Truck Tonnage And Equities Update

|
 |  Includes: IYT, SEA, XTN
by: Calafia Beach Pundit

The amount of tonnage hauled by America's trucking industry fell 2.7% in October, but was up a strong 8% from October of last year (i.e., this can be a very volatile statistic and seasonal adjustments may be faulty-- despite all that, the index is clearly increasing). This is one of those real-life statistics that, while it may not be perfect, measures the increasing physical size of the U.S. economy in a way that few other statistics can. The weakness in October likely had lots to do with the government shutdown that month; if so, activity should bounce back next month.

Click to enlarge

I like this chart because it ties the growth of truck tonnage hauled to the growth of the inflation-adjusted value of the stock market. Logic says that the two should be correlated, and indeed they are, over decent intervals of time. It also helps to highlight "bubbles." Note how equities way outpaced gains in the real economy in the late 1990s, and way underperformed the decline in the economy in the Great Recession. Both periods represented extremes of valuation that investors could exploit. Currently, stocks appear to be behaving more or less normally compared to gains in the economy. This dovetails nicely with the current P/E of the S&P 500, which is very close to its long-term average:

Click to enlarge