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Worried About an Economic Slowdown? Fastenal’s Earnings Won’t Help.

Worried About an Economic Slowdown? Fastenal’s Earnings Won’t Help.

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Boxes of hardware at a Fastenal distribution center in Pennsylvania


Luke Sharrett/Bloomberg

Fastenal’s quarterly earnings report, which sent shares of the industrial distributor sharply lower on Tuesday morning, makes a difference beyond the implications for the stock itself.

Fastenal (ticker: FAST) is one of the earliest industrial companies to report numbers. Larger, better-known industrial companies start disclosing their third quarter earnings in a couple of weeks.

More important, Fastenal is a distributor of thousands of small, lower- priced items used by businesses around the U.S. every day. Its sales trends are a good, real-time indicator of what is going on at the shop-floor level. The figures offer clues for investors about the coming earnings season and about the health of the U.S. economy.

“I find Fastenal to be a great bellwether for the industrial side of the U.S. economy,” said Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group, via email. “The tone of the third quarter of 2020 can best be described as one of normalization following the heavily pandemic-influenced second quarter of 2020.”

For the third quarter, Fastenal reported 38 cents in per-share earnings, one penny ahead of Wall Street consensus estimates and one penny more than the company earned in the third quarter of 2019. Sales, however, just missed expectations.

Growth in average daily sales decelerated to 2.5% from more than 10% in the second quarter. Third-quarter growth was also below daily sales growth in the first quarter of 2020. The “surge activity eased in [the third quarter],” reads Fastenal’s quarterly presentation. “But demand for pandemic-related products remains elevated, contributing to 34.4% growth in safety supplies.”

Baird analyst Dave Manthey said that while figures on September sales and profit margins might have disappointed the Street, he still likes the stock. “Results were strong despite the

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Decline And Slowdown Are Key Market Concepts – Use Them To Your Advantage (NASDAQ:TLT)

Decline And Slowdown Are Key Market Concepts – Use Them To Your Advantage (NASDAQ:TLT)

In the 2010 decade there have been three distinct business cycles based on several indicators such as growth in manufacturing employment, heavy truck sales, credit spreads, or purchasing managers surveys. The three cycles spanned 2009-2013, 2013-2016, and 2016-2020.

Their pattern is important because they had an impact on several asset prices. The last business cycle – the one going from 2016 to 2020 – provides, for instance, imported lessons on how long-dated Treasury yields behave.

HEAVY TRUCK SALESSome investors focus on the direction of the economy. Is it going up or down? What happened between 2016 and 2020 should help to recognize the power of small changes in the growth of business activity on investment timing.

In 2019 Wall Street agreed the economy was expanding and bond prices were extremely overbought. Yields had to move higher and prices lower. Several major strategists embraced this view.

YIELDS ON 10-YEAR TREASURY BONDSWall Street did not recognize business activity was already in the midst of a slowdown which started in mid-2018. Yields on 10-year Treasury bonds had bottomed in 2016 at around 1.4% and then rose until they peaked at 3.0% in 2018 as growth in business activity was rising. They began to decline in 2018 as the economy slowed down to finish at about 1.4% in 2019.

These levels were excessively low – or so Wall Street kept saying at that time. They could not go much lower given the economic expansion. Analysts repeated bonds were overbought and yields had to rise because the economy was still growing and the easy monetary policy of the Fed implied only one outcome – rising inflation.

Of course, rising inflation would have been the kiss of death for bonds. Hence the conclusion yields had only one way to go – sharply higher. Instead yields kept trading around 1.4% (pre-pandemic) to fall

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‘Shoppers aid growth but economic slowdown ahead’

‘Shoppers aid growth but economic slowdown ahead’



a person standing in front of a store


© Getty Images


The UK economy may have grown by as much as 17% in the three months to the end of September, says the EY Item Club, but slower growth may follow.

Shoppers splurged during the period as coronavirus lockdown restrictions were lifted, it said.

It is a rosier vision than the one offered by Item Club economists in the summer, but they warned that growth for the rest of 2020 would be far slower.

Growth for the final three months will be 1% or less, they predicted.

“The UK economy has done well to recover faster than expected so far,” said Howard Archer, chief economic adviser to the EY Item Club.

