Wednesday, December 26, 2012

Do You Have (Economic) Bowl Fever?

While you are relaxing watching the Russell Athletic Jock Strap Bowl and the Located Some Bad Teams Compass Bowl, don’t forget about watching the economy and your investments in 2013.  To help you along, I am again making my “Economic Bowl Picks” versus my economic expert panel (the average of my seven favorite economists whose forecasts are published by the Wall Street Journal). Here is how I did against the panel for 2012 (the actual numbers are current estimates, but should not affect the final results):

CPI (Inflation)
Housing Starts
Crude Oil Price

I'm closer on CPI, Unemployment and Housing Starts, so I’m doing a little victory dance celebrating my second straight 3 to 2 win!  Take note of how close the panels’ GDP forecast was.  You won’t get accuracy like that from those other economic blogs!  My GDP forecast was much too high for the second straight year.  I expected the government to “pull out all stops” to stimulate the economy in an election year because no incumbent president could ever be elected with economic growth so weak and unemployment so high. Uh, well it seems like the political indicators are malfunction as much as the economic ones. 

The 2013 forecast differences between the panel and I are much closer than normal this year which means I must be getting better or they are playing way to much golf!  For the record, I do make my forecasts before calculating the panel average: 

Here are the 2013 Economic Bowl Picks: 

The GDP Bowl: 

Minnesota Moderates vs. Rutgers Recession 

Line: Moderates by 2.2%  Range: 1.3% to 2.9% (The Line is the average of the expert panel.  The Range is the lowest and highest individual forecasts of the panel) 

The economy will start off at a very low rate of growth and then improve modestly all year.  We should be running at 3% by year’s end.  My Pick: Moderates by 2.3%  

The CPI Bowl (Consumer Price Index Bowl) 

Pittsburgh Pricers vs. Duke Discounters 

Line: Discounters by 2.1%  Range: 1.8% to 2.3% 

CPI was 2.2% last year.  There are few factors that should push this much in either direction.  This is why the FED can keep interest rates in check for another year.  I will move it up slightly just because I have GDP going up the same. My Pick: Discounters by 2.3% 

The Unemployment Bowl

Louisiana Laborers vs. Fresno Food Stampers 

Line: Stampers by 7.8%  Range 7.7% to 7.9% 

This statistic has been highly questionable for a year.  Just how many people are leaving the workforce and why?  The retiring baby boomers are a factor, but how much?  And then you have the underemployed and part-time worker/full-time seeker factor.  An economy growing at 2% should not generate enough jobs to reduce the current rate and that is why the panel is forecasting no change.  I am only slightly more optimistic. My Pick: Stampers by 7.6% 

Housing Starts Bowl
Arizona Allotments vs. Virginia Vacants 

Line: Allotments by 980,000  Range: 810,000 to 1,080,000 

The housing market is coming back and gaining momentum on a more consistent basis.  I (and the panel) am forecasting 25% growth in 2013.

My Pick: Allotments by 975,000 

Price of Crude Bowl 

Keystone Pipeliners vs. California Hippies 

Line: Pipeliners by $88 (year-end) Range: $80 to $94 

The price of crude (and gas prices) has dropped sharply in December and some experts say it could fall to $80 a barrel.  I think this is based on a weak U.S. and world economy.  By the end of 2013 I expect the U.S. economy to be rolling forward and hopefully the world economy is in better shape also.  My Pick: Pipeliners by $95.
Bet Big on the Pipeline!

Stock Market Prediction: 

The Model T predicted an S&P 500 Index high of 1435 in 2012 and the index peaked at 1474.  Being 2.7% low is not that bad; however in 2011 the forecast was 2.2% high.   

The Model T 2013 forecast is for a high of 1550, however for the first time since I have been writing this blog the Model T is signaling a definite peak to be followed by a correction.  I will present the details in the next post. 

I hope you made some good investments in 2012 and wish you a very prosperous 2013!

Sunday, December 9, 2012

A Very Ugly Freight Market

In preparation for my year-end economic forecasts and Model T 2013 stock market predictions, I thought it would be a good time to check the current status of the freight markets.  

Because the economy has been slow and needs some motivation, I have enlisted the cheerleaders from Good Shepherd High School to assist me in this endeavor. Excuse me, there has been a change.  These cheerleaders are actually from German Shepherd High School. 
  German Shepherd High Cheerleaders

Here’s what is happening in the freight world:

Truck Freight 

FTR (Freight Transportation Research) FTR Truck Loading Index
Latest Report: Declining 

Trend: Declining.  Index was growing nicely until hitting the wall in Q4. Expected to be at near 0% (year-over-year) at year end. 

Forecast: Skidding at 0% in Q1 before improving.

ATA Trucking Index 

Latestst Report:  Down 3.8%, at the lowest level since May 2011. 

Trend: Decreasing 

Forecast: Modest improvement in Q1

“Okay Cheerleaders, do your thing!”

You ain’t got no alibi. 
You ugly, oh yeah, You ugly 

Rail Freight 

Latest Report:  Carloads – Down 6.1% in October (y-o-y). It’s flat when you factor out declining coal shipments. Intermodal – Up 1.5% (y-o-y)  

Trend: Decreasing 

Forecast: Flat in Q1, before increasing the rest of the year. 

“What do you say Cheerleaders?”

Rickety Rick, Rickety Rack
Your train done run off that track,
You’re Grounded
Yo Mama says Your Grounded!
Port Freight Activity
Latest Report:  Inbound Freight – Up 5% (y-o-y) in October on the West Coast (Chinese imports), flat at most other ports.  Outbound Freight – Up slightly on the West Coast, down or flat for the rest. 

Trend: Declining 

Forecast: Flat in Q1 


You ain’t got nuthin’ to see
Cause you ain’t got no GDP,
You stagnant, oh yeah, you stagnant

Air Freight 

Latest Report:  Down around 0.4% from last year, year to date. 

Trend: Flat/Declining 

Forecast: Very bad Q4, 2013 to be much better 
Baltic Dry Index (measures world-wide shipping freight activity)

Latest Report:  Down 50% (y-o-y) 

Trend: Declining 

Forecast: Short-term, a modest improvement. Long-term, a 50% increase at the end of 2013. 

“Cheerleaders, help me!”

Two, Four, Six, Eight
You is in an awful state

The freight data is consistent with my forecast that the economy is bouncing between 0-2% GDP with no upward momentum.  It appears that we are falling to around 0% (the bottom of this cycle) at the end of the year.  I still don’t believe there we be a recession because the economy is moving so slowly.  It is the difference between hitting a wall at 5 mph versus 40 mph.  You hit the same wall, but the impact is much different. There just isn’t enough downward momentum to cause a significant recession.  

The freight forecasts suggest that this economic malaise will last through Q1.  The good news is that the rest of 2013 is forecast to be much stronger.  Wouldn’t it be great if we were talking about a new plan for economic growth instead of trying to keep from falling off a self-made cliff?  And just a reminder, while raising taxes is an economic plan; it is not an economic growth plan.

“Cheerleaders, do you have any final thoughts about this blog post?”  

You ain’t got no alibi. 
You ugly, oh yeah, You ugly

“You are talking about the economy, right? Well…..? (sigh) Suddenly I feel like I’m back in high school!”