Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Looking for Hints on Where the Global Economy’s Headed? Watch These Stocks

Friday, September 20th, 2013
By for Profit Confidential

Looking for Hints on Where the Global Economy’s HeadedYou can learn a lot about the welfare of the global economy by looking at global bellwether stocks such as FedEx Corporation (NYSE/FDX), MasterCard Incorporated (NYSE/MA), and Visa Inc. (NYSE/V). These are the companies that tend to ebb and flow along with the action of the global economy, so I generally follow them as a benchmark for some of my market analysis.

FedEx just reported its fiscal 2014 first quarter (ended August 31, 2013) that saw the delivery company beat the Thomson Financial consensus earnings-per-share (EPS) estimate by $0.03 per diluted share. Revenues expanded at 1.9% year-over-year. In my books, the revenue growth, while acceptable, does not suggest a boom in the global economy. The global economy is progressing along at a steady rate.

For 2014, FedEx is predicting EPS to expand at a rate of seven to 13% year-over-year. The estimate is based on U.S. gross domestic product (GDP) growth of 2.1% and 2.6% growth in the global economy. The assumptions are more or less in line with the Organisation for Economic Co-operation and Development (OECD) and International Monetary Fund (IMF) estimates, suggesting that the global economy will continue to grow at a moderate pace in 2014.

The positives of the moderate growth are that inflation likely won’t play a major factor and central banks around the world will maintain their record-low interest rates.

Now, if the assumptions are correct, I would expect the jobs market to improve and corporate revenues to rise, which are two key areas in my view. The U.S. GDP grew at 2.5% in the second quarter, so it looks like the expected growth is on target.

With this in mind, the official unemployment rate used by the U.S. Department of Labor could decline towards the seven-percent level and below in 2014, where we could begin to see speculation of interest rates edging higher. The Federal Reserve said rates will remain status quo until the unemployment rate falls to 6.5%, which likely won’t happen until late 2014 or 2015.

  • 100% Profit in Your Pocket Every 14 Days or Less with This Never-Ending Winning Streak

    Any stocks in your portfolio make you 100% or more this year? Let me tell you about 25 of them! In 2013, 25 of our positions reached gains in excess of 100% each. Average profit per pick at their high was 215.6%!

    Our 100% Letter could make you more money in 2014 than ever before! Learn about it here.

For the global economy, the key will be the progression in China and Europe. If China can drive its domestic consumption, and if Europe and the eurozone can recover from their recession, then we could see a rise in the growth in the global economy and the United States.

A key component to the growth will be consumer spending. Keep an eye on credit card companies such as MasterCard (set to report on October 28) and Visa to get a sense of this.

If the projections pan out, I would expect the stock market to edge higher in 2014, but driven more by stronger revenue and earnings growth than the easy money policies.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

George Leong - Financial Planner, ConsultantGeorge Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. Add George Leong to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.