The Global Economy Is Taking a Wrong Turn
The global economy seems to be taking a very wrong turn. There could be an economic slowdown brewing, with the next few quarters potentially being very critical.
This dire prediction is not based on gut feelings. There’s a lot of data that suggests a global economic slowdown could be a reality much sooner than later.
For starters, look at what global companies are saying. Why? Because they see things becoming worse long before the economic data starts to show it. If they are pessimistic, it’s a sign that the global economy could suffer.
3M Hints Global Growth May Not Be as Strong
3M Co (NYSE:MMM) just reported a dismal financial performance, namely a sizable decline in sales. The company also lowered its profit guidance.
“We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves,” said CEO Mike Roman.
“As a result, we have stepped up additional actions – including restructuring – to drive productivity, reduce costs, and increase cash flow as we manage through challenges in some of our end markets.” (Source: “3M Reports First-Quarter 2019 Results,” 3M Co, April 25, 2019.)
In other words, 3M is facing a lot of challenges in key markets and expecting things to get worse. This is a warning sign that shouldn’t be ignored.
FedEx Suggests Dire Outlook for the Global Economy
Don’t for a second think that 3M is the only global giant warning about the global economy.
FedEx Corporation (NYSE:FDX) isn’t holding back either. It is outright warning that things could get really ugly in the global economy.
Not too long ago, the company reported its financial results for the third quarter of its fiscal year 2019.
“Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,” said Alan B. Graf, Jr., Executive Vice President and Chief Financial Officer of FedEx Corporation.
“We have launched our voluntary employee buyout program, constrained our hiring, are limiting discretionary spending and are reviewing additional actions to mitigate the lower-than-expected revenue trends.” (Source: “FedEx Corp. Reports Third Quarter Results,” FedEx Corporation, March 19, 2019.)
What Happens if Global Growth Slows?
The list of companies warning about a global economic slowdown continues to get bigger. The mainstream may have you convinced that nothing is wrong and that everything is under control, but don’t get too complacent.
I can’t stress this enough: if the global economy suffers, the stock market will suffer.
Look at it this way: on the day 3M reported its financial results for the recent quarter and warned about hardships in key markets, the company’s stock price tumbled over 12%. Meanwhile, FedEx stock trades at roughly 30% below its highs made in 2018.
What do you think will happen if problems in the global economy persist? It could cause the entire stock market to drop.
Investors beware. Slowing global growth could be the catalyst for the next stock market crash.