- Why the industrials appear set to replay 2008;
- Paychex's strong execution; and
- why China's weakness will continue.
Industrials Can't Catch a Break Posted at 4:31 p.m. EDT on Friday, Sept. 30. Here's a piece I don't want to write. The industrials seem determined to replay 2008. It doesn't matter that things are much better for them. It doesn't matter that there is ample credit around the world, something that crushed them last go around. It doesn't even matter that none, not one, of the ones I am close to, Honeywell ( HON), United Technologies ( UTX), Cummins ( CMI) or Caterpillar ( CAT), has seen a slowdown. They all get whacked. This endless decline is playing havoc with the performance of anyone who is trying to keep pace with the averages. Owning them has been an anathema to making money. At the same time, the most overvalued and overstretched players are the recession stocks. But many of those have yield protection, and all are levered to the decline in commodity costs. If it weren't for the strong dollar, people would be raising numbers like crazy. > > Bull or Bear? Vote in Our Poll I see no end to the decline of these stocks if Europe stays weak, China weakens and we bump along a near-recession economy. I for one think these declines are pure panic. But there seems to be a hot potato effect going on here. No one seems willing to own them through this period, somewhat similar to the mineral and oil stocks that they now seem to correlate perfectly with. Oddly, the retailers, so geared to the "strapped" consumer, hold up great as the industrials, which are levered to worldwide growth but especially emerging growth trends, just can't stop plummeting. Bottom-fishing has become a huge sucker's game, even for those companies that are seeing strong demand. We got a great channel check out of Caterpillar this morning, and no one cared at all.