You know I think the economy is getting better. We have seen numerous better-than-expected quarters.
But today I find myself scratching my head because two of the best transports I follow, Union Pacific (UNP) and Southwest Air (LUV) , the jewels of their respective industries, gave you distinctly subpar reports with some pretty mealy commentary.
First, Southwest announced a very rare miss and said the business had become very competitive. Revenue per average seat mile, the key metric, was very disappointing, down 3.5%. Capacity, the equivalent of inventory when it comes to the bane of the industry, is gunning up 5%-6%. That means more fare cuts in the future as price wars have broken out all over the place.
Union Pacific was stunningly weak. Look at these volume growth numbers: agricultural products plus 2%; automotive down 2%; chemicals off 3%; industrial products losing 11%; intermodal (the trucks on the trains) down 14%; and coal off 21%. That's a total decline of 11%.
That's not the stuff booms are made of.
You need the facts to buttress the strength that I see out there. You didn't get it with these two fine companies.
It's a chink and, given the declines in the stocks, a big one.
The odd fact here? Delta (DAL) and American (AAL) both reported better-than-expected months recently. They are not as well run as Southwest. I liked CSX (CSX) , which reported first, much more than Union Pacific. Again, highly unusual.
All I can say is I am scratching my head about this.
Working on trying to resolve the conflict of good and bad.
Haven't been able to do it yet.
