Rail Traffic Showing Strange Trends

Rail Traffic Showing Strange Trends
Fotoworkshop4You / Pixabay

Rail Traffic Showing Strange Trends

Total N. American rail traffic rose last week to 701k cars. Given that we expect rail traffic to fall off at the end of the year as it traditionally does, traffic readings remaining this stubbornly high gives me increasing optimism for not only Q4 but going into Q1 2013.

I’ve noted below the expected pattern based on historical readings. I omitted ’08 here because Lehman Brothers Holdings Inc. (PINK:LEHMQ), American International Group, Inc. (NYSE:AIG) etc at the end of ’08 makes any data following those events skewed. We expect the drop to be more material than it has been. This means that there continues to be underlying strength in the economy and it is growing.  All fall and into winter I have been saying that rail traffic was not behaving in a fashion that would lead to the GDP growth of 1%-2% people were expecting. Today’s “surprise” reading of 3.1% is consistent with what we saw. I am expecting Q4 to turn in a strong reading also given the near flat lining of rail traffic when it should be falling.

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I still expect it to fall steeply over the next two weeks as it virtually always has. But, if it doesn’t, then we need to start having discussion about just what is really happening out there because they don’t ship empty rail cars and this economy might just be coiling…..

As always, we will see what the data tells us…


The chart:

Capture683 608x420 Something Odd Is Happening to Rail Traffic

By: valueplays

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.

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