For a long time I’ve been interested in bellwethers. For those who don't know, the original meaning of "bellwether" is a sheep -- usually an older male -- that leads the flock, often wearing a bell. In the financial world, a bellwether can be a stock that indicates a trend that the general market is taking, or it can be a specific industry or segment of the economy that indicates leading trends. Microsoft is a tech stocks bellwether; Disney is a bellwether for entertainment stocks. Where these companies go, others are sure to follow.

For the last several years Public Radio International’s “Marketplace” has visited Cuba, Mo. to report on the impact of globalization on Main Street America. Cuba, with a population of roughly 2,600, sits at the statistical center of the larger U.S. population. What host David Brancaccio found was that truck drivers are a strong early predictor of economic change in America because
they see changes in the volume of goods being transported, often identifying early trends in corporate health long before the professionals do.

The trick, of course, is finding the right person to speak with. In the October 2003 issue of NETWORK, I had the opportunity to interview Carl Tannenbaum, chief economist for LaSalle Bank. His perspective is different, to be sure, from drivers at a truck stop in Cuba, Mo. Yet he acknowledged that interesting information about financial trends can be found in unusual places.

Rather than watching the stock market or the nation’s top financial institutions, Tannenbaum follows farming, steel production and the airlines when looking for trends. These industries are leading indicators of change – bellwethers that are followed by all of the businesses that support or are served by them, affecting the livelihood and financial well being of large segments of workers.

This month we focus extensively on financial advisors and managers. These are the people who are staring into today’s versions of tea leaves – FNN, Bloomberg and the Wall Street Journal – and looking for those trends to help make suggestions and decisions that affect their clients’ assets. With the economy heating up, individual investors are once again wading into the stock market and keeping a closer eye on their portfolios. And speaking of tea leaves, here is my personal economic bellwether: gourmet coffee. Anyone who has waited in line at one of the growing number of gourmet coffee shops in town for their chance to spend upwards of five dollars or more for their custom concoction knows that with this volume of disposable income going to such a transitory luxury commodity, the economy must be doing OK.

Regards,

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