In an earlier post, I pointed out that world trade was beginning to boom again. Evidence of this was coming from comments from the shipping industry trade association and from FedEx. Several more bullish pieces of evidence have come in since.
European container shipping giant Maersk announced last week that its container business was doing much better than expected, and that as a result it was raising its full-year earnings guidance from “a modest profit” to a profit of more than $3.5 billion. Ironically, the restructuring of French container shipper CMA CGM has reportedly been complicated by the fact that the company has recently swung from big losses to substantial profits. In both cases, the key element in the turnaround is improvement in the Asia-Europe route.
Expeditors International (EXPD) chimed in with similar sentiments two days ago.
The most stunning of the June quarter earnings reports I have seen has been INTC’s. But the most interesting, to my mind, has been been the one from CSX. Why? The railroad is an east-of the -Mississippi shipper of intermediate industrial materials, autos and coal. Its revenues were up 22% year over year, based on increased volume. Operating earnings were up by a third, despite flat unit volumes in the agricultural and housing-related (forest products) businesses. Chemicals, Metals, Phosphates and Autos were the stars.
I have no opinion on CSX as a stock. And railroads are a mystery to me. But the good results seem to show that we’re starting to see a pulse again in general industrial activities in the US–not just the areas where the US is a world leader, but also ones that serve the daily needs of the domestic economy.
How does all this square with the just-released June minutes of the Fed’s Open Market Committee, in which it shaved a bit off its economic growth forecast, and slowed the rate at which it thinks unemployment will fall? That’s tomorrow’s post.