[Charts] Stocks, Jobs and Robots
Dear Wall Street Daily Reader,
Once a week, we abandon the long-winded analysis in favor of a few carefully selected graphics to sum up an investment trend and/or opportunity.
This week, I’m dishing on the biggest developing trend in pandemic-related investments. (Hint: It has nothing to do with vaccines.)
I’m also serving up a friendly reminder about why you should obsess like an economist over jobs.
Last but not least, I’m sharing a burgeoning opportunity that involves a robot apocalypse. (Kidding. Maybe).
So let’s get to it…
Spring has sprung. And so has a leak in all the highflying stocks that benefited from the work-from-home trend.
Per The Wall Street Journal, “The sectors that benefited most from the pandemic-inspired shift to working from home have fallen hard since late January.”
Ouch is an understatement, as you can see in the chart below.
This isn’t an effort to add insult to injury for anyone who owns these stocks.
It’s a call to action.
Get out now!
A massive shift is underway in the markets as a national and global reopening becomes more imminent.
The investments that worked during the stay-at-home pandemic times won’t keep working. Investors who can adapt quickly will keep profiting. Those that can’t? Well, they’ll learn the hard way.
Rest assured, I’ll be working hard to make sure we’re in the former group, not the latter.
Speaking of work…
Focus on Jobs
All eyes were on initial jobless claims this morning. While you might never think about paying attention to this economic metric, you should!
As I’ve shared before, stocks love jobs.
In fact, the relationship between initial jobless claims and the S&P 500 is undeniable.
As claims go down, stocks go up (and vice versa).
This strong inverse relationship is one of my favorite leading indicators.
So if you’re trying to figure out where stocks are headed next, look no further than weekly initial jobless claims.
Granted, we’re dealing with elevated levels because of the pandemic. But we’re nowhere near the levels we hit during the height of the pandemic.
The key trend now is maintaining the status quo, which even this week’s slight unexpected uptick did. As you can see, we’re operating at a pretty steady state.
But that’s about to change!
With trillions more dollars of stimulus headed for the markets, look for this metric to steadily decrease, which should lead to steadily increasing stock prices, based on history.
Bet on it!
Speaking of betting, a new trend is becoming obvious that should lead to profits for switched-on investors in an unexpected area of the market…
Automatic Profits from Automation
I’ve been banging the table on chip stocks for a year now. I was right!
But I’m not here to brag. Instead, I bring up the call to underscore a new opportunity that’s emerging from the semiconductor shortage and surge.
A growing trend to bring supply chains back home is going to lead to more chip manufacturing capacity in the United States.
And new builds always include new technology. Chief among them in this upgrade cycle will be automation equipment.
Or as UBS analyst Adam Scheiner sums it up (emphasis mine):
“The [chip] crisis has also highlighted how companies cannot afford to have all their supply coming from one country that could shut down their entire manufacturing footprint. Localizing efforts could cause a boost in new factory construction, which could benefit companies exposed to automation and robotics technologies.”
As it turns out, the US severely lags behind the rest of the world in terms of automation. Take a look:
That means the time is ripe to start identifying under-the-radar robotics and automation investments.
Not only should they be on the receiving end of increased orders, but if the automation trend really picks up steam, they could be on the receiving end of takeover offers from the major players in the industry like Rockwell Automation, Inc. (ROK).
Ahead of the tape,
Editor and Founder, Trend Trader Daily