{"id":43608,"date":"2013-10-30T07:32:49","date_gmt":"2013-10-30T11:32:49","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=43608"},"modified":"2013-10-30T07:32:49","modified_gmt":"2013-10-30T11:32:49","slug":"two-charts-show-global-economy-headed-slowdown","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/10\/30\/two-charts-show-global-economy-headed-slowdown\/","title":{"rendered":"These Two Charts Show Global Economy Headed for Slowdown"},"content":{"rendered":"

By Michael Lombardi, MBA<\/a><\/span><\/p>\n

While the mainstream media and politicians are telling us the economy is improving\u2026key economic indicators point to a global economy headed the wrong way.<\/p>\n

The Baltic Dry Index is an indicator of demand in the global economy. If the Baltic Dry Index is declining, it means the global demand for goods is softening. When you look at the chart below, you\u2019ll see the devastated Baltic Dry Index\u2014the index is saying demand never came back after the credit crisis of 2008.<\/p>\n

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Chart courtesy of www.StockCharts.com<\/a><\/p>\n

Another key indicator for growth in the global economy is the major stock Caterpillar Inc. (NYSE\/CAT)\u2014a worldwide company involved in the capital goods sector.<\/p>\n

Caterpillar is a bellwether stock because it gauges the activity of capital goods companies in the global economy. If these companies are not investing in new projects or upgrading their older equipment, it suggests the companies have a pessimistic forward-looking bias.<\/p>\n

Below is a chart I\u2019ve created for my readers that compares Caterpillar\u2019s revenue growth to the growth rate of the world\u2019s gross domestic product (GDP).<\/p>\n

\"\"<\/p>\n

Chart copyright Lombardi Publishing Corporation;
\nData source: World Bank & NASDAQ web sites, last accessed October 24, 2013.<\/p>\n

You can clearly see the relationship between the GDP of the global economy and Caterpillar\u2019s revenue growth\u2014they move very closely in line with each other.<\/p>\n

What\u2019s next?<\/p>\n

Not long ago, Caterpillar issued its third-quarter corporate earnings. The company\u2019s corporate earnings per share plummeted more than 42% compared to the same quarter a year ago\u2014$1.45 per share compared to $2.54 in the third quarter of 2012. Caterpillar\u2019s revenues plunged more than 18%, coming in at $13.42 billion compared to $16.44 billion in the third quarter of 2012. For fiscal year 2013, the company expects to have revenues of $11.0 billion less than the previous year\u2019s\u2014or 17% lower. (Source: Caterpillar Inc., October 23, 2013.)<\/p>\n

When I look at these two key indicators of the global economy, they are very convincing. The global economy is standing on the cusp of an economic slowdown.<\/p>\n

Sure, with the easy money policies of the past few years, the momentum for the stock market has been on the upside (\u201cdon\u2019t fight the Fed; don\u2019t fight the tape\u201d). But longer-term, companies on key stock indices, many of which earn a significant portion of their revenues from the global economy, will see their stock prices deteriorate as their revenues decline. There will come a point when the \u201cfinancial engineering\u201d many public companies are engaging in won\u2019t work anymore.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Michael Lombardi, MBA While the mainstream media and politicians are telling us the economy is improving\u2026key economic indicators point to a global economy headed the wrong way. The Baltic Dry Index is an indicator of demand in the global economy. If the Baltic Dry Index is declining, it means the global demand for goods … <\/p>\n

Continue reading “These Two Charts Show Global Economy Headed for Slowdown”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-43608","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/43608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=43608"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/43608\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=43608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=43608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=43608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}