Tuesday featured a series of downgrades demonstrating that “anything to do with trucks, or trucking, is now a whipping boy in this Brexit-influenced market environment,” according to a Real Money report from The Street.
WABCO Holdings has been downgraded a few times since Thursday, and stocks for companies like Meritor and Navistar are down 20%. However, according to the report, new domestic truck builds have been down for the past two years because of too much capacity.
Brexit threw a wrench into European truck sentiment, which had been humming along at a pace consistent with the modernization of the fleet that we have been seeing in the U.S. since 2010. Firms, like WABCO and Meritor, were set to continue achieving expectations, given this strength in Europe. Now, we have to wait and see. Only time will tell if Europe is reaching overcapacity in trucking, as is occurring domestically in the U.S. at the moment, and squeezing freight prices down along with it.
Capex will likely continue retrenching here. Expectations for a strong back-to-school and holiday season don't seem to be realistic, at the moment, which will likely keep a lid on pricing, due to freight line overcapacity. This could potentially begin in Europe, as well.
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