee responsible for typing on the keyboard hooked up to the computer that creates digital fiat tokens.

Here's a whopper. The Fed is trying to maintain a credible deniability defense as it increases credit to record breaking levels. Check out:
Jesse's Interest Rate Lie Detector
"... Many market watchers had been anticipating the dollar's slide for months, none more so than Paul Volcker, former Fed chairman. He said: "It's incredible people have gone on so long holding dollars."

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