What the heck happened to the transports? One after another, they are rolling over just when we would expect them to advance. It's becoming unnerving and, after hitting all-time highs recently, we don't want to be surprised by their declines.
The stocks of the airlines and the rails have been obliterated and the whole pulverization's pretty shocking.
Take today's news about Norfolk Southern (NSC) . The quarter really was terrific, with solid cargo growth all the way down the line. But when the Q&A came on the all-important conference call, it was all rather long-knived. Instead of talking about the excellent intermodal growth and the strength of coal and so many other cargos Norfolk Southern shipped, the focus was all on auto and how bad auto will be. When we talked about auto last night with Magna (MGA) , the biggest auto parts and assembling company in the world, we had to deal with GM (GM) CEO Mary Barra's comments about a pretty drastic decline in auto shipments. Ford's F not giving you all that much hope today for a turnaround, either.
Next thing you know, a perfectly fine quarter produces a real hammering. I guess we should have been ready for this when CEO Hunter Harrison lowered the boom first at CSX (CSX) , where the miracle worker worked no miracles and we got a restrained outlook.
Worse, Union Pacific (UNP) then reported what I thought was a blowout quarter with every single line item being terrific. But then CEO Lance Fritz came on Squawk on the Street and he was so glum he made me concerned that the second half could be a real downer, even as I don't think that's the case.
To top it all off, these rails all benefited from a resurgence in coal, including export coal, because of competitive advantages. But I think those could be going away, and let's never forget that while the president favors coal, that doesn't mean the utilities do. They will continue to phase it out and they are gigantic users of the stuff.
Then there are the pathetic airline stocks. What can I say? They had been a juggernaut ever since Warren Buffett started snapping them up. However, their quarters so far have been greeted with a thud and, again, without even any number cuts, we are getting an amber light for further investment. Just like the old days, there is now too much competition, except this time it's from overseas. No-frills carriers are just plain putting the hurt on any carrier with a good international business.
These stocks are getting cheap again and we know from Boeing's (BA) amazing quarter that it won't be easy to get new aircraft because the queue is long. But the group is heavy, to say the least.
What's the best hope for a reversal in this key group? I would say it comes from United Parcel (UPS) , which reports tomorrow, and people are expecting a good one given the incredibly fast shift to e-commerce in the country. UPS should be a huge winner, but how many times has this company snatched defeat from the jaws of victory? FedEx (FDX) did a great job when it reported but the stock's been stuck in neutral. Perhaps UPS can get it going forward again.
If there is one saving grace, it's from Cramer fave XPO Logistics XPO, the last-mile trucker and freight brokering company that has caught fire of late, rallying 43% for the year on the strength of all of that terrific e-commerce business both here and around the world. It just priced an 11 million share secondary at $60.50 and already it's up a buck and a half. It will use those proceeds to help fund its next big deal as, out of nowhere, it seeks to be the company that dominates trucking. It could be a huge winner if the Amazon (AMZN) -Sears (SHLD) tie-up for appliances ever gains any traction.
I can't stress how important this group is to any rally. Transports equal commerce. The more commerce, the higher the earnings for so many companies. Let's hope UPS breaks the dry spell. This group sure needs it.