Freight Shipments Suffer Steepest Drops since Financial Crisis, Overcapacity Balloons

For Trucking and Railroads, it’s Hangover Time.

Freight shipments within the US by all modes of transportation – truck, rail, air, and barge – fell 5.9% in July 2019, compared to July 2018, the eighth month in a row of year-over-year declines, according to the Cass Freight Index for Shipments, which tracks shipments of consumer and industrial goods but not of bulk commodities such as grains. This decline along with the 6.0% drop in May were the steepest year-over-year declines in freight shipments since the Financial Crisis:

In terms of shipment volume, the year 2018 was a historic outlier boom, far above all prior years. Now the Cass Freight Index has fallen back to the levels of the prior boom year, 2014, but remains higher than it had been in July 2015, 2016, and 2017.

In its report, Cass adds some items on its worry list that are not reflected in the Cass Freight Index, including “severe declines in international airfreight volumes (especially in Asia)” and “the ongoing swoon in railroad volumes, especially in auto and building materials.”

In the chart below of the Cass Freight Index for Shipments, the red line indicates shipment volumes in 2019 through July. The green line denotes 2014. What this shows is that 2018 was an immense party before dropping off in November and December, and that 2019 is a nasty hangover and a painful return back into the sober range:

Railroad freight traffic fell 5.5% in July, compared to July last year, according to the Association of American Railroads (AAR), with carloads (commodities, motor vehicles, etc.) dropping 4.8% and intermodal (containers hauled by truck or ship and then transferred to rail, or semi-truck trailers that piggyback on special rail cars) dropping 6.1%.

Only six of the 20 carload commodities categories showed gains compared to July last year, with the biggest, petroleum & petroleum products, surging 11.5% as a result of the US shale-oil production boom.

The AAR blamed the 6.1% decline in intermodal on the trade issues since about 50% of the intermodal freight is a result of imports and exports, and “trade policy uncertainty continues to drag down this traffic segment.” For the first seven months of the year, intermodal fell 3.7%.

The total amount shippers – industrial companies, retailers, wholesalers, etc. – spent on freight by all modes of transportation, is a function of shipment volume, freight rates, and fuels surcharges. And it ticked down 1.4% from July last year, according to the Cass Freight Index for Expenditures. This was only the second tiny year-over-year decline since December 2016, the end of the last Transportation Recession:

During the phenomenal boom in freight shipments and freight rates in 2018, total freight expenditures peaked with a year-over-year spike of 19% in September 2018, as shippers were complaining in their earnings reports left and right about surging transportation costs. By July, the Freight Expenditures Index barely backed off from last year and remained 16.3% higher than in July 2017 (red line, black markers) and higher than the prior record year, 2014 (purple line):

Railroads and large trucking companies have tried to maintain their revenues by nudging up contract rates where they can, or at least resist pressures to cut them. And they were also supported by the long-term nature of contract rates negotiated previously.

But even contract rates have started to fall. In July, the national average contract rate for van trailers fell 9% to $2.18 per mile, according to DAT Solutions, the largest truckload freight marketplace in the US.

But the trucking spot market has reacted sharply to the pressures created by surging capacity due to record orders of Class-8 trucks in 2018 that have been delivered in recent months, and by the decline in shipments. Rising capacity and declining demand are a toxic mix for spot market rates.

The national average spot rate for van trailers dropped 19% in July, from July last year, to $1.84 per mile, according to DAT Solutions. The average spot rate for flatbed trailers dropped 18% year-over-year, to $2.27 per mile.

This weakening pricing environment – a godsend for shippers that griped all last year about being taking to the cleaners by their surging shipping costs – has been showing up in the intermodal segment. The Cass Intermodal Price Index, which had surged by the double digits last year, has now largely given up those gains. In July 2019, it was still up 1.5% from July 2018. But that compares to a 12% year-over-year gain in July 2018. The index has dropped 7% from the peak in March:

Part of the drop from March through July is seasonal. For example, last year it dropped 2.9% from March through July. But the rest is the cyclical downturn that is now gripping the trucking industry, including truck makers.

The record order backlog from 2018 is still feeding truck makers, but time is running out. Read…  Heavy-Truck Orders Collapse Stunning 81%. Lowest Since 2010

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  77 comments for “Freight Shipments Suffer Steepest Drops since Financial Crisis, Overcapacity Balloons

  1. David Q Hall says:

    It is a slowdown.

