Frozen
It is good to see now bear markets only last one day.
It is a very difficult time to be a top down investor. The BBB has all sorts of pro-growth ideas that should help capital spending, but the short-term jobs numbers are a little concerning.
Who is right?
In general I think we are closer to boom than bust, but the consumer debt numbers keep me frozen.
When I listen to the consumer cyclical companies like Brunswick, Thor, Polaris, and Harley-Davidson, I know that the recession began last summer and is still dragging on. On a clear day, I can see signs of a bottom, but most days are foggy.
I see CarMax - KMX at a new low, but I hate the “happy talk” they spew about the credit quality of their auto loan portfolio. I feel their might be more bad news to come.
I am overjoyed I missed the dividend cuts in Whirlpool and Dow Chemical. Their stock prices are certainly sending ominous signals about the economy.
WHR and DOW are very tied to housing. I have watched Mohawk and Pulte take a little positive bounce, but I worry about housing prices. Prices are already dropping in Florida and even Atlanta. I know we need to build more houses, but I fear the news will get worse before it gets better.
The trucking stocks are telling you there are economic problems. Just look at the charts of leaders like SAIA and Old Dominion. Truck orders are marginally ok at Paccar, but it will be interesting to watch their order flow this Fall.
Copper prices are making new lows. I was too early on Teck. Please God, give me another chance to buy Hudbay Minerals at $6.
WillScott called out continued strong demand for big construction projects, but also weakness in smaller jobs.
There is not a lot of good news from retail, unless you own American Eagle.
The travel stocks have been mixed, with some good news at Norwegian.
In know Kinder-Morgan is going to build a bunch of pipelines, and Merck is even going to build drug manufacturing plants in the US. We need to build dozens of power plants, that will be made of steel not bamboo. Many companies are are calling out much lower cash taxes given the BBB.
I was way too early on Brunswick, Thor, Teck, and RXO. I made a little back in Gentex by buying it off the new low list. Steel Dynamics has been a push so far
To me, being about 25% (6 of 25 stocks) feels about a market weighted in economically sensitive stocks.
My “feel” is I want to own more cyclicals. The new low list is shouting buy cyclicals. The idiots are buying tech, and ignoring everything else. It is a little confusing that ConAgra and Colgate are also at new lows.
I remain frozen in neutral. I still own Pepsi, Sysco, Tyson, Corteva, Restaurant Brands and other safe stocks.
For now that is OK. My performance has been in line with other mid-cap value funds, and even above average given I have no technology exposure.
Right now I am relying on stock picking, not top-down thinking. That is admirable and reasonable position. But I do have a small and nagging feeling I could miss an economic boom in 2026, and an unexpected Republican win in the 2026 mid-terms. I fear the federal budget could look better if the Republicans can bring an “impoundment” case to the Supreme Court in early 2026. If you do now know the name Russ Vought, you are not paying attention. As Steve Bannon said, “deconstruct the administrative state”. It is a possibility, and maybe an investable possibility.