The Little Train That Couldn't Anymore

Submitted by Tyler Durden on 01/21/2013 18:13 -0400

While much has been made of the seemingly paradoxical stability of railroad traffic as the broad economy stagnates (and turns down - as we discussed yesterday), it appears the little train that could for the last four years has finally decided it can't anymore. Of course, there is an obvious cyclicality to the pattern but still the unprecedented plunge in rail traffic this week must be somewhat concerning.

(h/t @Not_Jim_Cramer)

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Mon, 01/21/2013 - 18:15 | 3173879 unwashedmass

oops....didn't they get the memo about fixing the data?

Mon, 01/21/2013 - 18:24 | 3173902 Kitler

I'm thinking they hired a new statistician whose immediate boss was on vacation.

Someone is going to pay for this.

Probably with their life.

Mon, 01/21/2013 - 18:43 | 3173950 TruthInSunshine

View this trend and development in the fuller context along with shipping:

Global Shipbuilding Outlook – 45% of Shipyards Have No Orders

By Sanjeev Rana, Deutsche Bank

Global Shipbuilding Downturn Continues

Global shipbuilding industry has been going through a downturn for the last four years. The downturn has been felt more in the commercial shipbuilding industry where demand tends to be driven by fixed asset investments and growth in global trade. Global commercial ship orders were down 48% YoY in the first nine months of 2012 and order backlog fell to half of the level in first half of 2008. At this point all lead sector indicators such as freight rates, ship prices, used ship transactions, and used ship prices suggest that commercial shipbuilding demand is unlikely to recover much in 2013 as the sector continues to suffer from oversupply, a weak financing market, and low freight rates...

Global Shipyards Are Sinking Amid Oversupply

Thursday, 29 Nov 2012 02:29 PM

By John Morgan

Nearly half of global shipyards will run out of orders to work on by the end of 2012, as oversupply, lower freight rates and other unfavorable factors mount, The National reported.

The dismal outlook means more consolidation in shipbuilding looms, according to Deutsche Bank research cited by the Abu Dhabi-based newspaper.

Global shipbuilding has been in a downturn for four years, the Deutche Bank analysts concluded. “For the small shipyards, the painful industry restructuring that started in 2010 is expected to continue as shipyards struggle with lack of orders and tight financing,” said Sanjeev Rana, a Deutsche Bank analyst.

Rana predicted already-low ship prices will fall further and estimated 45 percent of shipyards worldwide have no building projects post-2012.

“This means the finances of small shipyards are likely to deteriorate further and banks might be unwilling to issue refund guarantees to them, starting a negative feedback cycle,” Rana said.

Mon, 01/21/2013 - 18:46 | 3173964 francis_sawyer

GOOD NIGHT America How are ya?

Mon, 01/21/2013 - 18:50 | 3173976 Divided States ...

So the TRANNIES (Dow Transports) chugging to new all time highs is really based on a load of fumes???

Mon, 01/21/2013 - 19:08 | 3174014 Deacon Frost

That is true, so how do we reconcile the two?

5,695.27 +13.99 (0.25%) Jan 18 2013 - Close

Mon, 01/21/2013 - 19:11 | 3174020 notbot

It was the weather

Mon, 01/21/2013 - 19:57 | 3174114 French Frog

This is just another ploy to try to convince some that fundamentals might ... still ... apply ... eventually.

I wonder how many more shorts will sadly get roasted again because when one looks objectively at a chart like that, markets ought to tank. Alas, it won't be the case ... again.

Mon, 01/21/2013 - 21:41 | 3174326 knukles

anthropogenic horseshit

Mon, 01/21/2013 - 22:21 | 3174406 Joe Davola

The only engineer qualified for the border crossing/recrossing sham train must have taken a vacation with his cut of the loot.

Tue, 01/22/2013 - 00:50 | 3174765 A L I E N

Buy the dip, this will be fixed soon..

