Rail and Retail

Rail traffic has been up over the past two months. Combined weekly traffic for new carloads and intermodal shipments is about 14% higher than a year ago, according to the Association for American Railroads.

U.S. retailers’ sales probably expanded at an average monthly rate of 4 percent in the first five months of the retail fiscal year that began Jan. 31, the biggest gain since 2006, the International Council of Shopping Centers trade group said in advance of its June report tomorrow. This maybe a sign that consumers are overcoming concern about unemployment and depressed home values. Just maybe.

Rail volumn and retail sales are not leading indicators. They're contemporaneous ones. While encouraging, they offer no assurance for the economic recovery.

2Q earnings season is underway. But even good earnings may not be enough to lift the depressed market sentiments. Stocks are cheap, if the outlook of good earnings continues to hold up and perhaps improve. The fear of a double-dip recession, however, has called that into question.

Additionally, the uncertainty around November's mid-term election and consequently the tax policy changes may not give market good enough reason to start its recovery from the recent lows.