After coming out of last year’s Industrial Recession, companies within the Industrials sector have been among the chief beneficiaries of an improving U.S. economy. In the past year, the Industrials sector (XLI) has rallied +18.5%.
Looking to short this surging Industrials comeback? Be careful.
“The economic data looks pretty good and you’re coming out of an industrial recession,” says Hedgeye Industrial analyst Jay Van Sciver in the video excerpt from The Macro Show above. “So if you’re looking for industrial weakness to come out in your favor on the short side that’s not going to work.” Instead, shorts need to be tied to “industries that are uniquely and idiosyncratically impaired,” Van Sciver says.
In the video above, Van Sciver lays out why his highest conviction short call right now is the $39 billion construction-equipment maker Deere (DE).