Jan 09 2012
America’s Top Export – Fuel!
America’s Top Export – Fuel!
A recent article proclaimed that in 2011 a combination of gasoline, diesel and jet fuel comprised America’s largest export. Four manufactured product groups were next on the list of largest exports. Those were aircraft, motor vehicles, vacuum tubes, and telecom equipment.
I suggest you think about that, and determine whether your thoughts are similar to mine. With respect to these 5 export categories, it seems to me that over time:
- production of gasoline, diesel and jet fuel has to be a function of refinery location and capacity. As the developing countries gain their respective feet, presumably they will increase their refinery capacity as they will not want to be dependent on third-party countries for supply of those commodities at the margin;
- with respect to aircraft, properly maintained aircraft remain in service for decades (not years). Hence it seems to me that this is likely an industry sector in which American exports are likely to be protected for some long time;
- with respect to motor vehicles, it strikes me that American exports may be protected with respect to small volume specialty vehicles, but are unlikely to be protected for large volume mass-produced vehicles;
- with respect to vacuum tubes, unless you know something I don’t know, I see no reason to believe America will have long-term protection with respect to production, and hence export, of them; and finally,
- with respect to telecom equipment, once again unless you know something I don’t, I see no reason to believe America will have long-term protection with respect to production, and hence export of telecom equipment either.
If I am right in these observations, it seems to me that over time this does not auger well for US exports, and hence does not auger well for prospective improvement of ongoing U.S. monthly net trade deficits. If you read these e-mails regularly, you know I consider U.S. monthly net trade deficits and the U.S. history and continuation of cumulative net trade deficits to be an important economic marker against which to measure America’s place in the world economy, and its prospects for employment recovery and general economic recovery.
I suggest the issue of the nature of U.S. exports is important in an investment, and to some degree, trading context. You might want to discuss this with your investment advisor. Something to think about.
Read ‘America’s top export in 2011 was… Fuel?’ – reading time 2 minutes, thinking time longer.
Hungary Debt Rated ‘Junk’
On Friday, January 6, Fitch Ratings cut all Hungary’s debt to a “junk” rating. Hungry is one of the 10 European countries that is not part of the Eurozone. It has been reported that Fitch said this downgrade “reflects further deterioration in …..continue reading.
Commentary reading time 2 minutes. Referenced articles reading time 7 minutes.
Deus Ex Machina – A Latin Phrase Relevant To Gold?
From Wikipedia: The Latin phrase deus ex machina comes from a play by Horace, where he instructs poets that they must never resort to a god from a machine to solve …. plots – the idea being (or so I think) that artificial devices conceived by man should never be relied upon.
‘Deus Ex Machina’ is the title given to a December 6 article written by Egon von Greyerz for the Gold Switzerland Blog. Expressed in its simplest terms, as I read von Greyerz’s article his view is that:
- most of the world’s major economies, and the world’s financial system, are bankrupt;
- only ‘God’ being lowered onto the world stage can save the ‘plot of the current world play’;
that scenario is …..continue reading.
Commentary reading time 5 minutes, thinking time much longer. Referenced article(s) reading time 6 minutes. This Commentary includes a suggestion that you speak with your Investment Advisor(s) with respect to its subject matter.
2012 China GDP Growth Risk!
On December 28 the Bank of China is reported to have said “a sluggish global economy, domestic industrial overcapacity and a weak property market will pose increasing downside risk for the Chinese economy in 2012. Economic growth will slow to 8.8% in 2012 compared with 9.3% in 2011”. I find this interesting for the following reasons:
- you may recall that in September the international monetary fund said …..continue reading.
Commentary reading time 4 minutes, thinking time much longer. Referenced article(s) reading time 2 minutes.
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