    I found a report July auto sales in India fell 31%. If true, it is not good news.

    • Wolf Richter says:

      True, vehicle sales in India are in an epic plunge this year. It has a financial crisis going on, implicating its shadow banks. So lending is suddenly getting scarcer. This explains it:

      https://wolfstreet.com/2019/07/10/indias-vehicle-sales-plunge-as-shadow-banks-topple-clamoring-for-government-bailouts-amid-contagion-from-the-debt-crisis/

      • economicminor says:

        India’s roads are a mess and traffic is worse than horrible. Lots of varied modes of transportation all using the same roadways. Farm tractors, tut tuts (3 wheeled taxis), trucks, camels, horses, scooters ( some loaded with as much stuff as a small PU truck can carry. Others with families of 4 and 5 on them), buses and cars. Insane place to get around. No one bothers with traffic lights. Crossing the roads is a science in avoiding death and faith in the system of rivers of running around slower moving objects. Oh and the occasional cow wandering around which are sacred. I have no idea how business is done there as the major cities are more like chaotic gridlock and nothing moves very fast.

    • nicko2 says:

      Apparently around 350,000 autoworkers in India have been laid off.

    • nick kelly says:

      WR: I don’t mind the side bar ads if they make you some money but in the last 24 a few of them overlap your text. One right now is ad for Jira and another offers 30$ in free poker money.

      • Wolf Richter says:

        nick kelly,

        On a PC/laptop, as in your situation, they’re not supposed to overlap text. Can you send me a screenshot via email when you see it the next time?

        Is anyone else running into ads on PC/laptop that overlap the text? If yes, please take a screenshot and send it to howlatwolfstreet@gmail.com

      • NBay says:

        Evers since WR explained how these big automated “eyeball markets” for ads work, I have been having all sorts of fun creating what’s behind mine, and have encouraged friends to do same. Like AlJazeera has me pegged as very wealthy, Yahoo as an overweight woman who wants to look good outside and loves jewelry and gifts, another thinks I am in the market for a used truck, (that hit premium, I guess, single small spot in middle of text) plus the usual financial stuff, as this site is financial, sorta, i.e., Ken Fisher is VERY conspicuously absent right now.
        I also cost Liberty Univ a LOT of money elsewhere for well over 2 years, but some algorithm wised up and sold me to another private college, and lot’s of other stuff. Ha-ha, guess I am easily amused, which explains love of South Park.
        Anyway, to the point, nothing ever blocked text for me.

    • Iamafan says:

      I think in India it is not a demand problem. It is more like a lack of financing liquidity problem excarbated by scandals and of course an expensive US dollar.

      • economicminor says:

        Many businesses in India pay in cash. Modi tried and tried to stop this. He wanted everyone to go thru the banks but it turned into chaos and for a while, a few years back, it was difficult to get money from the ATMs or banks. They just didn’t have it.

        Hard to run a leverage system when the basic underlying economy runs on cash.

  2. Cyclops says:

    Trailer junk yards will fill up soon!

  3. Cyclops says:

    Similar transport equipment have been crashing around the world for a year but somewhat slower pace! But container shipping and ship building nose dived severely since a year ago!

    • Robert says:

      Well, the Baltic Dry Index has soared from 600 to 2067 at present in 2019 (see $BDI at stockchartsdotcom)

  4. Senecas Cliff says:

    The Fed and its crew can fake lots of indicators to keep the balls juggling in the air. Squash inflation , jury rig unemployment, juice the stock market no problem but faking the transportation index’s is a bridge too far. Even the plunge protection team is not powerful enough to arrange to ship millions of empty boxes around the country to make things look good. So heed the warning provided by the falling freight index and batton down the hatches.

    • James Levy says:

      I still don’t know how “the money problem” is going to play out as things take a turn for the worse. The last two decades has dumped a fantastic amount of money in the hands of a couple hundred thousand families around the globe with few profitable areas for investment and a low marginal propensity to spend (despite lavishing literally hundreds of millions of dollars on individual yachts and palatial estates and private islands). These people can make or break markets, and make things like fracking, which isn’t profitable, run on fumes for years. How are these people going to deploy their monies in the face of a global economic slowdown, and what will it mean? Those are big questions.

