One of our chief complaints/concerns over the past couple of years has been an historic lack of capex spending (investing on the part of companies in business-expanding capital), relative to past expansions.
Recessions in red: click each insert below to enlarge…
Well, at last, things may be looking up. Here are two of this week’s additions to our current trends file:
What’s it mean? Well, businesses seem to be poised to invest in productivity-enhancing capital going forward. The endeavor itself tends to be job-producing, plus, the gains in productivity allow for increased wages, which is something else that has been slow to develop during the current expansion.
In fact, looks like it may be already underway. Here’s the update to the first chart above:
Now, this is, for long-term patient investors, unambiguously good news. However, it — along with other macro data — also unambiguously changes the market’s underlying narrative. The bull market, that has to this point been helped to no small degree by a very accommodative Fed, will find itself — in terms of U.S. monetary policy — meandering through a less hospitable environment going forward.
This jibes with our present cyclical sector bias in client portfolios…
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