Worrying sign of weakness in crude oil & transportation demand

In Naked Capitalism, you will find an interesting article entitled "Railroad Traffic Decline Accelerates". To wit:

One indicator of commercial activity is shipments, such as train and truck traffic.

Reader Marshall Auerback provided this sighting which shows that the decline in shipments is accelerating. Note that one of the general reasons for optimism is that many indicators are getting worse less quickly and some appear to be stabilizing.

Now this is merely a one-week shift and may be noise, but the change was pretty dramatic, and in the wrong direction. As Marshall noted:

The latest data out of the Association of American Railroads has been released. While a month ago the weekly YoY decline hit a very troublesome -17.1%, the last weekly decline added another almost 3% to the deterioration, and is now down -19.8% for Week 36. Cumulative traffic decline is flat at -18.4%. Including intermodal traffic or ton-miles in the calculation does nothing to improve the conclusion. Not a single “carload originated” category has improved, and in fact even the relatively stable ones from the prior update have slumped.

Table: Weekly Traffic of Major US Railroads for week ending Sept 12, 2009 (Source: Naked Capitalism)

Another sign of the weakness in the real economy can be seen from the slide in the crude oil prices, which did not benefit at all from the weakness in the USD (unlike gold). From Chart 1 below, we can see that WTIC has broken below its 100-day SMA line yesterday.


Chart 1: WTIC's daily chart as at 24/9/2009 (Source: Stockcharts.com)

Finally, it is worth noting that BDI has broken below its short-term uptrend line (see Chart 2 below). While we have noted in an earlier post that the poor performance of BDI is partly attributable to the capacity glut, the breakdown of the uptrend line for BDI could signal slowdown in international trades & a possible relapse of the current timid economic recovery.


Chart 2: Baltic Drybulk Rates' daily chart as at September 24, 2009 (courtesy of Investment.tools.com)