      • John Taylor says:

        If you can’t make money from production, you can often still make money by buying up scarce resources.

        I think golds a good bet. They’ll probably spend on REITs too … land in crowded cities with high rents (unless they start to fear oversupply), perhaps farmland and such as well.

        Sector rotation will be big as well … I could see easy central bank money pumping up dividend payers in utilities and staples and such. When enough easy money floods in it will start the everything bubble again (or keep it going if it hasn’t turned yet).

        High cash-burn unicorns are definitely a sign of too much investment money seeking anything that might grow. My bet is those companies will start to fall first when investors get nervous, but they’ll float high again with enough liquidity flooding in.

        If easy money comes quick it’s hard to see the asset bubble deflating much … a recession with a mild stock market correction and ultra low bond yields is certainly a possibility.

        I’ll be playing the charts, trying to figure where money’s moving month by month and squeezing a bit of short term gain from it.

        • James Levy says:

          Thank you for such a calm, rational reply.

        • Pretty sure China will use a global recession to corner important commodity markets. Their goal always has been to drive out producers who might supply their competition, like say US alternatives to global Rare Earth mining. They make up the difference by monopolizing the market on the finished product.

        • economicminor says:

          “If you can’t make money from production, you can often still make money by buying up scarce resources. ”

          Maybe…. but when there is over capacity in everything and everything is leveraged to the hilt, the idea of owning and storing unneeded resources just doesn’t appeal to me.

          I think people are pretending and hoping that this next downturn will be similar to the last few. Buy low, sell high just might take sooooo long to play out this time that you’ll go broke with the storage and overhead costs. I know I got caught in the 1980’s real estate bust. I bought/speculation properties at the peak and it took almost 20 years to get back to even with taxes and other costs of holding. This will be worse. It is the Everything Bubble!

          I still see this as a long term down cycle. A reversion beyond the mean after all this leverage. Add in the costs of NOT paying attention to the real costs to our environment including soil health and pollination plus just the general mess with ignored infrastructure. No, I just don’t see this as the run of the mill recession. I think we will enter a deflationary depression world wide and we won’t come out of it for a decade or more. Lots of suffering. Just to many issues we keep sweeping under the rug and hoping they’ll just go away or solve themselves.

        • cd says:

          one tweet blows up most charts….good luck with that…

  5. timbers says:

    If glove don’t fit, jury must acquit…Powell set the bar with his pre-emptive rate cut. Now he has no choice but to cut more & faster. Hello QE. Good morning NIRP.

  6. timbers says:

    And BTW, don’t we all sleep better at night with a President who openly states that Job#1 at the White and Fed is to make stock markets go up?

    So who caaaarrrrressss if the economy tanks or what trucking does or if we die sooner from our falling life expectancy…as long as stocks go up?

    • Harry says:

      Well, all those ageing Republicans trying to live on retirement savings and fixed incomes won’t be very happy. Since Trump only hangs with billionaires, he probably won’t realize it until he has to fire more pollsters for giving him bad news about the next election.

    • Naresh sher says:

      Just returned from India retail is a dead the 3 wheelers are not diesel but natural gas…hotels a d testsyrsnts half empty … to give you a detailed idea friend of mine from Kashmir and a very successful store in the heart of Delhi for over 30 years it was always happy and jovial and people are in the store buying his rugs in artifacts he’s begging that I buy something India’s economy has changed its already entering a serious serious recession you have the elite class and everybody else and eventually this will lead to political economic and social tensions which lead to civil unrest it’s already happening. Capitalism has not worked has it really worked in North America look at General Electric massive fraud look at the TSX most companies are total fraud just a matter of time till the deck of cards Falls welcome to 1929 or should I say 2019 my cycle work tells me we are headed for a severe severe depression get ready look around

    • R Hughes says:

      Also factor in demographics which are seldom referenced. Around the world ( except Africa and India which have very little spending capacity per person ) all the key population ages that buy alot of things are declining. Fertility rates drop year over year. But look at the growth in the 55 or 65 + population which are the lowest spenders per capita ( except for health care ). Pure fantasy to believe that further rate cuts, stimulus will do anything. All the over capacity in everything courtesy cheap money with no need for ROI is just more phone sweet icing on the cake. The demographic numbers just can’t support any real growth, but these numbers aren’t very exciting, reveal the truth and are easy to avoid bringing up. The future isn’t pretty flowers, but alot of slogging thru the muddy fields.

