Global Exports

On several occasions since March 2009, I’ve had the opportunity to compare the bull market that started back then to Rodney Dangerfield, the comedian who passed away in 2004. He always started out his monologues saying: “I don't get no respect!” The latest disrespect of the bull market came from Bond King Bill Gross, who compared it to a Ponzi scheme in his latest Investment Outlook.

A week ago, I observed that Bill’s pessimistic outlook for corporate earnings is based on his “new normal” prediction that GDP growth in the US is likely to be subpar for many years to come. Even if that’s correct, corporate earnings are increasingly driven by global business opportunities, which have been expanding dramatically since the end of the Cold War.

So it was encouraging to see that US real merchandise exports rose to a new record high of $1,323 billion (saar) during June. The trade deficit also narrowed significantly during the month, suggesting that Q2’s real GDP gain of 1.5% (saar) might be revised upwards closer to 2.0%. That’s all rather impressive given that the JP Morgan trade-weighted dollar is up 5.1% y/y.

Also encouraging is that an index measuring the volume of world exports rose 1.9% to a record high during May. However, June export data available for other countries suggest this index weakened that month. In current dollars, exports of the G6 industrial nations (i.e., G7 less the US) fell 3.7% during June. UK and German exports fell 10.5% and 3.6% during the month. In Asia, exports fell during July in China, South Korea, and Taiwan.

Today's Morning Briefing: Passing the Tests. (1) Rodney Dangerfield and Bill Gross. (2) US exports at record high. (3) World exports at record high. (4) Old normal making a comeback? (5) Railroads chugging along. (6) Food costs rising. (7) Israeli’s getting existential. (8) How to break up the euro. (9) A very mixed bag of outperformers. (10) “Hope Springs” (+). (More for subscribers.)