The world steels itself for the next depression. But volumes of railcars (Buffett is a fan) are a far better leading indicator than volumes of Doomster column inches (Prof Roubini and Robert Peston, take note). The American Association of Railroads reports US railroad volumes of 312,170 carloads for the week ending 1/10/11 (week 39), up +4.7% y-o-y. Intermodal volume totalled 250,864 trailers and containers, up +4.4% y-o-y. This week’s US carload volume is the highest since Week 45 of 2008, just before world trade swooned. Intermodal rail volume reached a 4-year high and is back to pre-recession levels. Carload rail volume is the highest in 3 years.

Double-dip-so-maniacs will also take cold comfort from staffing stock Hays plc, now sporting an 8% GBP yield (Hays’ dividend kept its job all the way through 2009’s recession) and reporting not only 30% net fee growth in Asia (a third of its business now), but also +37% growth in Germany. Temp staff hires are a particularly reliable leading indicator of better times to come. Hays reported Like-For-Like volumes up +15% and are growing their own headcount by nearly a third. Our Global Outsourcing theme instead holds Adecco (3% yield in CHF, on 10x PER) as it is the world’s leader in temp. Maybe we should consider switching companies. Anyone know a head-hunter?

To the victor, the spoils. Our French oil major and Energy and Alternative Energy theme play, Total, denies any knowledge of a deal giving France priority access to Libyan oil wealth. Well, they would, wouldn’t they? But French newspaper "Libération" reports that Libya's National Transitional Council has promised 35% of Libyan oil to France in exchange for its backing. Reuters –neutral in the matter- say they saw a copy of the letter. Whatever the case, Africa's third-largest oil producer after Nigeria and Angola will provide much honey to the postbellum busy bees of Big Oil. Total’s shares yield 6.5% and are up some +20% from their recent lows. Only a very brave man would bet against Total getting a tanker or two to tow away to Toulouse. Tut tut.

BHP Billiton, a "Supply Inelasticity theme" holding, lays down rules on directors' share ownership. Non-executive directors must apply at least 25% of board fees to shares until they own the equivalent of 1 year's fees. Though we always applaud good corporate governance, it is even more comforting when the Chairman, Mr Nasser, for the second time in a month, loads up. He paid about USD 29.50 per share and spent just over USD 500,000. The month before, he paid USD 35, a total of more than USD 900,000. That gives him a stake worth USD 2-3mn. There have been few buyers of mining companies recently. Almost all economists have been singing in the down-grade chorus. Nasser is buying the world’s leading miner at a yield of 4% and a PER of 7x.

Lunch in London with Manfred Adami, former head of Credit Suisse’s investment business. Talk turned to crises. Manfred, once a Hamburger himself, reminded me of the 1857 financial crisis. The merchants of Hanseatic League Hamburg were suddenly fearful of lending to each other. No matter. The Warburg-Schiff-Rothschild banking network arranged with Emperor Franz Josef of Austria to despatch –very visibly- a train heaving with silver on temporary loan to Hamburg’s GiroBank. Once the good burgers had spotted the silver driving up the high street, blood pressures fell and business returned to normal. The train then chugged back to Vienna, with all its silver on board. If only, Manfred sighed, Angela Merkel had advisers of the same calibre today. Gordon Brown, thankfully still out of the public eye, need not apply.

"So was that it, then?" asked a client, referring to early October’s dramatic release from the bear’s embrace. Our reply is muted. Since the epicentre of global risk is the European banking sector, there’s no recovery in equities without recovery in the Eurostoxx50 banks index. This flirted with 90 but is now 108 and should be watched. Second, the politicians who operate in that fuzzy continuum called "Political Time" rather than "Market Time" seem finally to be synchronizing their watches. Third, when dividend yields for Dividend Aristocrats (our markets adviser David Fuller calls them "Autonomies", like those 15th century Italian city states which did what the hell they wanted) are 20 times those available from cash, and also based upon low dividend payout ratios that will grow unless we enter economic nuclear winter, the odds are vastly in your favour. Our accounts are loaded with Autonomies and Aristocrats, breeds that survive all time continuums. So, a cautious "yes".


This diary (the "diary") is published by Global Thematic Investors Limited, a company domiciled in Hong Kong and incorporated under the Hong Kong Companies’ Ordinance on the 15th September, 2005. The diary is not intended for private customers and is written to be read solely by sophisticated investors, such as family offices, business corporations, banks and financial intermediaries. Statements are completely personal and may change without notice, are often forward-looking and therefore subject to uncertainty and risk. The predictions and forecasts implied may not subsequently be achieved. The diary is composed of information and opinion believed to be accurate, though this information may not have been verified. Funds or collective vehicles may only be open to certain persons in certain jurisdictions and may follow strategies that are speculative and involve a high risk of loss and may go up as well as down (a favorable performance record is no indication of future performance).