It’s been a brutal start to the year with the major indices piling up losses of nearly 10% in the first 10 trading days. The sell-off has investors wondering if this is the start of a prolonged slump or a temporary setback. We haven’t been immune to the selling but remain focused on the long term, which includes gaining insights into where the economy is headed.
We’ve found trucking sales are a reliable proxy for economic activity. Current data, as shown, reflects some softness—the most recent four-week rolling average of 50.2 is hovering just above contraction territory—but remains higher than the previous low of 2013. The upshot is that while things have slowed, signs have yet to surface that we are headed for the type of plunge experienced in 2008.
Whether the current numbers illustrate a temporary lull or a meaningful downturn, we believe sales growth will be challenged in the near-term and steady streams of revenue are likely to be rewarded with a premium by investors. Our response is to hone in on names that have low debt, steady sources of revenue, and idiosyncratic drivers.
Past performance does not guarantee future results.
The statements and opinions expressed in this article are those of the presenter(s). Any discussion of investments and investment strategies represents the presenter’s views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true. Economic predictions are based on estimates and are subject to change.
Investing involves risk, including the potential loss of principal. There is no guarantee that a particular investment strategy will be successful. Value investments are subject to the risk their intrinsic value may not be recognized by the broad market.
Definitions: Gross Domestic Product (GDP): is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. Evercore ISI Trucking Companies Sales Survey: started in May 1997, is made up of thirteen Less Than Truckload (LTL) and truckload companies combining both private and public companies. Each week, respondents are asked to rate their revenues excluding fuel surcharges on a 0=weak to 100=strong scale. Contact person for the survey is typically a CFO or Treasurer.
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