Editor: Damn the Torpedoes

Contrary to popular belief 2003 has had a very promising start. Notwithstanding the Venezuela crisis, the Iraq standoff and no hint of capture for the beast Bin Laden, things are good. The US and world economies are showing signs of recovery, the tanker market is strong, containers have had a sustained rebound (a symptom of an improving economic landscape) and even the Northeast US is having a good ski season with cold temperatures raising energy expenditure putting pressure on prices.

Last year this economisteditor, in “Shipping and Global Recession” January 2002 took a look at the world’s macro-economy and took a stab at predicting the economic trends of the upcoming year. Remarkably, and largely due to a lot of assistance from good supporting sources at Citibank and others, much of it was correct. The discussion of the US recession and using expansion of money supply to combat it instead of interest rate cuts alone appears to have been correct. US M3, the broad measure of money supply has expanded 6.6% over the last 12 months, the dollar has weakened against the Euro and hints of inflation have re-appeared (albeit that the US CPI only rose 2.4% in the last 12 months and contracted in December due to holiday discounts). This signifies economic growth and will permit interest rates to go back up to sane levels where they once again become a useable tool for fiscal policy. Why is this a good thing? A better US economy means a better world economy and that is generally very good for shipping.

On the shipping front we have a large amount of transactions running wild in January and bankers, to a person, are in a buoyant mood:

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