Slowing Shipments a Sign of a Turning US Economy?

It’s another day in paradise for stock investors today with stocks once again setting new all-time record highs.  The formal signing on the initial phase one trade agreement has put many investor’s concerns of a trade war on hold.  This is contributing to the overall strength of the stock market.  With trade concerns, it will be interesting to see how stocks respond going forward.  There has been such hype over the anticipation of yesterday’s event.  It seems to me that we will soon once again see the trade war dominate the headlines, with stocks falling during times of concern and climbing when good news regarding continued progress is released.

One key index that has been a historic predictor of future health of the US economy is the Cass Freight Index.  As consumers purchase goods, they need to be shipped to retailers and consumers via land, sea and air.  This index measures the number of shipments, which generally reflects the consumer demand for goods.  When this number is negative, it indicated business is slowing and can be an early sign that things are turning in the economy.  Compared to December 2018, shipments this last December were down 7.8%, showing the steepest decline since the Great Recession of 2008-2009.  We need to watch this number closely going forward.

We will maintain a locking bias.