When Hunter Harrison took over the reins at CSX, the expectation was a repetition of his slashing of costs with the deployment of his Precision Scheduled Railroading. In his first full quarter as CEO, he appears to have done just that.…
Highlights Key Portfolio Updates Synchronized global economic growth is driving real yields higher and boosting equities (Chart 1). Meantime, core inflation remains muted which will ensure that Fed policy stays sufficiently…
U.S. airlines have been enjoying some of their highest profits in history, lifted by the collapse in oil prices and cheap financing and the market has rewarded them handsomely (bottom panel). However, the last year has seen a trend shift…
Overweight We booked gains on the rails in late-January of this year as growth worries mounted; since then, relative performance has been in consolidation mode. Now is the time to re-board the rails as these worries have largely…
Highlights Portfolio Strategy Reviving global trade and an enticing domestic operating backdrop mean that, after a 5-month hiatus, it is once again time to ride the rails. Even a modest reacceleration in global export volumes and…
We raised the S&P air freight & logistics group to overweight two months ago, because the budding revival in global trade was not reflected in either valuations or earnings estimates. Looking ahead, firming profit…
Highlights Portfolio Strategy Swap consumer staples into financials in our pair trade versus the tech sector. Relative profit fundamentals signal that this relative share price ratio will soon come alive. Global growth tailwinds…
The Empire State Manufacturing and Philadelphia Fed Business Outlook surveys typically move in lockstep and their message last week was united; the domestic outlook for manufacturing is exceptionally strong. Both surveys have…
Highlights Portfolio Strategy The consumer staples recovery is sales-driven, underscoring that additional outperformance lies ahead. The lagging hypermarkets and retail food industries are starting to play catch up, reflecting a…
Portfolio Strategy Any meaningful weakness in the U.S. dollar could accelerate the budding recovery in corporate revenue growth after a multiyear malaise. Following this year's underperformance, lift the industrials sector to…