By: Scott Davis

  • Rising COVID cases have had very limited impact on the industrial recovery so far, with our most recent short cycle corporate and macro data points continuing to improve sequentially into 4Q. Longer cycle markets also showing early signs of improvement.
  • Key cycle indicators all remain constructive, with copper on a tear, up 10%+in the last month. Inflationary pressures are building from rising labor, raw material and transportation costs. Inventories are well below “normal” levels in many industrial verticals, notably those touching consumer markets.
  • The industrial stock rally has stalled after a strong November despite the continued positive rate of change noted above. Institutional interest in the space, however, continues to increase with fund flows nearing prior peak levels.

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