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19 Mar C.J. Lawrence Weekly – Tight Capacity Utilization Bodes Well for Select Machinery, Building Products, and Construction Equipment Stocks

Among the economic data released last week, both Industrial Production and Capacity Utilization came in well ahead of economists’ expectations. The Industrial Production reading, a measure of total U.S. factories, mines, and utilities output, rose 1.1% from the prior month, and 4.4% from last year’s figure. Capacity utilization reached 78.1%, the highest level since January 2015. The two metrics tend to go hand-in-glove. As manufacturing activity accelerates, idle and underutilized manufacturing capacity is re-engaged and the utilization rate climbs. Most economists believe that 80% is an important utilization hurdle. When the utilization rate climbs above that level, and available manufacturing capacity is tight, firms increase capital expenditures on new productive capacity. It appears we are closing in on that trigger level. [caption id="attachment_478" align="aligncenter" width="695"] US Industrial Capacity Utilization versus S&P 500 Capital Expenditure Growth Source: FactSet, S&P Global[/caption] Conversely, utilization, and corporate spending on plant, property, and equipment, falls off...

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13 Mar Inflation – Who Cares?

Inflation of all forms is most damaging during the asset distribution phase of life, those who live off their accumulated wealth e.g. retirees. Yes, modest inflation can help those assets continue to build but increased prices becomes a dangerous long-term termite. This issue is compounded by increased life expectancy where your assets must last you longer....

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12 Mar C.J. Lawrence Weekly – New S&P Sector Construct Could Create Volatility this Summer

Followers of the CJL Weekly Market Comment are familiar with our practice of looking below the broader market indices to compare the fundamentals, price performance, and valuations of the 11 different S&P Sectors, 24 Industry Groups and, 157 Sub-Industries. This style of analysis dates back to the original C.J. Lawrence. ...

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