Beth Hammack

Hammack identifies "insurance costs" as a specific, persistent driver of pricing pressure that she hears about "very regularly" from businesses. One company's "cost pressure" is another company's "revenue growth." If businesses are complaining about high premiums, it confirms that Property & Casualty (P&C) insurers possess strong pricing power and are successfully raising rates in an inflationary environment. Long P&C Insurers (Progressive, Chubb, Travelers) as beneficiaries of the sticky service inflation mentioned. Catastrophic weather events increasing payout ratios significantly.

In the Cleveland district, the primary complaint is that "it's hard to find skilled laborers and tradesmen" and this shortage is a "real barrier to growth." When human labor is scarce or too expensive, industrial companies are forced to invest in capital expenditures (Capex) focused on automation and efficiency to maintain output. This directly benefits industrial automation and motion control firms, particularly those with strong Midwest industrial ties. Long Industrial Automation (Rockwell, Eaton, Parker-Hannifin) as the solution to the structural labor shortage. A recession causing a total freeze in industrial Capex.

Hammack identifies "insurance costs" as a specific, persistent driver of pricing pressure that she hears about "very regularly" from businesses. One company's "cost pressure" is another company's "revenue growth." If businesses are complaining about high premiums, it confirms that Property & Casualty (P&C) insurers possess strong pricing power and are successfully raising rates in an inflationary environment. Long P&C Insurers (Progressive, Chubb, Travelers) as beneficiaries of the sticky service inflation mentioned. Catastrophic weather events increasing payout ratios significantly.

In the Cleveland district, the primary complaint is that "it's hard to find skilled laborers and tradesmen" and this shortage is a "real barrier to growth." When human labor is scarce or too expensive, industrial companies are forced to invest in capital expenditures (Capex) focused on automation and efficiency to maintain output. This directly benefits industrial automation and motion control firms, particularly those with strong Midwest industrial ties. Long Industrial Automation (Rockwell, Eaton, Parker-Hannifin) as the solution to the structural labor shortage. A recession causing a total freeze in industrial Capex.

In the Cleveland district, the primary complaint is that "it's hard to find skilled laborers and tradesmen" and this shortage is a "real barrier to growth." When human labor is scarce or too expensive, industrial companies are forced to invest in capital expenditures (Capex) focused on automation and efficiency to maintain output. This directly benefits industrial automation and motion control firms, particularly those with strong Midwest industrial ties. Long Industrial Automation (Rockwell, Eaton, Parker-Hannifin) as the solution to the structural labor shortage. A recession causing a total freeze in industrial Capex.

Hammack identifies "insurance costs" as a specific, persistent driver of pricing pressure that she hears about "very regularly" from businesses. One company's "cost pressure" is another company's "revenue growth." If businesses are complaining about high premiums, it confirms that Property & Casualty (P&C) insurers possess strong pricing power and are successfully raising rates in an inflationary environment. Long P&C Insurers (Progressive, Chubb, Travelers) as beneficiaries of the sticky service inflation mentioned. Catastrophic weather events increasing payout ratios significantly.

Hammack highlights "two-sided risks" regarding oil, noting that energy costs are already elevating pricing pressures and that geopolitical conflict (war) poses a risk for further spikes. Energy is identified as a key input cost that is not abating. The Fed's "wait and see" approach to supply shocks suggests they will not immediately hike rates to crush oil demand, allowing energy prices to run if geopolitical tension escalates. Long Oil (USO) or Energy Producers (XLE) as a hedge against the sticky inflation/geopolitical risk described. Demand destruction from a slowing economy causing oil prices to collapse despite supply risks.

Hammack highlights "two-sided risks" regarding oil, noting that energy costs are already elevating pricing pressures and that geopolitical conflict (war) poses a risk for further spikes. Energy is identified as a key input cost that is not abating. The Fed's "wait and see" approach to supply shocks suggests they will not immediately hike rates to crush oil demand, allowing energy prices to run if geopolitical tension escalates. Long Oil (USO) or Energy Producers (XLE) as a hedge against the sticky inflation/geopolitical risk described. Demand destruction from a slowing economy causing oil prices to collapse despite supply risks.

"The banks that I've talked to in the district see that their loan growth is improving... business leaders... they're still willing to make investments. They're taking out loans." Regional bank valuations are often depressed by fears of a credit crunch or a recession-induced lending freeze. Hammack's proprietary district data suggests the opposite: loan demand is robust and growing. If loan books are expanding despite current rates, regional banks are healthier than the macro narrative suggests. Long Regional Banks (KRE) to capture the disconnect between "recession fear" and the reality of improving loan growth. Commercial Real Estate (CRE) defaults could outweigh new loan growth, damaging bank balance sheets.

"When I'm out in the district talking with businesses... they're looking to make more investments in their businesses and they think demand is going to be reasonably robust." When businesses "make investments," they spend on Capital Expenditures (CapEx)—machinery, facilities, and automation. This spending flows directly to the top line of Industrial companies. A "healthy" economy with business optimism signals a cycle of re-investment. Long Industrials (XLI) captures the upside of corporate CapEx spending. If the "disappointment" in the jobs report accelerates into a broader recession, businesses will cut CapEx immediately.