Mon, 01/21/2013 - 23:16 | 3174526 legorf

Are you suggesting we should invest all of our savings in the S&P 500 at 1486? Maybe, maybe not, who really knows. If I knew, I would be on a yacht pressing a button once or twice a day, bucking trillions in profits.

Sadly, I don't own a multi-million 100 foot long yacht which certainly proves I don't know shit (and/or that I don’t benefit from/use insider information).

But hey, I agree, all those shorts are playing a game knowing (or do they?) that the odds are against them.

Mon, 01/21/2013 - 23:56 | 3174636 Fish Gone Bad

Are you suggesting we should invest all of our savings in the S&P 500 at 1486?

No, of course not. Until the US changes how it does business though, there is no money to be made in commercial lending, so banks will do their best just to own the entire US stock market and anything that will pay a dividend. Sooooo prices could actually go through the roof. But on the other hand, everyone knows that this will eventually all end badly....

In the end, there will be two sets of losers. Those who went short and were destroyed, and those who went long and were destroyed. The only way to win is to not play the game.

Tue, 01/22/2013 - 00:06 | 3174676 legorf

Unfortunately, that also means I'm not gonna own a big boat anytime soon.

Do nice girls like mens driving a Lada? No? Shit I'm screwed.

Tue, 01/22/2013 - 02:36 | 3174887 TruthInSunshine

The bigger the artificial float, and it is an artificial float of epic, historic proportions, the bigger the fall, but as always, being early to any trade can be as disastrous as being wrong:

The Harvest excerpted from the book The Creature from Jekyll Island

When men are entrusted with the power to control the money supply, they will eventually use that power to confiscate the wealth of their neighbors.

There is no better illustration of that law than the Crash of 1929 and the lingering depression that followed.

...

During the nine years before the crash of 1929, the Federal Reserve was responsible for a massive expansion of the money supply. A primary motive for that policy was to assist the government of Great Britain to pay for its socialist programs which, by then, had drained its treasury. By devaluing the dollar and depressing interest rates in America, investors would move their money to England where rates and values were higher. That strategy succeeded in helping Great Britain for a while, but it set in motion the forces that made the stock-market crash inevitable.

Replace Great Britain with PIIGS+UK+Japan currently, and, voila, bitchez (throw in the economic meningitis of the U.S. for good measure, which is undeniable).

Did someone say that The Bernank was a serious student of the causes and consequences of The Great Depression? If this is true, he's the worst student in the history of students.

Tue, 01/22/2013 - 17:16 | 3176850 _ConanTheLibert...

Yes, he did study history so he can repeat the planned mistakes and do a 'better' job at it. The evil bastard.

Tue, 01/22/2013 - 02:31 | 3174881 fourchan

not having a corn crop in 2013 is not going to help.

go long ac units?

Mon, 01/21/2013 - 19:12 | 3174022 mrgneiss

They have finished stocking all the DUMBS.

Mon, 01/21/2013 - 19:19 | 3174046 SmittyinLA

no, its still a RAIL MONOPOLY

Mon, 01/21/2013 - 19:24 | 3174051 ACP

Come on, we all know that neither the economy nor the actual company has anything whatsoever to do with stock prices.

Edit: Buffett, Paulson, CAT all burned by bad Chinese investments. The whole foundation of China is fraud; all the BS going on here is just a drop in the bucket.

Mon, 01/21/2013 - 20:05 | 3174130 otto skorzeny

who was that chinese dude that wrote THE book on war? oh yeah- Sun-Tzu- and basically it was ALL about deception.

Mon, 01/21/2013 - 22:56 | 3174491 Freddie

I know CAT got burned. How did that POS Buffett get burned?

Buffett want Ob-MAO. Someone should tie that old POS to his own train tracks. Evil old ***k

Tue, 01/22/2013 - 00:09 | 3174686 Fish Gone Bad

Of course it will end badly for Buffett. That is because is not a banker. He is also not from a Rockerfeller or Morgan family, nor any other banking family for that matter. When the markets finally collapse, Buffett will valiently step in to support his companies, but the short sellers will push everything he has into the ground. Buffett may very well go broke in the blink of an eye.

