Looking at February US Industrial Production stats, you can see how US Exports get choked off by a strengthening USD (in February the US Dollar Index remained strong). At down -11.2% year over year, this chart (see below) is quite nasty. If we don’t break the buck’s upward momentum, sustainably, expect more of the same here.
Interestingly, within this IP report was the lowest capacity utilization number the US Industrial base has printed since 1982 (just under 71%). If you don’t deflate the Dollar, you get deflation. That’s bad. Stopping deflation starts with starting to break the buck.
Keith R. McCullough
CEO & Chief Investment Officer