HON - Weakness In Industrials Is A Warning

• Recent weakness in industrial stocks suggests that the cycle is peaking.
• A combination of a long-term rotation out of tech stocks and a cyclical downturn is likely to result in a crash.
• Capital goods stocks are the core of industrials and they are declining across the board.
• Historically high valuations in the industrial sector also point to low long-term returns.
• Industrials are likely to outperform in the 2020s but it is better to wait until the cycle bottoms and to position defensively in the meantime.

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