      • Rowen says:

        Vietnam is interesting.

        For obvious reasons, Vietnam’s population pyramid is different from most of the WWII countries, shifted about 20-30 years. But as an exporter tied to those countries, it should suffer from the same trade headwinds. Unlike those countries, it has the population base to stimulate internal demand.

  7. tommy runner says:

    sounds like gbalism curling her toes..
    hold on bobby.

  8. Lance Manly says:

    The manufacturing sector seems to be taking a hit. Industrial Production was pretty crappy as well, but the NT and Philly Fed surveys held up. The consumer seems unstoppable though, maybe they will save the day like in ’16 https://fred.stlouisfed.org/graph/fredgraph.png?g=oEwk

    • Wolf Richter says:

      Yes, and services (healthcare, finance, etc.) are doing very well. And that’s 70% of the economy.

      • Iamafan says:

        Wolf, is it entirely possible that the US has been transformed to a largely service economy that the manufacturing sector can’t by itself take the country down.

  9. Michael Engel says:

    Cass shipment :
    2018/19 is the most volatile period on chart. Bubble up since Jan 2017 til May 2018 // bubble down since, with volatile clusters and multi spikes of selling tails, similar to the volatile bursts on
    the DOW + SPX in the last 2 years.
    Volatility first showed up on the rail chart, at +4% // (-) 4%, in 2012.
    Volatility steadily increased to 6% in 2014 and (-) 6% in 2016 and in 2018 from +12% to (-) 6% in 2019. So the net is still a plus.
    Every year shipments are rising from Jan til May. In 2016, – an election year and Berxit, – shipping kept trending up, from Jan til Oct, before taparing off, in a steady pace, in a peaceful tranquility, without any volatility.
    The recession period of 2015/ 16, on rail, look like a red comb.
    Since Oct 2016, the election year, rail was sharply up, from (-) 6%
    to + 12%, for a total on +18, but in 2019 the trains made a round trip.

  10. Michael Engel says:

    The DOW and Cass rail in divergence. Options :
    1) The most expected & predicted recession will start, as the crooked yield curve predict.
    2) The first leg of economic activity is over. A new phase will slowly
    emerge. First with planning and designing phase, ex shipping, before fresh Capex spike rail and the rest of transport and the US economy.
    3) When Davos charge investors (-) 1% vs Ford dividends @ 6.7%, SLB 6%, XOM 5%, CVX 4% ==> money will flow to US into parking
    lot # F, and into real deep water, not the fake underwater
    European ECB, or BOJ rates.

  11. Rowen says:

    I’m not sure if we get into a technical recession. Mostly because of the massive amounts of stealth stimulus from defense and health care in the near future.

    Err, maybe the Japanese and Germans should start military spending again…

  12. MC01 says:

    In the first half of 2019 air freighter capacity worldwide rose by 2.7% but volumes fell 4.6%. Overcapacity has been looming at least since 2017 with load factors below 80% being the norm and on some markets going below 70%. By comparison Ryanair and EasyJet are both over 90% and Delta and Southwest are both over 80%.

    When the explosive growth of ecommerce is factored in, this is not sustainable in any way, shape nor form, as are the absolutely ridiculous growth projections: we are allowing ourselves to be bamboozled by consummate conmen touting that “monetary easing” will somehow cure an overcapacity problem with more overcapacity.
    China has flooded her own economy with “easing” since before the New Year festival and a whole lot of good it has done. The mollusks in charge of the US Federal Reserve even managed to mess their strong economy by first halting rate normalization for no reason and then proceeding with the most ridiculous rate cut in human history. But, not to worry! The ECB in September is going to cut rates by 100 or 200bps, buying any investment grade that isn’t nailed down, concoct a potion out of sugar, spice and everything nice and stuff will happen, such as increasing capacity at a steady 2.5-3% per year against a 1% growth on a very good year, on top of the overcapacity we already have to deal with.
    When I hear cretinous ideas like these I want to smash my head against this stupid table.

    • Dave Kunkel says:

      MC01:

      I enjoy your take on things and your writing style. I especially like it when you’re pissed!

      I think I’ll borrow “mollusks in charge of the US Federal Reserve” if you don’t mind.

