Transport Weakness Confirms Cyclical Downturn Underway

As I pointed out in Transports leading the stock market and economy lower, the Dow Transport Stock Index has not confirmed strength in the broad market indices since December 24th. In fact, the transportation index is at the same level today as it was in December 2017.

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Large-cap companies can fabricate earnings growth through share buybacks for a while, but that does not solve weak sales. Less sales mean less shipping, and less shipping historically correlates with disappointing economic growth in the months ahead.

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