•Buffett's Most-Watched Freight-Freight Train Index Takes Tumble: Chart of the Day

Discussion in 'Wall St. News' started by ByLoSellHi, Jul 10, 2009.

  1. Uh oh. When UPS, FedEx, and now the trains and trucks aren't busy, that's a real life indicator as good as any you'll find that the economy is in the shitter, and given the current environment, is likely to remain there for a long, long time (think massive and rising unemployment, with real unemployment closing in on 19%).


    Buffett’s Most-Watched Index Takes a Tumble: Chart of the Day
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    By David Wilson

    July 10 (Bloomberg) --
    For Warren Buffett, freight-train traffic has the kind of importance that Alan Greenspan attached to scrap-steel prices as Federal Reserve chairman -- and it isn’t going his way.

    The CHART OF THE DAY compares the number of freight carloads at six of the largest U.S. railroads this year with the same period of 2008. Shipments tumbled 19.2 percent through last week from a year earlier, the Association of American Railroads reported yesterday.

    Buffett follows this gauge more closely than any other index, Bianna Golodryga, a reporter for ABC’s “Good Morning America” program, said yesterday after she interviewed the billionaire investor. Its drop worries him, she reported.

    Buffett’s Berkshire Hathaway Inc. owns a 23 percent stake in Burlington Northern Santa Fe Inc., the biggest U.S. railroad by revenue. The holding’s value was $5.25 billion at yesterday’s close. Among Berkshire’s common-share investments, only Coca- Cola Co. and Wells Fargo & Co. were bigger.

    Berkshire also has stakes in Norfolk Southern Corp. and Union Pacific Corp., two other U.S. railroads. The value of those shares totaled about $545 million yesterday.

    Greenspan followed the scrap-steel market to gain insight into the U.S. economy’s prospects. The rate at which cars and trucks are scrapped “has a pronounced cyclical pattern,” he wrote in a study that the Fed released in 1996.

    (To save a copy of the chart, click here.)

    To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
    Last Updated: July 9, 2009 21:01 EDT
  2. So they mention YoY 2009 v 2008, anyone know how 2007 compares? Was it already in the shitter in 2008?
  3. Good question. (you prompted me to go to the Association of American Railroads and read a dozen or so releases)

    Last year the numbers were slightly ahead of 2007 while 2007's summer numbers were a few percent lower than 2006. Hence this data seems to have little value as a leading indicator, market wise at least.
  4. Here's all the #s in a nice table:
  5. Thanks guys.
  6. Arnie


    I would consider this bullish.

    Go back and look at 2001-2002. Rail traffic started a steep rise in the 4th qtr 2001-1st Qtr2002. The market bottomed early in the 4th Qtr 2002. So this doesn't appear to be a leading indicator. If anything, it suggests were closer to a bottom than a top.