This looks like a good time to buy the industrial dip.
The U.S. is on the cusp of an industrial supercycle, partly fueled by $2 trillion in spending coming from new federal plans for infrastructure and electric-vehicle development.
That possibility is like catnip for this former engineer and current industrial reporter who often recommends shares of hard-to-understand manufacturing companies that few have ever heard of.
You wouldn’t know a boom is coming from looking at how the industrial sector performed this past week. The
Industrial Select Sector SPDR
exchange-traded fund (ticker: XLI) dropped 2.1%. That’s not the worst-performance in the
—that honor goes to the
Real Estate Select Sector SPDR
ETF (XLRE), which dropped 4.9. But it’s also far from the best: The
Health Care Select Sector SPDR
ETF (XLV) slipped just 0.2%.
Still, this looks like a good time to buy the industrial dip. Besides all that new spending and reporter biases, there are other reasons for increasing exposure to manufacturing stocks now. The best is that the industrial economy looks to be finally bottoming out.
The Institute for Supply Management Purchasing Manager Index, or
shows whether the U.S. manufacturing economy is growing. The PMI has registered contraction for seven consecutive months. That’s a long time. The longest streak in the past 20 years was 11 consecutive months beginning in September 2008, right at the nadir of the financial crisis. A new ISM PMI reading is due on July 3, and it’s expected…