    • Bob Hoye says:

      On data back to the 1825 Bubble and at the peaks, short-dated market rates of interest increase with the boom. Rising rates are good.
      And the DECLINE signals the inevitable contraction.
      For this boom, the 3-Month Bill rate increased into March and in sharply declining is anticipating the contraction.
      The time from the start of the decline to the first “Fed-Cut” has been 4.5 months.
      The market rate turned down in June 1929 and the first “Fed-Cut” was in that fateful October. Five months later.
      As with the behaviour of the senior central bank since the 1840s, the Fed had no choice but to follow market rates of interest down.
      In order to look “in charge”.
      The worst phases of stock bear markets have occurred with the fastest drops in T-Bill Rates. With the fed following by dropping the administered rate.

  13. Jason says:

    These yoy comps can be quite misleading to the less sophisticated observer.

    • Lance Manly says:

      Could you say how a sophisticated observer should look at the data? Personally I find Y/Y highly useful were there is not a seasonality adjustment available. Not only that if the data series is noisy it helps bring the signal out. Here is Cass’s take:

      “With the -5.9% drop in July, following the -5.3% drop in June, and the -6.0% drop in May, we repeat our message from last two months: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.”

    • Wolf Richter says:

      Yes, they can be misread. That’s why I included the stacked charts as well. YOY is a crucial metric. But it’s also important to show the data in the broader picture, such as the stacked charts that are included here.

  14. Glenn McClendon says:

    After a blistering shipping index for 2018, what would one expect for 2019. Otherwise there would be blistering inflation showing up everywhere. The President’s tariffs and threatened tariffs have certainly shaken the world economic picture. But he could reverse that at anytime and probably would if the world economic picture darkens. However, he’s the first president that acknowledges one of many problems. Which is, treating insurmountable trade deficits with most other countries as nothing. China stealing intellectual property and offshoring everything Americans buy, has to come to an end someday. Better try now when the dollar and the US economy is still the fairest in the land. The Chinese mind set is that, any theft, lie or deceit to get the upper hand in intellectual property, resources or military power is fair game after centuries of Western domination. If you think we aren’t in an economic war, think again. Can the president turn things around? I have my doubts too, but at least someone if finally trying.

    • nick kelly says:

      Largest category of Chinese exports to US: consumer electronics at 27 %. There is no US industry to protect. US out before China in: last US TV Zenith 1995. US taken out by Japan and SK. Now Japan out with Toshiba exiting and Sony giant screen only. Starbucks makes more on a latte than the profit on 32 ” flat screen delivered to assembler.

      Next category at 19% : apparel incl footware. Ex. niches, there is no US industry to protect. Most of the apparel made in China is by US companies: Lee etc.

      Then comes all the Walmart stuff: toys, budget house ware, kitchen ware, where as well as no US stuff, there is no German or Japanese stuff. Not enough profit.

      A tariff on German cars would make more sense in at least there is a US industry. But so far we don’t have a Navarro to whisper: “Germany bad”

      BTW: I completely agree with confronting China’s attempts to militarize the South China Sea etc. and to make China adhere to WTO trade laws etc. but that requires ALLIES. When the anti-globalists made the US withdraw from the TPP, weakened NATO, trashed the EU, they created an opening for China.

  15. RD Blakeslee says:

    “Only six of the 20 carload commodities categories showed gains compared to July last year, with the biggest, petroleum & petroleum products, surging 11.5% as a result of the US shale-oil production boom.”

    It’s also a result of pipeline capacity restriction, with above-ground transportation used instead.

    The “greenies” anti-pipeline escapades have economic consequences.

  16. Just Some Random Guy says:

    I will preface this by saying, yes I know data is not the plural of anecdotes.

    Last night I was at a Porsche dealer, test driving a couple of used 911s. I’ve been a Porsche guy for a long time. They know me, love me and pretty much hand me the keys to go have some fun, when I see something interesting show up on their lot.

    Usually when I’m there, it’s maybe one other customer, 2 on a busy day. I can usually spend some time chatting with the manager about cars, what’s in the pipeline, etc. Yesterday the place was overflowing with people. I’d never seen anything like it before. Every sales rep was buys, manager was busy.

    Maybe it was a fluke? So I checked to see is Porsche really selling that many cars these days? And what do you know? July was a record month for sales in the US. Up 5.3% over 2018, which itself was a record.

