“The GE earnings miss and guidance revision last week highlights how the increasingly weak macro environment can quickly sneak up on even the most diversified and well-run of industrials businesses,”

I would actually be buying calls in specific industrial names and have Honeywell (HON) and Union Pacific (UNP) calls on my book for the past 2 weeks.

My biggest problem with this recommendation is the XLI is about 18% GE (making the XLI basically a lite GE play), its kind of late to buy the puts AFTER GE took that dive from $37ish to$32ish! And why did GE take that big plunge? It sure wasn’t because GE is an industrial. It was because we found out GE was more of a financial than an industrial where GE’s financial unit took GE’s earnings per share down by 7 cents and negated any positives the industrial units were producing.

None of the other components in the XLI has any financial units like GE (hence they’re true industrials, unlike GE). After listening to GE’s call, one should actually be bullish on export industrials. GE citing very strong infrastructure businesses, mostly abroad, and in the same industries we’ve known to be hot: oil & gas, energy generation, power, and aerospace. Oh, and the weak dollar kicker has been huge!