Internal equity dynamics are sending a powerful signal for the broad equity market. Not only are defensives outshining cyclicals and mega caps trouncing small and micro caps, but also transports are warning that the broad…
When our U.S. Equity Strategy team moved to an overweight recommendation on the S&P airlines index last year, they noted three pillars supporting the onset of an earnings outperformance: a drubbing in oil prices significantly…
Overweight (Downgrade Alert) When we moved to an overweight recommendation on the S&P airlines index in the fall of last year, we noted three pillars supporting the onset of an earnings outperformance: a drubbing in oil prices…
Overweight With a pickup in oil prices in general and jet fuel prices in particular, a logical inference would be a decline in airlines’ earnings power (second panel). However, the revenue side of the equation has…
Last week’s release of traffic data showed further deterioration in freight volumes, the fundamental driver of pricing power, confirming our bearish thesis. Only four of the 20 commodity categories tracked by the…
Underweight We downgraded the S&P railroads index to underweight last month based on falling rail traffic leading railroad pricing power down from its recent highs. Last week’s release of traffic data showed further…
The Railroad Indicator and our Rail Shipment Diffusion Indicator, have continued to deteriorate, as well as total rail shipments which have now started to contract for the first time since the 2015-16 manufacturing recession…
Highlights Portfolio Strategy Corporate sector selling price inflation is nil while leading wage inflation indicators signal additional labor cost increases in the coming months. The risk is that profit margins have already peaked for…
Neutral We have been offside on the high-conviction overweight call on the S&P air freight & logistics index and the recent FedEx warning suggests that profits will come under pressure for this index for the rest of…
Underweight Our previous Insight referenced the deterioration of indicators that caused us to grow more negative in last year’s downgrade of the S&P railroads index to a benchmark allocation but what kept us…