It’s Probably Nothing – small dead animals

Fedex to cut thousands from workforce.

6 Replies to “It’s Probably Nothing”

Richard Russell, author of the Dow Theory Letters, has been harping on the fact the Dow Transportation average has not been close to a new high, while the Dow Industrials were making new highs a few weeks ago. His reasoning: if the economy is reallly moving, then goods need to be shipped, and the Transports (rails, air, trucks) would be gaining ground as well. But the Trannies have been falling, which makes him suspect the economy is not “in gear” – that is, the gain in the Industrials is not due to real economic activity, but rather, manipulation by other forces. (Hi Ben!)
He expects to see the Dow Industrials tumble over the next few months, although he also suspects that Ben will do everything he can to prevent a falling stock market going into the election; if Romney gets elected, Ben is finished at the Fed.

Almost sounds like FedEx is instituting a new method of tying costs to revenue gains or losses. The rationale that transportation should reflect economic activity possibly faster than any other indicator makes sense. However other factors such as competition and input costs also affect this calculation.
Similiar situation with the Dry Baltic Index. Seems to be a solid number until one realizes how much new tonnage has entered the market and how badly revenues have been hit by increased competition.