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08/07/2009

Steel and the Market

Since spring 1990, I have kept various figures on sheets of ledger paper, including price/earnings ratios, foreign equity benchmarks, sentiment readings, and steel production. This last one, steel, I long thought was a decent barometer of activity and once PIMCO’s Bill Gross, who I used to work with at the marketing level, said it was his favorite barometer. [Not sure that remains the case today.] 

Well it’s been years since I reviewed the topic in this space, though each week I post the number from Barron’s for my own benefit and one thing has been clear since last fall; steel production has obviously confirmed the economic freefall we’ve been in…and is now ticking back up. [Emphasis on ‘ticking.’] 

So here are some past trends at market highs and lows.  I’ve chosen the four weeks before the key date (which is highlighted), as well as the four weeks after. Steel production is in 000s of tons. 

3/24/00 …S&P 500 hits new high of 1527 

Steel…2317, 2299, 2284, 2270, 2290, 2329, 2379, 2337, 2320 

10/9/02…S&P 500 hits cycle low of 776 [bursting of tech bubble (not manufacturing), 9/11, build-up to Iraq invasion spring ‘03] 

Steel…2116, 2116, 2060, 2129, 2012, 2046, 1969, 1979, 2007 

10/9/07…S&P 500 hits new all-time high of 1565 

Steel…2062, 2092, 2088, 2101, 2125, 2137, 2133, 2126, 2088 

3/9/09…S&P 500 bottoms in current cycle at 676 

Steel…1006, 1080, 1083, 998, 980, 1038, 976, 1027, 1006 

7/31/09…S&P 500 hits 987, rallying 46% from 3/9/09 low 

Steel…1161, 1165, 1213, 1244, 1255…??? 

Check out the pattern in the weekly figures for steel production beginning 8/22/08, as we hit the wall in mid-Sept., through the rest of the year. 

2167, 2125, 2087, 2062, 2055, 2027, 1986, 1942, 1869, 1744, 1680, 1605, 1536, 1556, 1348, 1197, 1182, 1168, 1022 [12/26/08] 

Now that’s an economy that has truly fallen off a cliff. Let’s hope the current trend stays in place. 

Wall Street History returns next week.
 
Brian Trumbore



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Wall Street History

08/07/2009

Steel and the Market

Since spring 1990, I have kept various figures on sheets of ledger paper, including price/earnings ratios, foreign equity benchmarks, sentiment readings, and steel production. This last one, steel, I long thought was a decent barometer of activity and once PIMCO’s Bill Gross, who I used to work with at the marketing level, said it was his favorite barometer. [Not sure that remains the case today.] 

Well it’s been years since I reviewed the topic in this space, though each week I post the number from Barron’s for my own benefit and one thing has been clear since last fall; steel production has obviously confirmed the economic freefall we’ve been in…and is now ticking back up. [Emphasis on ‘ticking.’] 

So here are some past trends at market highs and lows.  I’ve chosen the four weeks before the key date (which is highlighted), as well as the four weeks after. Steel production is in 000s of tons. 

3/24/00 …S&P 500 hits new high of 1527 

Steel…2317, 2299, 2284, 2270, 2290, 2329, 2379, 2337, 2320 

10/9/02…S&P 500 hits cycle low of 776 [bursting of tech bubble (not manufacturing), 9/11, build-up to Iraq invasion spring ‘03] 

Steel…2116, 2116, 2060, 2129, 2012, 2046, 1969, 1979, 2007 

10/9/07…S&P 500 hits new all-time high of 1565 

Steel…2062, 2092, 2088, 2101, 2125, 2137, 2133, 2126, 2088 

3/9/09…S&P 500 bottoms in current cycle at 676 

Steel…1006, 1080, 1083, 998, 980, 1038, 976, 1027, 1006 

7/31/09…S&P 500 hits 987, rallying 46% from 3/9/09 low 

Steel…1161, 1165, 1213, 1244, 1255…??? 

Check out the pattern in the weekly figures for steel production beginning 8/22/08, as we hit the wall in mid-Sept., through the rest of the year. 

2167, 2125, 2087, 2062, 2055, 2027, 1986, 1942, 1869, 1744, 1680, 1605, 1536, 1556, 1348, 1197, 1182, 1168, 1022 [12/26/08] 

Now that’s an economy that has truly fallen off a cliff. Let’s hope the current trend stays in place. 

Wall Street History returns next week.
 
Brian Trumbore