Buffett is a sharp old man and he has enough money to make the playing field more in his favor. Gotta give him credit where credit is due.

Mon, 01/21/2013 - 19:16 | 3174037 youngman

doncha know me I´m you native son....

Mon, 01/21/2013 - 19:36 | 3174077 Agstacker

http://www.youtube.com/watch?v=AJMVj04lfyo

Mon, 01/21/2013 - 19:35 | 3174076 Jason T

through the grave yards of the rusted automobiles that were once made in America.

Mon, 01/21/2013 - 18:51 | 3173980 OutLookingIn

The BDI continues to bottom bounce.

The world container ship capacity as of january 1, 2013 shows an increase of 6% from a year ago. Or a net growth of 921,000 TEUs. The global ship order book stood at 3.43 million TEUs on january 1, equivalent to 21% of the current fleet. Around a quarter of the additional capacity has boosted the fleet of idle ships by 5% from a year ago.

http://www.dryships.com/pages/report.asp

Mon, 01/21/2013 - 19:16 | 3174042 knowless

same for trucking, already hitting downstream.. their suppliers, etc.

Mon, 01/21/2013 - 19:26 | 3174060 gatorengineer

Everyone knows Benny moves C notes by Helicopter, not truck or rail........ Check out copter stocks......

Mon, 01/21/2013 - 20:08 | 3174137 knowless

market share: http://www.flightglobal.com/Features/helicopters-special/census/

http://en.wikipedia.org/wiki/List_of_rotorcraft_manufacturers_by_country

didn't look up tickers, guessing it's mixed though.

Mon, 01/21/2013 - 19:09 | 3174015 TahoeBilly2012

That's just Walmart's cancelling guns and ammo orders...

Mon, 01/21/2013 - 19:48 | 3174100 spanish inquisition

Shelves are pretty bare at Fleet Farm too....

Mon, 01/21/2013 - 22:01 | 3174374 Go Tribe

You know, I was in several supermarkets and a couple of Walmarts in the last two days, and I was thinking, "Wow, the shelves are sure low on goods." I thought it was just a weird coincidence, time of week or something.

Mon, 01/21/2013 - 18:31 | 3173930 Urban Roman

"Seasonally adjusted" rail traffic figures in 3 ... 2 ...

Tue, 01/22/2013 - 02:38 | 3174891 Matt

The chart shows a dive every January. While the amount of the dive is a record, based on this 5-year chart (on a short enough timeline, everything is a record), it is still higher than January 2010.

Mon, 01/21/2013 - 18:36 | 3173941 TideFighter

They suddenly quit moving channel-stuffed cars around?

Mon, 01/21/2013 - 18:47 | 3173967 Sudden Debt

but buffet said....

Mon, 01/21/2013 - 18:55 | 3173989 mayhem_korner

choo

choom wagon......

Mon, 01/21/2013 - 19:39 | 3174082 Meatballs

This made me laugh :D

Mon, 01/21/2013 - 18:59 | 3173998 OutLookingIn

Rail carload volume dropped 12.1% year-over-year, as shipments of coal fell 19.2% and motor vehicle/equipment traffic declined 20.6%. Weekly carload traffic on Eastern railroads fell 12.3% y-o-y, while Western railroad volume dropped 12% in the same period. According to the Association of American Railroads.

Attempting to track commercial truck diesel fuel useage has become diffacult since the Ceridian-UCLA Pulse of Commerce Index, ceased publishing ANY data as of May 2012. Wonder why?

Mon, 01/21/2013 - 19:26 | 3174061 knowless

i can assure you that orders for shipping trucks are on par with this.

Mon, 01/21/2013 - 20:20 | 3174166 hardcleareye