Markets are strongly unchanged. One important divergence is the Transports. They are down -3.1% in the month.The Dow is up +1.5%. Transports are up +14% since the Election. Yesterday 26 of the 30 Dow stocks were down. All of this is going on as Oil is down -7%. Asia is the fastest growing Oil market. It's awash in excess Oil. "Cuts are not enough to re-absorb the world's excess supply. So, unless oil demand growth rebounds to record levels in 2017, oil prices could head for another substantial fall," said Leonardo Maugeri, senior fellow at the Harvard Kennedy School's Belfer Center for Science and International Affairs. reading Rob? Crude shipments to Asia are up +3% since December. Crude prices are down -10% in that period. The productivity improvements in the US will allow them to increase production even as the price falls further. We went negative when the Saudis opened up the supply in 2014. Our view has been that the Critical variable is Demand. Thus the IEA stats are closely watched. Every year for the past seven years they have underestimated Demand. It averaged 880K bbl pd more than they forecast. Stay Tuned.
Industrial Production was flat in February. It was constrained by Utility production. Capacity Utilization was up +0.1% at 75.4%. US Manufacturing keeps on ticking.
We don't expect much from the Trump Merkel meetings. If Trump gets out of line she will straighten him out. Temperamentally she's way tougher. Politically a dust up with Trump will improve her own Election prospects.
Populism is the "Plat du Jour". In Venezuela, the "Wheat" police are enforcing the edict that 90% of the wheat must go towards bread production. No Chance they can "Eat Cake".
Yesterday we deferred the Piece about They're doing what?Amazon is selling Beer and offering free delivery."Happy" Saint Patrick's Day.
Invest the Money.
On this day in 1997 there was a changing of the Guard. Woolworth went out of the Dow. Walmart went in.
Edward Pennock CFA, Founding Partner
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