Hallelujah! The first thing I came across this morning as I was reading struck me as positive, and it came from one of today’s hot investors, Mark Mobius, Executive Chairman of Templeton Emerging Markets Group. Not only that, but I agree with the man – when all is said and done, if there is lots of “floating” money in the system, things will work out. Here is his take on this notion.
For starters, Mobius believes the U.S. will avoid recession. “Probably the most important reason is about money,” he said. “There’s a lot of money sloshing around looking for a home.” And, with the prolonged weak dollar, the U.S. is looking very attractive to global investors. “Things look pretty cheap in the U.S., whether it be property, whether it be companies … And labor rates look cheaper, and that is going to attract manufacturing investment.”
So simple, yet so elegant a solution to the economic problems in the U.S., or anywhere for that matter. Money needs to work and, like water, it seeks the lowest spot and then evens out. You economists out there, forget your numbers, your charts, and your theoretical propositions; it is all about the flow of money.
And, speaking of flow … Today’s import/export numbers looked dang good, which points to another disconnect in the analysis of the U.S. and global economy. How is it that exports of planes, trains, and automobiles can increase to record levels in a time when many keep saying a recession is coming? Yes, please give me an answer to this riddle.
A record level of exports and a drop in oil prices narrowed the U.S. trade deficit in July to its lowest point in three months. The jump in exports could give the economy a lift at time when it is at risk of another recession. The record for exports hit in July came after two months in which exports had fallen as global demand weakened.
Commerce is still alive and the money is beginning to flow on a global scale, and that will make the difference between falling back into recession and resuming a global, economic recovery.
Just one more point about the comments from Mark Mobius. Notice that he said “Probably the most important reason” for not falling back into recession. This implies he has other significant reasons, and I suspect the U.S. export data is one of them. Now all we need is for the inventories to dry up after a month or two of depletion and companies will begin to hire again to replenish those warehouses.
The market seems to have taken the import/export data in stride, along with the ho-hum weekly employment report. Perhaps the market sees what Mr. Mobius and I see, and that is that the reports of global economic death are greatly exaggerated, and that it is just a matter of time before the ship rights and the sails fill up with wind, again.
Trade in the day – Invest in your life …
