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Dismal auto sales mean bad news for U.S. Steel, analyst says

Published 05/02/2017, 12:33 PM
© Reuters.  Dismal auto sales mean bad news for U.S. Steel, analyst says
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  • Disappointing auto sales data released by GM, Ford and Fiat Chrysler could be bad news for U.S. Steel (X -0.3%), Axiom Capital's Gordon Johnson writes.
  • The U.S. Steel bear says auto sales rarely plateau and instead will fall drastically, and American steel mills have material leverage to U.S. auto sales trends both from a revenue perspective and a margin perspective; due to the mix, Johnson says this is a key part of his 2017 short call on U.S. Steel.
  • Based on Axiom's proprietary steel supply and demand model, after new privately owned housing at 40% of demand, auto sales are the largest contributor to American steel demand at 25%.
  • Johnson says he is adding to short positions in X and Cliffs Natural Resources (CLF +0.1%) based on today's news.
  • Now read: Cliffs Natural Resources: Q1 Report In More Detail


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