    When people are packing showrooms selling $100K SUVs (cuz unfortunately Porsche is now an SUV company with a side business in sports cars but that’s a whole other topic) , I’m not seeing that as a sign that a recession has begun. Maybe that’s just me.

    • Zantetsu says:

      Are you saying that the difference between your normal experience of one or two customers and a packed show room is 5.3%?

      If not, then you are acknowledging that your experience that day was a fluke. If that type of activity were the norm at Porsche then their numbers would be up much more than 5.3%.

      A 5.3% increase should see 1/20 of an extra customer on average, not 5x or whatever you saw that day.

      • Petunia says:

        I don’t think his experience is a fluke. People are spending and they are spending on luxury brands. I would rather spend 100K on a Porsche SUV than a Ford pickup. The Porsche brand will retain more value, has more universal appeal.

        I recently splurged in the Nordstrom sale, got a 2 for 1 deal on industrial strength wrinkle cream. Couldn’t pass that up, the stuff is obscenely expensive.

        • SocalJim says:

          I would never spend 100K on any car. Better off getting a base model Ford F150 pickup for under 30K than a fully loaded one for more than 50K. Better yet, get a base model Tacoma in the mid 20s. Driving around a 100K car is not only a waste of money, but it makes you a crime target. Best way to avoid crime is to be invisible. Goal is to live as long as possible, and one factor is to make sure you don’t get shot in a robbery.

        • Petunia says:

          SocalJim,

          You missed the point. These luxury purchases are not about conspicuous consumption, they are about getting out of a depreciating currency. Nobody needs a 100K vehicle or a 2M painting.

          I on the other hand need my expensive wrinkle cream.

      • Iamafan says:

        I’m still waiting to buy my new Corvette. I can’t find it in the showroom. Before I die, I want to spin around in one.

        • SocalJim says:

          Rent it for a month. You will get tired of it. I know someone who dreamed of a sports car, rented it for a few months, then was glad to see it go. Now, he is looking for a practical new vehicle.

        • Dave Kunkel says:

          A friend of mine has had 6 Corvettes over the years starting with a 1963 convertible. He sold his last Corvette, a 2007 C6, a couple of years ago and bought a new Honda Accord.

          He loves the Accord and said he’ll never buy another Corvette.

        • The new ones are fast but still not fast enough for me. I’d rather spend a lot more for something really fast.

    • Rowen says:

      YoY, YTD and July sales numbers are down across all models, except for Cayenne.

      https://www.prnewswire.com/news-releases/porsche-reports-record-us-retail-sales-in-july-300895338.html

      • Sean_opks says:

        But those Cayenne numbers are huge. Brings total July sales to +23.3% YOY. The rich are getting richer, as the stock market hit new highs in July. But the stock market is a lousy recession predictor, and so are the spending habits of the rich. Employment is also a lagging indicator. Leading indicators are pointing to recession.

    • NBay says:

      Every time I see a high performance car “racing” on the road with bread trucks and old ladies I laugh like hell. I know damn well they never go to the track or the drag strip. We used to leave the drag strip or track writing/time on the window to show we had gone up against others who WERE racing, as kids. Used to do Sunday morning rides, too. On the road from Tustin out to Elsinore in 87 or so (to fly ultralites) we saw some were still hard at it. Medi-Vac copter was just leaving, fellow riders in group were standing solemnly around the guy’s boots.
      The one exception is restored old iron, which is always cool, especially if you did most of it yourself, hi performance or not.
      I now just follow F-1 religiously, and as well as some other motor sports.
      Get a Porsche hat if you just want to talk their cars.

  17. Michael Engel says:

    1) Maersk ceo :
    shipment are up, the global economy isn’t shrinking, its booming.
    2) There was a stock market correction in 2018/19, not just in transport.
    Relative to the rise since 2015/16 lows, Microsoft, Amazon, Googl,
    BRK/B, Netflix had a minimal contraction, below 38% of the
    move, from 2016 bottom to the peak. The uptrend is stiil strong, if there will be no future correction of above 50% !
    Those are the SPY ETF strongest leaders of the pack.
    From 2016(L) SPY ETF up 113 pts til Sep 2018(H), with a correction
    of 44 pts to Dec 2018(L). That’s a 38.9% correction.
    3) The market whales pay zero/ or low dividends. They have been the darling of future growth, for a decade.
    4) Drugie and “Madam Fatal” promised to excite and stimulate
    the Europeans.
    5) The deeper European rates go, the worse it become here in US and over there to European savers.
    6) There might be a shift to the most hated & oppressed, to the energy sector, for life necessities, for dividends.
    7) History shows that as long as the DJ Transport is falling,
    the DJI & the SPX, at best, will spend time in a trading range, at best.
    They will be waiting for each other.

