Source: Tradingeconomics |
Exports rose 14% on a YoY basis against 4.5% consensus.
Source: Econoday |
Global markets responded with the "risk-on" trade. The dollar sold off while commodities rallied.
CRB Commodity Index (source: barchart.com) |
One of the broader developments in recent weeks in response to the China growth story has been the rally in US transport shares. DJ Transports index has materially outperformed DJI since mid-December.
Cognito: - China is the world’s second largest and most rapidly growing major economy. It is also the world’s largest exporter. As a result, a bottom and potential turn in China’s international shipments can be reasonably viewed as a sign of a bottom and potential turn in worldwide trade. Many of the twenty companies comprising the Dow Jones Transportation Average are engaged in the international shipment of goods. Hence their sales and earnings would benefit from an increase in global trade. Global transportation bellwether Federal Express/FDX is a prime example. Perhaps not coincidentally, FDX is attempting to emerge from a substantial reverse head-and-shoulders consolidation spanning more than two years!
This is not unique to the US, with Australian transport
shares rallying as well. An improvement in the transport
sector is good news for global growth because it tends to
lead economic expansion.
DJ Transport vs. DJ Industrials (source: Yahoo/Finance) |
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