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Afternoon Note

Fasten Your Seatbelt: There is No Recession

By Charles Payne, CEO & Principal Analyst
10/11/2019 1:52 PM

This morning, Fastenal (FAST) posted its earnings results, and many that were bracing for a manufacturing recession to drag the entire economy lower, let out a big sigh of relief. The company posted results that beat on top and bottom lines, and while management acknowledged a slowdown, the results dismissed the idea the bottom has fallen out.

Fastenal: About Us

Today, Fastenal is many things to many different customers: an expert consultant, a logistics company, a technology provider, and more generally, a distributor of wide-ranging industrial and construction products. These aspects of our service share a common foundation: great people, close to our customers.

Our service model centers on approximately 3,200 in-market locations (a combination of public branches and customer-specific on sites), each providing custom inventory and a dedicated sales team to support local customers.

The news has sent FAST shares +17%, leading the way for Industrials to be the second-best performing sector in today’s session.  Note: Materials are the best performing sector on this manufacturing relief and investors search for value.  The Industrial sector (XLI) has been ranged-bound since late 2018, so while this is a welcomed move, there’s more to go before a breakout confirms the worst is over.

XLI

https://www.tradingview.com/x/0Rf2IRFm/

Investors are rotating out of safe havens Utilities, Real Estate and Consumer Staples, but long-term investors should take care to remove that balance from their portfolios.

S&P 500 Index

+1.43%

 

Communication Services (XLC)

+1.69%

 

Consumer Discretionary (XLY)

+1.51%

 

Consumer Staples (XLP)

+0.05%

 

Energy (XLE)

+1.49%

 

Financials (XLF)

+1.89%

 

Health Care (XLV)

+1.45%

 

Industrials (XLI)

+2.06%

 

Materials (XLB)

+2.43%

 

Real Estate (XLRE)

+0.28%

 

Technology (XLK)

+1.58%

 

Utilities (XLU)

 

-0.09%

 

Donald J. Trump @realDonaldTrump

Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!

9:49 AM - Oct 11, 2019

President Trump will meet with China’s Vice Premier Liu He around 2:45, and they are scheduled to discuss trade for 85-minutes.   So far, it feels like this could be the inflection point that gets trade negotiations back on track. 

This isn’t a “skinny deal. ” It’s a step in the process that should make the remaining negotiations run smoother.

 

 


Comments
The Art of the Deal writ large!
Could not agree more with your assessment, Charles.
Thank you!

Dennis Paine on 10/13/2019 5:18:06 PM
 

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