The Real “Green Shoots”
Politicians have been looking in all the wrong places to find the first “green shoots” for the economy (world or national, it doesn’t matter). The real green shoot indicators are when reserve banks start to tighten rather than ease, and when shipping rates begin to turn up. We may be seeing that.
Green Shoots in Hawaii
DryShips reported better than expected earnings this morning. While revenues are still considerably down from a year ago (which is to be expected), earnings were significantly above expectations. DryShips cited increased drill rig returns and lowered costs among the reasons, but the tell is that the company also highlighted improved spot market charter rates. That is a “green shoot” for expanding cargo demand. Watch to see what happens with other shipping companies, and also with railroad traffic.
Almost simultaneously, the Reserve Bank of India raised its bank liquidity ratio, which amounts to a reserve requirement that limits how much money an Indian bank can lend. This is a small, but first step towards tightening India’s credit market, something that would only be done if the central bankers felt their economy was on the way back. Another “green shoot”. This is on top of Australia’s recent increase in interest rates. And Norway is widely expected to raise interest rates tomorrow morning. Something is happening, and I think it is good.
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