As recorded in Barron's "Investor's Soapbox AM" for August 3, Credit Suisse analyst William Stein has suggested that a "declining [Institute of Supply Management's] Purchasing Managers Index (PMI)" indicates a strong "negative read on test and measurement (T&M), connectors and distributors" including connector industry leaders TE Connectivity (TEL), Amphenol (APH) and Molex (MOLX), as well as electronic components distributors such as Arrow Electronics (ARW) and Avnet (AVT).
The investors' note added:
The new debt deal offers another negative read on military-exposed supply-chain companies. The proposed U.S. budget deal incorporates two tranches of spending reductions, both of which include defense spending.
According to [Credit Suisse] aerospace and defense analyst Rob Spingarn, spending cuts on defense could total approximately one-third of the total $2.4 trillion spending cuts over the next 10 years outlined in the debt deal.
Spingarn believes that the majority of the Department of Defense (DoD) cuts are likely to be in procurement, starting in fiscal 2012 and 2013, with specific program cuts identified in early October 2011.
Full Story: Supply-Chain Stocks Set for Negatives (online.barrons.com)
