HH Meaning Mexico

It took some doing, and some time, but Mexico has managed to bring its car production back up to more normal levels. For two months, there had been practically zero automaking in one of the biggest auto-producing nations. Getting back near where things left off, however, isn’t exactly a “V” shaped recovery; it’s only halfway.

Two months of zero production are two months of zero sales for the OEM’s producing down there. The latest data is for the month of July meaning that for all the reported robustness of the reopening world there is again another sign of contradictory gentleness and deliberate precaution belying the notion.

I mean, that’s ~600k light vehicles which should have been manufactured and would have been yet they weren’t. In how many places can the biggest economic contributors just skip one-sixth of their annual revenue? The answer is none.

More to the point, why aren’t they going absolutely nuts trying to make it all back as quickly as they can?

Central banks and their financial media want you, need you, to believe that everything is coming along just nicely. In some places where the words “record” and “stock prices” are associated, not just nicely but, on the surface, anyway, downright perfect.

Underneath all that, there’s two and a half years of contradictory history that in the real world can’t just be set aside so easily. In terms of manufacturing in Mexico, carmakers had been hit with trouble all the way back in January 2018. Despite constant promises and sunny forecasts, it only got worse; for the sector, for Mexican industry, as well as their economy as a whole.

Once the Euro$ landmine detonated around October 2018, that was it. It’s been recession ever since – the recession “scare” increasingly priced by global bond markets throughout last year was no scare in Mexico. It was the real thing – long, long before COVID. Time is any economy’s biggest enemy.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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