Smalltime's 2014 Economic Outlook Part 2 : Small Time Blog

Smalltime's 2014 Economic Outlook Part 2

by Bradley Voight on 02/02/14

Here I will turn from the equity markets and look at the real global economy. The best indicator for that are the base metal prices which continue to be under pressure as you can see here by looking at the 1 year aluminum chart here. The base metals are the building blocks of everything so if demand is low for these items, prices will be low. Consequently, if demand is low and prices are low then the real economy is crawling along at best right now. I do look at numbers and I do my best at making sense macro economic data, but I like to measure sentiment in what I can actually observe from my own vantage point and here is what I see that tells me this is the make or break year for the world "recovery"


1. My friend got a job at Rexnord which is a bearing manufacturer. Every thing that rotates needs bearings. My friend is working mandatory 10 hour shifts as are all three shifts at the plant. Saturdays are opt out only meaning that you are working unless you opt out.

2. Ford is now making the F-150 pickup truck with an all aluminum frame. The F-150 is the #1 selling truck in America and preferred by contractors of all types. If home building does pick up in the spring and summer more F-150's will be sold.

3. Alcoa may have something to tell about the future of the global economy in its stock price. The stock has been in a defined trading range of $8-$10 for over 2 years now. Starting in October of last year it began to move and is now at $11.51. Why is this important? If the stock is going up then investors must be anticipating an increase in profits. Alcoa can ramp up profits without doing anything other than benefiting from an increase in the aluminum price. What makes the aluminum price go up? Stronger demand. 

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