Activity on the desk in Industrials was consistent with broader market performance, but there were some notable differences in investor activity between long-only communities and subsectors. Specifically, GEV, JCI, NVT, MTZ saw overwhelmingly better performance from the long-only community, while Cyclical names (FDX, KNX, FAST, FERG, GTES) fared much better as buys. This highlights the ongoing thematic of skewed investor sentiment in the consumer space, particularly in discretionary areas.

The consistent feedback from market participants is that consumer fundamentals have outpaced price action, driven by a combination of factors such as tax refunds from the One Big Beautiful Bill, potential SCOTUS tariff repeals, easy comparisons from April 2025, and a positive slant towards holiday season. This has led to a “hope” thesis among investors, who are betting on a continued upswing in consumer sentiment and activity.

However, it’s worth noting that this optimism may not necessarily translate into tangible results in the near term. The consumer space is highly competitive and subject to various macroeconomic factors, including interest rates, inflation, and geopolitical tensions. As such, investors would do well to approach these names with a cautious, fundamental-driven approach, rather than simply relying on sentimental factors.