Manufacturing output at highest level since 2008
Manufacturing output is up 2.1% over the past two months to the highest level since July 2008. Leading the gain was auto output - up 8.5% the past two months. Rising to a new record high was business equipment output - up 3.3% over the same period. December's gain in business equipment was widespread, with output of industrial, transit, and information and processing equipment up 2.1%, 1.9% and 0.6%, respectively. Consumer goods output was little changed after a 0.9% advance in November.
During the bull market that began March 9, 2009, industrials have been among the three top-performing sectors of the 10 in the S&P 500. It edged lower Wednesday, weighed down by Boeing's nightmare over battery problems with its Dreamliner. However, it did manage to rise to a new cyclical high on Tuesday. The recent rally in industrial stocks has been mostly led by rising valuations, while forward earnings have been flat. Investors must be anticipating better global growth and perceive that the stocks are relatively cheap.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.