Posted on 01/13/2016 11:31:01 AM PST by GilGil
One of our favorite hypocritical CEOs spoke this morning to try and explain why his rail freight transportation company's stock is plunging. 11 months ago Michael Ward was adamant on CNBC that he has "not seen any changes," suggesting everything's fine down to $30-35 oil and "expected no impact on crude shipments." Today, he exclaims, the volume drop can be seen as "freight recession," warning that "there is pressure on markets not seen outside of a recession." He is right, of course, as we noted previously, the weakness in rails is entirely recessionary and is no longer limited to industrials or coal.
(Excerpt) Read more at zerohedge.com ...
All of the class one railroads have been hammered by the obama war on coal. CSX and NS were hit especially hard by the massive drop out of east coast coal mines. UP and BNSF have been hit just as hard by drops in shipments out of Colorado and the Powder River basin of Wyoming. We’re talking 25% loses in volume over the last year alone.
I love that pic, except it is highly inaccurate. See, there are a few bricks still stacked on top of another. When Obama is through there will be absolutely nothing left, no stacked bricks just complete rubble.
I’ve started noticing a lot of parked locomotives lately at the Union Pacific Davidson Yard in Fort Worth. Last time I saw that was around the 2008 recession.
He’s lazy..............
The bigger issue is the decline in intermodal traffic, since that is directly related to business and consumer spending on a wide range of products.
I notice there is lack of traffic when there is a lot more graffiti on them.
Great, a new economic measure of shipping to rank right up there with the "Baltic Dry Index" -- "Thor Graffiti Index!"
LOL! Absolutely!
OANN had an interview with Albert Edwards, who issued a dire warning about the recession to come. He predicted it will be much worse than 2008-2009.
This is generally, what he noted:
It goes without saying that deeply negative interest rates would be accompanied by a massively expanded QE4 in the US. The last seven years of exploding central bank balance sheets will seem like Bundesbank monetary austerity compared to what is to come.
http://www.businessinsider.com/albert-edwards-negative-us-interest-rates-2015-9
Edwards uses the Bureau of Economic Analysis* preferred measure of whole economy profits, defined as profits from current production that removes inventory profits [an accounting measure]. This measure is down nearly 7 percent year~over~year and is falling at a pace not seen since the midst of the financial crisis in 2008.
FWIW: Edwards carried on with the doom and gloom, adding:
If I am right and we have just seen a cyclical bull market within a secular bear market, then the next recession will spell real trouble for investors ill-prepared for equity valuations to fall to new lows. To bottom on a Shiller PE of 7x would see the S&P falling to around 550.
I will repeat that: If I am right, the S&P would fall to 550, a 75% decline from the recent 2100 peak. That obviously will be a catastrophe for the economy via the wealth effect and all the Fed*s QE hard work will turn dust.
That is why I believe the Fed will fight the next bear market with every weapon available including deeply negative Fed Funds rates in addition to more QE. Indeed, negative policy rates will become ubiquitous.
Most believe a 75% equity bear market to be impossible. But those same people said something similar prior to the 2008 Global Financial Crisis. They, including the Fed, failed to predict the vulnerability of the US economy that would fall into deep recession, well before LehmanÂ’s went bust in September 2008.
Very late reply, but all of rhe class 1 railroads are buckling down on expectations of decreased carloadings across the board. We lost 25% of our coal traffic last year alone, and intermodal shipments are expected to decline also. The bright spot is us shipping UPS traffic via intermodal trains, worked out very well for us and UPS.
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