Checking the Boxes: Where Stocks Go From Here

|May 1, 2023

We took another truckload of cardboard to the recyclers last night.

When you’re refinishing an old house and running a successful business from a farm, you go through a lot of boxes – a dumb amount of cardboard.

‘Tis the economy we live in. Everything on a truck… everything in its neat little box.

As the nation holds its breath waiting to interpret some more Fedspeak this week, those oh-so-dull cardboard boxes just might tell us more than the tight-lipped fella on the stage will on Wednesday.

The news, as you may suspect, isn’t great.

In fact, the numbers haven’t been this bad since the Great Recession.

The fine folks at Packaging Corp. of America (PKG) opened their books last week. The ensuing 10% drop in the share price tells us all we need to know.

Shipment numbers for the quarter came in worse than expected. It marks six straight months of figures failing to match estimates. The number of boxes shipped during the year’s first three months plunged by nearly 13%… matching the pain felt at the bottom of the 2009 slowdown.

Digging into industry notes from the end of last year, we see that this Q1 slump wasn’t supposed to happen. It was widely expected to be a rebound quarter, when shipments would jump after a period of “inventory adjustments.”

The folks at Packaging Corp. don’t give many reasons to hope for a Q2 turnaround. They admit the slump accelerated through March.

Shipping data confirms the trend. Here’s a chart we shared with our VIP subscribers during a call last week…

Trucking Demand Drops in March

The last time over-the-road tonnage fell this steeply was during the horrific shutdowns of 2020.

Clearly things have slowed. An economy that’s using fewer boxes is one that’s spending fewer dollars.

It’s good news for the folks begging Jay Powell to halt his rate hikes. He certainly has all the rationale he needs to sit this round out.

Boxes deliver the economy.

Right now, those deliveries are falling short.

Keep an eye on this vital indicator.

Andy Snyder
Andy Snyder

Andy Snyder is an American author, investor and serial entrepreneur. He cut his teeth at an esteemed financial firm with nearly $100 billion in assets under management. Andy and his ideas have been featured on Fox News, on countless radio stations, and in numerous print and online outlets. He’s been a keynote speaker and panelist at events all over the world, from four-star ballrooms to Capitol hearing rooms.