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Don't Call it a Comeback

In reference to the Cass Shipping Index for June, Cass Says "Don't Call it a Comeback."

The Cass Freight Index showed sequential volume improvement again in June, although freight volumes still remain well below year-ago levels and also below pre-pandemic levels. We were thinking the June rebound would have been stronger, based on what we’re hearing on the trucking side and what we’ve been seeing with respect to rail traffic and with the ISM Index now back >50. 

Cass Freight Index vs Prior Years

Cass Freight Index vs Prior Years for  June 2020

As a measure of economic activity, Cass Freight Index shipment volumes dropped 17.8% vs year-ago levels, better than last month’s -23.6% y/y change, but not good by any absolute measure. The index reading from May nudged up 3.5%, an acceleration from the 1.6% sequential improvement seen from April’s low to May. We believe the stock market run over the last few months has, therefore, largely been a function of very low interest rates (higher valuation multiples) and not a function of a better economy (higher earnings).

Total Freight Expenditures 

Total Freight Expenditures  for June 2020

Total freight expenditures have taken a drastic hit.

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No Significant Recovery

Cass has numerous other charts that all say the same thing: There is no significant recovery. 

All Continued Unemployment Claims Top 32 Million Again

Given that All Continued Unemployment Claims Top 32 Million Again there is no reason to believe things have improved much.

Additional Key Ideas

  1. American Airlines is in Deep Financial Stress and will shed 16,000 or more jobs.
  2. United Warns It May Cut 36,000 Employees
  3. A Surge in Small Business Bankruptcies is Underway
  4. That Fewer People Pay Their Rent on Time in July suggests more people are struggling.
  5. Phone Data Shows the Retail Recovery Has Stalled in Covid Hotspots
  6. Patients Stranded in Emergency Rooms as Hospitals Fill Up

Where to From Here?

The above 6 headline items tell the story.