Today let’s take a quick look at the markets and then a longer look at the world economy.
Crude oil topped at $84 last April. It fell all the way to $66 this week and then reversed. Today (Thursday) October crude rallied $1.84. A target of the most recent high at $78 seems reasonable. Gold rallied $42 and silver $1.25. A gap up on the PSLV chart suggests a very big move ahead. Stocks rallied today and may well do that into the FED meeting Sept 17-18. We remain bearish in the stock market. This next look at world economies bolsters the bear case. Here is a stroll through today’s Wall Street Journal.
VW’s problems mirror the problems of the German economy. VW is to Germany as Samsung is to South Korea. China now exports more machinery than Germany. And BYD is taking VW’s share in China. It used to be that when the U.S. got a cold the world got really sick. Now substitute China for the U.S.
The NEOM project in Saudi Arabia features a building destined to be 105 miles long. Injuries and insults from Wayne Borg CEO are causing lots of delays.
AMLO’s kiss goodbye in Mexico is to replace all federal judges. Never a model of a reliable legal system, this will only deter foreign investment.
The United Kingdom economy flatlined in July. The country has endured a decade of anemic growth.
Foreign investment is shying away from China. The growing list of problems, centered in real estate, will only grow more prominent in months ahead.
Enviva a producer of wood pellets filed for Chapter 11 bankruptcy. This is the latest green energy disaster. The pellets were supposed to be cleaner burning than coal. But Enviva cannot produce them for the promised cost.
Former high-flyer lululemon, maker of upscale women’s sports wear is in trouble. The stock price has fallen from $500 last December to $260 today. This is exactly the sort of stock performance one can expect across the Big Board the next two years.
They changed the name to Stellantis but it looks like the same old Chrysler to me. Chrysler was the third USA auto firm that managed to make a bit of money in the best of times and then go near bankrupt, which in fact it finally did. Market share has fallen from 10.4% to 8.4% from a year earlier. This kind of drop is very difficult to claw back. And there are more car makers for sale here than ever before.
PwC is laying off 1,800 U.S. workers. A Big Four accounting firm is in itself a pretty good economic indicator.
Ally Financial is a leading auto lender. Its stock fell 18% Tuesday. Overdue consumer car payments are up the last three months in a row, another casualty of higher interest rates and inflation.
Well, get the picture? The world is slowing down. The stock market usually predicts a slowdown six months in advance and that notice is now underway.
