Five interesting things that Hodges Capital research analysts discovered this week...

#1 FREIGHT RECESSION: The Cass Freight Index shows that May shipments fell 3.4% from April on a seasonally adjusted basis—despite typically rising in May. The ongoing trade war continues to produce mixed effects: while pre-tariff consumer spending is still supporting freight demand, early signs of negative tariff impacts are emerging. Pre-tariff inventory stocking has begun to shift toward destocking, with inventories expected to thin further in the coming months. After rising 13% in 2021 and 0.6% in 2022, the index declined by 5.5% in 2023 and 4.1% in 2024. It is currently on track for another decline in 2025.

#2 THE POWER TO MAKE IT HAPPEN: The U.S. produced more energy in 2024 than ever before, reaching over 103 quadrillion British thermal units, according to data from the U.S. Energy Information Administration (EIA). This marks a 1% increase over the previous record set in 2023, according to Chartr. Domestic production hit new highs across several major energy sources, including biofuels, solar, wind, crude oil, and natural gas—the nation’s leading energy source since 2011. Natural gas accounted for approximately 38% of total U.S. energy production in 2024, though its output remained flat year-over-year. Meanwhile, coal production—once the dominant energy source from 1984 to 2010—slumped to its lowest annual output in 60 years, down 10% from 2023. As the U.S. phases out coal, China—the world’s largest energy producer—continues to increase both production and consumption of the most carbon-intensive fossil fuel. The International Energy Agency estimates that China consumes 30% more coal than the rest of the world combined.

#3 GAME ON: Nintendo sold over 3.5 million units of the Switch 2—its first new console in eight years—within four days of its global launch. According to Sherwood, that’s nearly a million more than the original Switch sold in its first month (2.7 million). The launch sets a new record for Nintendo, making the Switch 2 its fastest-selling console to date. It also puts the company more than one-fifth of the way toward its goal of 15 million units sold by March 2026. Encouragingly, early adopters don’t seem deterred by the console’s $450 price tag—or its $80 games.

#4 OUT OF POCKET: The U.S. federal deficit reached $1.8 trillion in 2024. Total government receipts were $4.92 trillion, with the largest sources being individual income taxes ($2.4 trillion), payroll taxes ($1.7 trillion), and corporate taxes ($530 billion). Major spending categories included Social Security ($1.5 trillion), healthcare—primarily Medicaid—($912 billion), net interest on the national debt ($882 billion), Medicare ($874 billion), and defense ($874 billion).

#5 NO BOOZE: According to Hedgeye, U.S. wine shipments to Canada fell 93% year-over-year in April. Canada, the largest market for U.S. wine exports, began pulling American-made alcohol from store shelves in March in response to new U.S. tariffs. Although Alberta has since lifted its three-month ban on U.S. liquor imports, Canada continues to enforce a 25% import tax on American wines. Overall, U.S. wine exports dropped 41%, with notable declines in the U.K. and China—the second- and third-largest export markets.

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