Friday, October 22, 2010

Friday's News In Brief

Prepare yourself.  Here it comes. 

Shippers won't be held hostage to trucking costs and are looking for intermodal shortcuts.  This is bad news for truckers who raised rates thinking they had pricing power (yes, YRC Worldwide, I'm thinking of you but you're not alone in that folly).  It's good news for rail and barge carriers.

Speaking of YRCW, it's preparing to triage New Penn if greedy union drivers won't vote for its survival.  I wish I had shorted this stock last year.  Now I just get to watch it spiral down the drain.  I wonder if the asset-backed securitization facility they just renewed will have seniority over other debt holders in the event of liquidation. 

Market observers think trade with the Middle East and Africa will drive Chinese growth.  No argument there, but consider what Chinese strategy demands of this trade.  Their plan is to send value-added finished goods from China to their new resource colonies, primarily in exchange for oil. 

It's a bumper crop for grain exports through the Great Lakes to points across the Atlantic.  Name me some publicly-traded barge operators on the St. Lawrence Seaway so I can have new companies to blog about.

The whopper of the day is the astronomically high expected tab for Phoney and Fraudie - at least $154B.  This presumably excludes the costs of servicing or foreclosing all of these fraudulently securitized mortgages we're just now discovering.  Another TARP is politically impossible, as even folks in Ireland are catching on to bailout scams.  This leads to inevitable big-bank collapses and forced resolutions.  Equity owners and bond investors will eat a big fat mud pie.  Investors who've been sitting this spectacle out - like me - will buy up tracts upon tracts for a song.  Bring it on. 

Remember how the stimulus was supposed to fix America's dilapidated infrastructure?  Surprise!  It never happened and now we have to live with reduced future prosperity thanks to that lack of foresight.  This is the one thing that will cement America's descent into the world's economic basement.  I take issue with the Economist's statement that there is "no urgent need" for high-speed passenger rail.  Excuse me, but Peak Oil will price air travel out of reach of the shrinking middle class.  That's why people will be screaming for an alternative to cars and planes in about a decade.  Nothing could be more urgent, and there is plenty of rail capacity available for both freight and passengers when rail carriers are double-stacking containers. 

I hope you enjoyed reading all of this wonderful news about your immediate future.  Have a great weekend everybody! 

Full disclosure:  No position in YRCW, FNM, or FRE.