This is going to date us, but we are Led Zeppelin fans. One benefit we here in Minnesota had over our pastoral neighbors to the east is that Zeppelin would not play in Wisconsin. Rumor had it that in 1969 Zeppelin did not sell out a show in Wisconsin and never wanted to play there again.
Channeling Zeppelin, we are “Dazed and Confused” about the industrial sector. Like most that follow the sector we monitor Institute of Supply Management (ISM) data on a regular basis. The data from ISM has been good lately—seemingly across the board. In our view Philadelphia Fed data echoes that sentiment. European and Chinese data are generally pointing toward expansion. Usually these data are a leading indicator of industrial health so that’s good news for the sector, right? Well, usually, but not so fast. Copper prices are also considered a leading indicator of industrial demand and prices are down notably since the beginning of this year. That’s not good for future industrial demand because money talks, right? Other data such as the National Federation of Small Business survey also shows conflicting trends in our opinion. Additionally U.S. and global GDP figures may indicate that we are just plodding along—no real change. Of course, there are some subsectors that are doing better than others—aerospace doing better than mining equipment, in our view. However, our question is where is the industrial sector going to perform as a whole over the next six to twelve months? What do you think?