Industrials

Despite a stellar Q3 earnings print, the S&P 500 had a terrible October as EPS continues to do the hard work in lifting the market (Chart 1). Chart 1EPS Doing The Heavy Lifting EPS Doing The Heavy…

Overweight 2018 has been a tough year for the S&P industrial conglomerates index as all of the key constituent members (GE, MMM and HON) have progressively either disappointed on earnings or lowered forward guidance. Further, industrial dividend…

Highlights So What? The bull market in defense stocks is global and only beginning. We construct a BCA Global Defense Index to give investors exposure to this theme. Why? Multipolarity will drive uncertainty and conflict, spurring arms demand to Cold…

Neutral We have been riding the rails juggernaut for roughly 16 months, but the time has come to get off board. As shown in the chart at the side, technical conditions are overbought and relative valuations are pricey, hovering near previous extremes as…

Highlights Portfolio Strategy Overbought technicals, pricey valuations, decelerating global growth, declining capex, rising indebtedness and softening operating metrics argue for hopping off the S&P railroads index. Rising refined product stocks,…

Overweight - High Conviction The S&P construction machinery & heavy truck (CMHT) index has been waylaid this week and last following earnings reports that the market did not digest well, first from PCAR and most recently by CAT. With respect to…

Overweight We have been overweight the pure-play BCA defense index since late-2015 and our strategy is to add exposure on any meaningful pullbacks and keep this index as a structural overweight within the GICS1 S&P industrials index. In the U.S.,…

Highlights Portfolio Strategy Debt saddled small caps have to wrestle with rising interest rates at a time when they lack a valuation cushion. Tack on their high beta status and investors should continue to avoid small caps and instead prefer large caps…