“Consumer spending has bounced back strongly, while housing sector activity has also seen a pick-up, in part thanks to the stamp duty holiday.”

The economy probably grew 16-17% in the third quarter of the year compared with the second quarter, it said. It had been expecting growth of 12%.

Trade deal risk

While government help such as the furlough programme has provided “much-needed support”, growth will now begin to fade, said Mr Archer.

The end of the furlough scheme, under which workers had part of their salary paid by the government, will mean higher unemployment and sluggish growth, said the forecasters, who use a similar economic model to the Treasury.

That said, the UK economy is now predicted to regain its pre-pandemic size in the second half of 2023. Back in July, the EY Item Club did not expect that to happen until late 2024.

Official figures from the Office for National Statistics showed last week that The UK economy continued its recovery in August, growing by 2.1% in the month, as the Eat Out to Help Out scheme boosted restaurants.

It was, however, smaller than economists

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U.K. Launches Third Job Program This Year to Counter Economic Slowdown

U.K. Launches Third Job Program This Year to Counter Economic Slowdown

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U.K. Chancellor of the Exchequer Rishi Sunak (L) in Rothesay on the Isle of Bute, Scotland.


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Faced with the prospect of a massive rise in unemployment by the end of the year, the U.K. government announced on Friday another significant job-support program to supplant the more ambitious one set up earlier this year to counter the effects of the coronavirus pandemic.

The announcement came on the day the Office for National Statistics said that gross domestic product grew 2.1% in August, less than half of what was forecast by a Reuters poll of economists. The U.K. economy remains more than 9% smaller than its pre-pandemic February level, and most of the August bounce was due to the government restaurant-subsidy program, now expired, known as “Eat out to help out.”

Chancellor of the Exchequer Rishi Sunak, just three weeks after announcing his “winter economy plan,” had to change tack once again to adjust his policy to the prospects of a worsening economic situation in the coming months.

Under the new program, the government will pay up to two-thirds, with a cap of £2,100 a month, of the salaries of employees working for businesses forced to close due to the pandemic-related restrictions.

A Treasury source told Reuters that the new wage support measures, to last for six months, will cost hundreds of millions of pounds a month.

“I hope that this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter,” Sunak said.

Only a week ago, the U.K. chancellor announced a £9 billion program in the form of a “job retention bonus” to be paid to companies who keep their furloughed workers on the payroll until at least February, 2021. The job-furlough program he had announced in March

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Trump’s Businesses Face Debt Deadlines Amid Economic Slowdown

Trump’s Businesses Face Debt Deadlines Amid Economic Slowdown

The Trump Organization faces the prospect of paying more to borrow, getting smaller loans or selling some of its assets to manage more than $400 million of debt coming due on properties hit hard by the economic downturn.

The organization’s financial situation could become more challenging if President Trump wins re-election because of the complications, ethical quandaries and political dynamic of lending to a sitting president, according to real-estate finance executives and a lawyer who handled presidential ethics.

The Trump Organization isn’t carrying a particularly heavy debt load relative to its generally high-quality assets, and it has generated significant cash from its properties and asset sales. But the market for commercial real-estate loans is struggling.

“There’s still financing available, particularly for the right deals, but it’s definitely a more challenging environment,” said Steven Buchwald, managing director at Mission Capital Advisors, a New York-based company that helps arrange financing for commercial real-estate deals. He hasn’t worked with the Trump Organization.

Some of the Trump Organization’s properties have underperformed their lenders’ expectations.

Actual and expected cash flows

Trump International Hotel & Tower

Retail Space

Trump International Hotel & Tower

Retail Space

Trump International Hotel & Tower

Retail Space

Trump International Hotel & Tower Retail Space

Trump International Hotel & Tower Retail Space

Mr. Trump’s debt deals are likely to face more scrutiny from his political opponents if he wins a second term. Democrats have said that the debts could affect the way Mr. Trump governs. They raised the issue of the president’s finances after the New York Times reported on his tax returns and his personal guarantees of the debts he owed.

“Do you owe anybody money who is impacted by any decision you make as president of the United States?” asked California Sen. Kamala Harris, the running mate of former Vice

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