"In this slow growth economy." In this "environment where there's not much demand." In this "moment where we wonder whether there will ever be a sustained pick-up."
I tire of these boilerplate anti-empirical judgments. If you are saying these things, if you are mouthing them as if they are gospel because they have been gospel for so long, you have to wake up and start listening to the people I put on Mad Money.
Hamid Moghadam, the CEO of Prologis (PLD) , the gigantic developer of distribution centers, is doing everything he can to keep up with all the business he can. He is building distribution centers here and abroad to keep up with all his customers except one, the U.S. Postal Service, which doesn't want warehouses overseas.
He's putting buildings up as fast as he can because of e-commerce and the fact that e-commerce needs three times the space of regular commerce, because of all of those bulky boxes the stuff comes in. He's got warehouses wherever all the big population hubs are, especially up and down the most inhabited portions of both coasts, and he's owned the last mile of distribution.
Now, though, he needs to own the last touch and he is buying up real estate that's available in cities to help the Amazon-like companies of the world reach you in the same day. He's only doing it in Seattle now, but if it works, do you think that Growth Seeker portfolio name Amazon (AMZN) won't expand that everywhere? Can you imagine the number of distribution centers we will need if it takes off?
Prologis has been growing its earnings and dividends faster than almost any other real estate investment trust, because it is actually a plain old growth company in the form of a REIT. It's demand that's driving things. Endless shopping demand, and it's getting demonstrably stronger, not weaker. It is not a tough, no-demand, slowdown environment for Prologis. It's a "how can I keep up with demand environment," and the company is the largest at what it does.
Nucor (NUE) is the largest steel maker in the country and John Ferriola, the CEO, said last night that 2016 was better than 2015. He already knows that 2017 will be stronger than 2016, because there is so much business to handle of all sorts, including autos, where they are up 50% in three years and non-residential construction, as well as classic infrastructure projects that had been deferred during the downturn.
Again, the question is, does he have enough capacity to handle all of the business, particularly now that the U.S., first under President Obama but now under President Trump, is finally cracking down on high-cost foreign producers who dump their subsidized steel in our country?
Remember, Nucor is the low-cost producer, given its superior technology and up-to-date facilities. While others were licking their wounds, Nucor spent $7 billion updating its plants and building new ones with novel technologies that have lowered the cost of steel even more for the company.
Why did it do this? To meet the demand that is now coming its way. Slowdown? No growth? Are you kidding me?
Business for these nationwide -- and in Prologis' case, international -- companies is about as strong as these execs can remember, maybe stronger.
It is time to bury the no-and-slow growth canard. Stop letting people get away with it.
There are simply too many CEOs who come on the show who were downbeat, who were perplexed, who are now just trying to meet ever growing demand, that you can just forget these canards and accept that we have a solid, growing economy that's accelerating, not getting slower and is no longer inconsistent, spotty and about to stall out at the drop of a hat.