  18. in SoCa local grocery clerks are planning a strike and the Teamsters have promised to honor the lines, no deliveries. A convergence of things, no offsetting political consequences in an election year. In 2000 GOP said “starve the beast”, in 2020 it’s “starve the deplorables..” Not sure if this will get to Walmart which is the lifeblood of flyover America. Without WMT many of these rural people will starve, lose their Rx, and their painkillers.

    • California Bob says:

      WM just had a blowout quarter but, unfortunately there is no ‘same customer’–like ‘same store’–stats. That is, are the same WM customers buying more stuff, or are new customers adding to the bottom line?

  19. SocalJim says:

    Clearly, the MSM is pumping “Recession, Recession, Recession”. It is an election strategy meant to defeat the president’s re-election. My prediction is this propaganda will backfire on the MSM. Rates are going way too low and this will trigger a boom just in time for the 2020 election, and that will increase the probability of the president’s reelection. This will be fun to watch. Freight shipments will surge next year.

    • SocalJim says:

      Of course, there is a chance a recession actually happens, and in that case, the president likely loses. But, I put the probability of a recession at 1/3rd. In my opinion, no recession … 2/3rds chance. The freight shipment drop is heavily influenced by the extraordinary jump last year … this jump was people front running tariffs, so they have inventory for now. When they run out, they will re-order with a higher price. If you believe this, then you would say no recession is the likely outcome.

      However, if the unlikely recession happens, the stock market will hurt because in this case: 1) the president likely loses, and the executive branch becomes less business friendly; and 2) The less business friendly executive branch will damage forward operating margins and the top line.

      • George W says:

        Ahh, but Trump as always, is ahead of the curve. If the world goes into a recession Trump should be able to buy Greenland for like pennies on the dollar! Bingo – re-elected!

      • George W says:

        No way the US is heading for a recession. Soon all the migrants waiting 5 years to be eligible for welfare will realize it is not worth the hassle and leave. Then after the US buys Greenland, US citizen will be able to buy their medicine from Greenland for cheap and become healthy again and fill in all the vacant jobs as cooks, janitors etc and the US will be at full employment once again!

      • GirlInOC says:

        “It’s really, really important that you not let all of this Drive-By Media, fake economic news, talk you into believing that we are on the verge of another gigantic recession or maybe depression,”
        ~Rush Limbaugh (also referred to the GFC as the “so-called financial crisis of 2008.”)

        Is this where you’re getting this from? Personally, I like my chances with Wolf’s take on the economy better. Or anyone not Rush Limbaugh for that matter.

        • SocalJim says:

          Happens every election when the Republicans are in power. Wall street trades know about this and make money off it.

    • red denial says:

      Lower rates will trigger a boom and it will be felt as a shockwave to trump lunatics, look no further than the Japan model trump is currently generating, i.e., lower GDP growth, higher deficits, lower bond yields and permanent stagnation, all of which will make a handful of Americans wealthy, while everyone else re-thinks new leadership, even if it comes in the form of a different moron.

      https://fred.stlouisfed.org/graph/?g=oEEv

    • Congress has Trump’s records from Deutsche bank in their hands as we speak. What becomes of them I don’t know but should they become public Trump won’t have to worry about any re-election in 2020.

      • Matt Schilling says:

        I like you, you’re funny. Write something else silly.

        • Robert Ross says:

          I don’t know if lower rates will have the same effect? Haven’t we spurred/pulled forward all of the demand for money and equipment we could over the last 11yrs?

          Second, the graph is helpful, but how do we know this is not another 2016 and the transport sector will pull out of its funk again? I don’t think it is, but…

  20. Manny says:

    Interesting to read the story about shipping within the US being down, this being trucking and railroads.

    Can anyone explain why international (bulk) shipping, in particular the Baltic Dry Index is UP, even in the light of tarifs?

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