Tuesday, April 13, 2010

International Trade Balance- 04.13.10

Via Bloombeerg:

Today's trade report suggests that businesses are a little more optimistic about domestic demand. The U.S. trade gap widened in February on both oil and non-oil imports. The trade deficit for February expanded to $39.7 billion from a revised $37.0 billion the month before. February's gap came in a little larger than the market forecast for a $39.0 billion shortfall. Exports rebounded 0.2 percent while imports made a 1.7 percent comeback.

The worsening in the trade deficit was led by the nonpetroleum balance which widened to $27.2 billion from $25.6 billion in January. The petroleum deficit came in at $22.9 billion, compared to $22.5 billion in January.

The source of the gain in nonpetroleum goods should give comfort to those worrying about business confidence in the consumer sector. The boost in imports primarily was the result of a $1.1 billion jump in consumer goods, followed by a $1.0 billion gain in industrial supplies (largely oil). But imports of capital goods excluding autos posted a moderate gain of $0.4 billion. Overall, businesses appear to be in a restocking mood-which is favorable to the economy.

Exports were up only marginally with major components mixed. Capital goods excluding autos were up $0.4 billion in January despite a $0.8 billion drop in the aircraft component. The food, feeds & beverage component showed the biggest decline, dipping $0.5 billion. Taking into account the fall in civilian aircraft exports, overall exports were good.

On a year-on-year basis, growth in overall exports of goods and services in February slipped to 14.3 percent from 15.3 percent in January. Meanwhile import growth jumped to 23.3 percent in February from 13.7 percent the month before.

I am encouraged to see retailers restock their supplies which in turn means consumers are buying again. Hence, are banks extending more lines of credit as the economy improves? I will look to JPM's earnings on Wednesday and BAC's on Friday to help confirm or reject this hypothesis. Specifically, I will look at new issuances of consumer (credit cards) and small business loans.

On the other hand, I am not thrilled to see a decrease in net exports (exports - imports). The global trade balance needs to rebalance itself in order for a proper global recovery to manifest; including job creation. Maybe these numbers reflect the lush liquidity which continues to bath the U.S. Economy.

Will The S&P 500 break 1200 Today? Equity markets are choppy this morning. Good luck trading!

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC


  1. i would like to note, one should be careful about the statement of retailers restocking... we have capital imports, but not necessarily from the retail side. also doesn't necessarily mean banking is extending credit. one should look to retailer inventories on the balance sheet or major big box retailers might give a hint, like wmt, target, costco etc...

    in terms of bank, you have to look to their quarter financial statements i guess, but from my sources im sure banking situation hasn't improved dramatically, maybe a slight improvement, but not fundamentally sound changes in loan/business practices in regional banks. earnings may or may not reflect this as short term can be superficial numbers.

    lastly decrease in imports maybe bad for the fiscal policy stated by obama but perhaps not necessarily an overall evil? perhaps it is indicative of are return to american consumption as you have stated :D

    and sure there is liquidity in the market, but is it reaching the demand side still? well like you said, you will have some confirmation by looking at some of the banking numbers !

    bull or bear!?

    hmm tough call right now ...

  2. nice thanks for the reply pat, great article, that clarifies many things for me. it seems obama is just using typical political speak. If no action is taken seriously on the fiscal side to increase exports, we may very well see a return to weak dollar strong equities corr? or the synonymous weak dollar = good for us recovery... hmm much to think about


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