Daily Gains Letter issues a warning that large-scale slowdown could impede U.S. growth and key indices.
www.DailyGainsLetter.com), an e-letter published by Lombardi Publishing Corporation, a 27-year-old consumer publisher that has served over one million customers in 141 countries, is weighing in on key global economic indicators and cautioning that a sustained, large-scale slowdown could significantly impede both U.S. and international growth.— Daily Gains Letter (
“The global economy looks to be in trouble, as there may be an economic contraction on the horizon. If all the pieces of the puzzle fall into place, companies on key stock indices might face issues in delivering corporate earnings,” says financial analyst Moe Zulfiqar. “Many major global economies are witnessing an economic slowdown; it wouldn’t be a surprise to see the global economy cave in as a result.”
The eurozone, one of the biggest economic hubs, remains under severe scrutiny. In the third quarter, the area’s gross domestic product (GDP) declined to 0.1%, while in the second quarter, the GDP growth rate was just 0.3%. In particular, Greece, Spain, and Portugal are stuck in depression-like conditions; at the same time, the region’s economic leaders also face downward pressure. Germany’s third-quarter GDP growth rate came in at 0.3%, compared to the second quarter, which saw 0.7% GDP growth from the previous quarter. (Source: “Second estimate for the third quarter of 2013,” Eurostat web site, December 4, 2013; http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-04122013-BP/EN/2-04122013-BP-EN.PDF.)
According to Zulfiqar, Japan, the world’s third largest economy, continues to suffer, despite the unprecedented monetary policies enacted by the government and central bank to spur growth. Japan’s GDP growth rate was 0.9% in the second quarter and 0.5% in the third. (Source: Kajimoto, T. and White, S., “Japan third quarter GDP slows, consumption expected to pick up again,” Reuters web site, November 4, 2013; http://www.reuters.com/article/2013/11/14/us-japan-economy-gdp-idUSBRE9AD01620131114.)
“Australia is facing economic headwinds as well. In the third quarter, Australia’s economy grew by only 0.6% from the previous quarter; the annual GDP growth rate of Australia registered at 2.3%. In the second quarter, the Australian economy grew 0.7% and the annual growth rate was 2.4%. (Source: Kewk, G., “Australia’s economic growth falling short,” The Sydney Morning Herald web site, December 4, 2013; http://www.smh.com.au/business/the-economy/australias-economic-growth-falling-short-20131204-2yprt.html.)
“If the global economy continues to face economic headwinds, companies on the key stock indices here at home will see their sales and profits decline. That’s because a growing number of U.S. companies rely on exports,” Zulfiqar concludes. “Consider that in 2012, 46.6% of all the sales of the S&P 500 companies that report their global sales came from outside of the U.S. economy. In 2011, this number was 46.1%, and in 2010, it was 46.3%. Unfortunately, a lot of investors forget that companies trading on key stock indices rely heavily on the global economy, so any fluctuation in global demand will affect them.” (Source: “S&P 500 2012: Global Sales,” S&P Dow Jones Indices web site, August 2013; http://www.spindices.com/documents/research/sp-500-2012-global-sales.pdf.)
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