What Are Heavy Truck Sales Telling US?

1) TRUCKS – Do heavy truck sales ever tell us anything?  Yes.  In all but two cases, the previous 14 times that heavy truck sales jumped by 55k units or more over 3 months, the S&P 500 moved higher over the following 5-12 months.  Markets are responding today more to the uncertainty of war and its effect on oil, along with a bad jobs print.  But, the facts remain: 1.) Global industrial indicators confirm a genuine cyclical upswing; 2.) Manufacturing gauges are turning up; 3.) Trucking volumes are moving up; and 4.) Heavy truck sales are strong.  There’s some economic strength under the surface of price.

2) RATES – The 2YR Treasury spiked to 3.63% this morning…then non-farm payrolls came out showing a LOSS of 92,000 jobs.  Consensus expectations were for a gain of 59,000, so the labor market is clearly weakening.  After that report came out, the Fed Front Runner dropped to 3.54% and is now settling in at about 3.58%.  Why?  Well, the Fed is in a tough spot.  Jobs are being shed, but inflation (specifically oil…up another +11% this AM) is potentially poised to accelerate.  What will they choose…cut rates to support employment, or not cut rates to try and put a lid on inflation?  The 2YR is still bullish trend this morning, meaning there is still an upward bias.  That suggests the Fed is selecting the latter.  Will the uncertainties of war force the Fed to pick rate cuts over worry about inflation?  Maybe.

3) VIX – Market bottoms tend to show up when, throughout the trading day, VIX goes from green to red and the S&P 500 opens down hard and then recovers.  We got that on WED this week, but I guess the market needs another shot at it.