Figuring Out The Transports And Avoiding The Rust
They’re not making it easy. But do they ever? Yes, they do. Who is “they”? I’m not really sure, but I seem to use the pronoun a lot.
Let me give you an example of one thing that confused me lately. Look at the two charts below. The first one is the Dow Jones Transportation Index which is made up of thing like airlines, rails, truckers and shippers. It is nowhere near its August 2023 peak which is concerning.
Now let’s look at the second chart which is the ETF that trades the transports, the Ishares Transportation ETF. It is well above the peak from last summer and actually looks like one of the super stocks.
How can the same sector offer such different results? I found no conspiracy. The DJ Tran has 20 components. The IYT has 48. Big difference. The IYT’s largest component, UBER, isn’t even in the DJ Tran. Wanna guess how UBER is doing after looking at the IYT chart above?
See below. IYT’s largest position looks like Nvidia. We own it in our Unloved Gems strategy and similar to how we trimmed Nvidia several times, we will probably do the same thing here.
The government releases the Producer Price Index (PPI) at 8:30am today and we already saw the Consumer Price Index (CPI) come in on the hot side on Tuesday. This trend continues to support my thesis that 3% is the new 2% and inflation will have a tough time getting back to the Fed’s target without recession.
We have a three day weekend in front of us to observe President’s Day. I am old enough to remember having off Lincoln’s birthday as well as Washington’s off. It seemed a little much so close together. I am looking forward to escaping to Vermont where my blood pressure declines. My middle child is coming from Boston to ski and visit with us from college. And UCONN hoops has games Friday, Saturday and Monday. As Neil Young once said, when you rest, you rust. I am trying my hardest to avoid any rust.
On Wednesday we bought DXHYX, EAT and more FDLO and RYCIX. We sold FENY and levered S&P 500. On Thursday we bought FFEB, GSG, TLT, FSTA, BMY, EMB, PCY and PMPIX. We sold some QQQ, AIG and DXHYX.
