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Monday, April 20, 2015

CFNAI; Rail

This really is not a surprise. CFNAI was released for March.
Due to the generalized dolor indicated by CMI's B2B credit, we knew this was going to be poor. 

Note the downward revisions to January and February (somewhat related to employment revisions), and the sad YoY contrast with March of last year. The three-month moving average looks better in contrast to March of last year, because it evens out the moves.

But CMI does not forecast a good April, nor has rail shown much sign of economic green shoot-bearing potential yet for April.On a YoY basis, rail has been flat so far this year, implying an abrupt pull-back in growth compared to Q4. This is a little concerning, because remember GDP for Q1 2014 was distinctly bad.

The difference between last year and this year is that moving into Q2, we appear to be seeing growing weakness.

The current peak for this cycle is November 2014. If we arrive in June without seeing a distinct move up, the probability that we are in recession will be very high.

Comments:
So, is there hope we can just "bump along the bottom" for a while without actually crashing?
 
Yes, a lot, freight so far is just flat. It hasn't shown the "it-has-started" pattern yet.
 
But on the other hand, freight is not showing an uptick either.

So matters are quite equivocal. Last year it looked pretty bad with a high probability of a business-led recession in 2015. I hoped very much that the drop in oil prices would allow us to slide through with just a rough patch.

We are at least in the rough patch.

The primary causation on this one is just poor disposable incomes combined with health-insurance increased costs, which hit harder on the main spenders - families.

I am also hoping that the FHA mortgage insurance cut is going to allow more first-time buyers without a large downpayment into the market. With high rents, one would hope that we would see sales really pick up if those without dps can get in.
 
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