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Industrial Sector Analysis: Business Cycle Positioning & Future Recommendations

Explore the current situation of the Industrial sector, its comparison with the S&P 500, economic drivers, industry outlook, and recommendations for investors looking into capital goods, transportation, and commercial services. Are we at the cycle's bottom?

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Industrial Sector Analysis: Business Cycle Positioning & Future Recommendations

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  1. Industrials Brad Sanderson Enoch Shih

  2. Industrials – Sector Makeup

  3. Current Situation – In Line

  4. Forward Earnings / Sales vs. S&P 500Cyclical Industry with room to grow

  5. Are we near the bottom of the cycle?

  6. Industry Comparison

  7. Business Cycle

  8. Industry Five Forces Low Low Non-issue Low High

  9. Economic Drivers .005 GDP T stat = 51.89 GDP S&P Industrial Sector Con. Demand FFR 0.868 FFR T stat = 10.71 0.144 UMCS T stat = 7.82 Comm. Prices Final Model 0.005 GDP + 0.868 FFR + 0.144 UMCS = SP-20 R-squared = 0.943

  10. Industry Outlook GDP growth = 5% FFR = 5% UMCS growth = -10% Final Model 0.005 GDP + 0.868 FFR + 0.144 UMCS = SP-20 R-squared = 0.943 Expected return = 9 percent

  11. Recommendations • Sell 32 basis points to bring SIM weighting in-line with S&P 500 • Overweight capital goods • Underweight transportation • Look into commercial services

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