RAIL FREIGHT TRAFFIC PLUMMETS 18%
Start spraying those “green shoots” with some Weed-B-Gone. They are in fact weeds. The most recent rail data confirms the continuing trend that the real economy is seeing no real recovery. Intermodal traffic for the week ending June 24th was down a staggering 17.8% from the same period a year ago.
That’s an astounding decline for an economy that is supposedly in recovery mode. You would think that a huge rebound in commodity prices and economic activity would spur large gains in rail traffic, but it’s not translating into real strength in the data. Buy into the “green shoots” theories at your own risk. It’s just not being seen in the real economy. We are seeing the same results in other economically sensitive industries like trucking and air transports. We are also hearing similar stories from readers in the trenches.
AAR reports:
Freight traffic on U.S. railroads remained down for the week ended June 20 compared with the same period last year, the Association of American Railroads reported today.
U.S railroads reported originating 261,717 cars, down 17.7 percent from the same week in 2008. Regionally, carloadings were down 11.9 percent in the West and 25.2 percent in the East.
Intermodal volume of 187,759 trailers or containers was down 17.8 percent from the same week last year. Container volume fell 12 percent and trailer volume dropped 39.0 percent.
Total volume on U.S. railroads for the week ending June 20 was estimated at 27.7 billion ton-miles, off 16.6 percent from the same week last year.
Eighteen of 19 carload freight commodity groups were down from last year, with declines ranging from 1.8 percent for farm products other than grain to 65.4 percent for metallic ores. The lone group showing an increase was the catch-all category labeled “all other carloads” which was up 11.9 percent.
TPC – Whats up with this BS rally today? there is no good news out and we rally 2%??????
Andy,
I really have no idea. I think the homebuilders are driving the rally. Lennar and the other homebuilders took off with the rest of the market in the AM. Any positive news out of housing is positive for the market. Unfortunately, the consumer data and recent housing data does little to back up any positive news out of the homebuilders. You could even argue that the homebuilders adding supply to the market is actually a negative….
TPC,
What was it relative to last month. It’s a terrible number, I will grant you, but you make it sound like the “green shoots” narrative is dead because it’s a decline over last month. It seems to me that if it’s a tick or two up from last month, then all it does is confirm that we’re troughing, which is what anyone reasonable has been claiming.
So what were the numbers for April, and do they confirm your claims?
Paul,
It was a 1% month over month decline. There is a huge difference between troughing at record low levels and recovery which the stock market is clearly pricing in….Based on the economic news I think stocks represent a poor value based on the recent surge.
If things change I will try to convey that, but as of now I am just not seeing the economic news that backs a large overweight stock position. Still short S&P’s from 945 and will remain so until the facts change….
That is a big difference from what you suggest in the headline, imho.
So is today just end of month/quarter mark up?
maybe it is just window dressing?
Paul,
The data is all there for you to see in the chart. I am not misleading anyone. 18% is a massive decline. The AAR chooses to report the numbers on a year over year basis – that’s not my decision.
You’re nitpicking a little bit. I’d love to jump into the bullish camp with you, but I don’t think the data justifies that currently. Just my opinion….
window dressing my man. CC is dead on.
Folks, I would argue it is the combination of the Russell being reset and window dressing. Next week is a huge amount of economic data….
-Michael
My point is not to nitpick, but to state that your headline was misleading. You’re presenting the 18% as if it is a decline from last month, rather than a 1% decline. Granted that the world economy is in shambles, the point of the green shoots hypothesis is that it’s not 18% decline from last month, or even last quarter. The YoY figure is misleading.
Now, we can agree that there is some windowdressing going on. My QID position got shot to shoot today. Tech is strong, and people expecting the Qs to just roll will be disappointed, it seems to me.
You ever hear of the Golden Cross?
My guess is the data will be just as fuzzy as it has been, with both positive and negative numbers showing up. We’re in the trough, that much is clear. Even Japan’s exports are not collapsing much more. The turn will be slow, but it will turn. Q4 has a good probability of being positive. I would be careful shorting… I’m not saying there won’t be another correction, or even a steep one, in fact, I’m hoping there will be one that goes under 800, so that I can buy, but unless something major blows up, we will not see 666.
Good comments Paul. I think we’re mostly in agreement. The reason why I include the long-term chart is to give readers a long-term perspective. It’s not my intention to imply that the near-term fundamentals of the rails data is fall off a cliff, but rather that there are no signs of a real recovery as most market participants would have us believe….
So why is the market rallying?
rallying? we haven’t gone anywhere for 2 months.
rallying? we haven’t gone anywhere for 2 months. Market is flat for the year. You bulls shouldn’t be cheering anything.
Rubbish
1. yoy data as has been talked about.
2. rail traffic is not a leading indicator, at best a coincident indicator.
3. why would rail traffic get better in the US? Economic growth is outside the US
The person who thinks the market is flat for the year surely is aware of stocks in the US +30-40-50% YTD, and emerging mkt indices +30% YTD
Tell me how you can have an economic recovery without the transports? They are the middlemen in nearly every transaction in this economy. If they are reporting continued declines then there is no recovery. Even if they are a coincident indicator it still means the economy is not recovering, but rather troughing at record lows.
As for stocks – no matter where you look they are still off 40%+ from record highs. A 3 month rally means nothing in the long-term….Anyone who thinks this economy is going to blast off to above trend growth in the coming few years is delusional….
GO SHORT BIG
CDC is now estimating that the novel H1N1 virus will be “Category 2” in severity. They are closely watching the situation in the Southern Hemisphere for validation of this estimate.
A category 2 pandemic has the following characteristics:
* Case fatality ratio of 0.1 percent to less than 0.5 percent.
* Between 90,000 and 450,000 deaths in the U.S. (compared with estimated 36,000 deaths during a typical influenza season).
* Excess death rate of between 30 to less than 150 per 100,000 people.
* Illness rate of between 20 and 40 percent.
* Similar to 1957 pandemic.
TPC – why would rail traffic show improvement already? We know shipments have only improved marginally and too MoM (YoY is meaningless), but new orders have improved considerably (see durable goods report). Which means rail traffic will improve in the coming weeks. Traffic will improve considerably in Q4 vs last year when major industries shut down. Then will you put up the same chart with YoY growth and a title saying “rail traffic explodes +15%” ?
X,
A. It sounds like you might be a new reader because I am not the permabear you are making me out to be. I post plenty of positive articles and have been very bullish on more than a few occasions during the last years: http://pragcap.com/how-are-we-doing
B. Durable goods have been on the rise for 2 months. 1.9% in April and 1.8% in May. These are weekly freight figures and there is no recovery in these figures despite the supposed strength in durables. In addition, the June consumer retail sales figures are setting up to be disastrous so I am simply portraying what the data actually says as opposed to the MSM and the Larry Kudlows of the world who see nothing but green shoots.
If the data changes I will absolutely post it. And I will reallocate my portfolio accordingly. As of now I am not seeing the robust recovery that everyone else is seeing….
Nice site
Tpc,
what do u think about the recent homebuilder earnings?