The most important information out today is from both FedEx and UPS, both of which are reporting falling shipment volumes:

"UPS, whose domestic volume has outperformed the gross domestic product for almost a century until last year, said April 8 that deliveries dropped in the first quarter. UPS also said earnings for the three months through March will miss its previous projection by as much as 7.4 percent, just the third time the Atlanta-based company has made a new forecast that was below an earlier one.

FedEx's U.S. shipments dropped 2 percent last quarter, and the company said last month it would have 'limited earnings growth' this year because of the slowing economy. Both companies are also struggling with soaring jet-fuel, gasoline and diesel costs after crude oil surged 80 percent in the past year."

The "kingpin" of the bull's case has been that Transports have not confirmed the Dow's relative weakness, and in fact recently have been amazingly strong. This, according to the Bull case, means that we're done recession-wise and are headed higher - both for the economy and the market.

The problem with this case is that most of the Transport strength hasn't come from organic, broad-based traffic growth but from specific sector favor - first "merger fever" in the airline industry, and then again in the rails due to exports both of agricultural products and resources (particularly coal)

And while there have been many who have argued that one of the "big shippers" was cannibalizing the other's customer base, we now have both reporting unit shipment declines.

There goes that argument.

United Airlines posted a wider loss and announced layoffs, citing fuel costs (no, you mean $118/bbl oil is a problem for an airline?)

AT&T posted a nice profit growth, but a lot of it came from merger savings with Bellsouth, mostly by firing 10,000 people. That of course reduces costs and boosts profit, but its not necessarily a good argument for the economy as a whole. The shift to wireless from wireline phones continues apace and is likely to increase even more over time; on-balance the argument for landlines look weaker by the day. As consumers get squeezed more and more the "paradigm shift" will become even more entrenched - why pay $30 for a landline when you already have a $50/month cellphone - that works in your house as well? If you ask me which line I'd drop given a need to get rid of one of them, the landline loses. Every time.

McDonalds continues to benefit from a "trade down" view, which ain't good for American's "wastelines" (sic) but is likely to be good for the firm's stock, at least for a while. I expect that the real 900lb gorilla for them will be when the cattle "kill off" runs its course later this spring and summer (ranchers giving up on the high price of feed and killing off herds rather than spending the money on finishing feeds) and beef prices start to move materially higher. That is likely to hit the stock and company hard right in the margin gut - if you're late to this party and not in the stock by now, you're probably too late. That squeeze may have already started - the firm said that US same-store sales were slightly negative. Further, the firm's intention to go after Starbucks by installing "trendy" coffee bars serving lattes and the like appears to me to be a few years late and potentially ruinous to the bottom line - these installations are not cheap, and if consumers are squeezed, will they really pony up for a $4 latte? I am reminded of the last time that McDonalds went after "expanding" its core competency a number of years ago and literally destroyed operating margins for a number of years, just recently emerging from its malaise.