Some Bad Pictures for Economic Bears…

• Posted by ToddSullivan
• on July 30th, 2009

We have talked here before about Dow Chemical (DOW) and its place in the economic food chain. Its basics plastics division is ground zero for the economy. Any economic improvement will be felt here first as the order to make stuff to sell come there before anywhere else.

In addition, as a chemical company, the remainder of it’s businesses if we explain them in the most simplest terms “make the things that people use to make things”. Bottom line is not many physical items get produced without a products from somewhere in Dow’s production chain.

With all that said, we must watch Dow’s operating capacity and demand for its products to get a true feel of what is happening in the general economy.

Now, a codicil. Dow is a global company. While a large part of its final sales are to the US, you cannot extrapolate verbatim the following chart to the US. They do correlate, but not 100%.

All these charts are very good news for the general economy. Note, this does not mean we are out of the woods as in many areas we are still be,ow last year levels. It is good news because we are seeing continued gains. The better news was the phrase that “production is meeting demand”. That means there is very little inventory in the system so any growth will mean continued gains.

Disclosure (“none” means no position):Long DOW

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