TNT Attrition

There was a bit of a stir caused by Dutch logistics firm, TNT Express. The company has been expressing caution, if not downright pessimism about its prospects due to economic considerations. Today, it lowered its targets for growth, with the stock taking a beating in so doing. However, it is the manner of that downgrade that should be seriously considered, citing “weak growth in Europe and the US.”

Downgrading European prospects is one thing, even condoned in orthodox circles given the obvious turn of the tide (which wasn’t really a turn, but a realization), but citing weak US growth prospects is something altogether “unexpected” and so contrary to the narrative. Perhaps TNT is not aware of all the sentiment surveys?

In the end, I think it really is just as simple as not accounting for prices correctly. Not to belabor Target’s comparable store data, but the message there was clear in its macro concepts – people paying more and getting less stuff. Economically speaking, that shows up as rising (or flat, in Target’s case this past quarter) revenue, or the dollar value of goods traded a la GDP. When properly figuring in prices, however, what looks like low but positive growth is revealed as erosion, or really attrition.

If people are getting less stuff, that would mean somewhere someone is making less stuff; and then shipping less stuff (making TNT Express into a corroborative point in that favor). That leaves economic erosion hidden under the cover of economics’ ill-fated pursuit of precision, producing a whole host of “unexpected” economic transgressions like displaying recoveries that don’t really exist.

ABOOK Sept 2014 Target Comps per Trans MAs


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