Rail Stocks Back To All Time Highs As Rail Traffic Collapses

Just how forward looking are stocks? With the Rails index back to all time highs this seems like an especially appropriate question considering the fundamental data which is.... well, see for yourselves.

Consider where rail stocks are trading:

Do fundamentals justify this price? Here is the chart of total carload and intermodal traffic for 2018, 2019 and 2020.

Total U.S. carload traffic for the first five months of 2020 was 4,713,757 carloads, down 14.7 percent, or 815,413 carloads, from the same period last year; and 5,186,630 intermodal units, down 11.3 percent, or 661,703 containers and trailers, from last year.

And another way to see the unprecedented divergence:

And the details:

U.S. railroads originated 740,171 carloads in May 2020, down 27.7 percent, or 282,965 carloads, from May 2019. U.S. railroads also originated 912,922 containers and trailers in May 2020, down 13 percent, or 136,241 units, from the same month last year. Combined U.S. carload and intermodal originations in May 2020 were 1,653,093, down 20.2 percent, or 419,206 carloads and intermodal units from May 2019.

In May 2020, one of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with May 2019. It was farm products excl. grain, up 324 carloads or 10.6 percent.

Meanwhile, commodities that saw declines in May 2020 from May 2019 were coal, down a record 127,201 carloads or 40.7%; Coal carloads are down 26.1% so far this year and have declined on an annual basis for 13 straight months.

Motor vehicles & parts, down 49,341 carloads or 75 percent; and crushed stone, sand & gravel, down 18,196 carloads or 19.4 percent.

Excluding coal, carloads were down 155,764 carloads, or 21.9 percent, in May 2020 from May 2019. Excluding coal and grain, carloads were down 150,701 carloads, or 24.3 percent.

And visually:

In short, lowest rail traffic in years, and that was based on a trend even before the coronavirus, and yet rails stocks are at all time high. All we can is... "Jay's market."