Alan Greenspan was famous for watching scrap metal prices. He believed they were a leading indicator of economic activity. American Metal recently wrote:
“The scrap industry often is the first to feel a strengthening of the nation’s industrial activity, a bellwether that economic times are improving. Former Federal Reserve Board chairman Alan Greenspan was fond of tracking scrap metal prices and saw them as a leading indicator of economic recovery in hard times. Perhaps a scrap dealer driving a gas-guzzling 4×4, rather than Wall Street’s financial wizards, will be best able to tell when the economy truly is on the rebound.
Steel import activity remains muted in the United States, according to traders, who say domestic prices remain competitive with foreign tags, helping to limit imports. However, they see some hopeful signs that the logjam in place since early last year is beginning to break.
There is not much happening, but I think you are seeing a little more (activity) with the flat-rolled price going up,” one trader source said. “It’s nothing appreciable yet. I’m not even sure if the price increase is going to stick; it’s too early to tell.”
Looks like the sentiment is pretty universal. The signs of stabilization are evident, but the signs of recovery are still murky.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.