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Six Warning Signs That The Economy Is In Trouble
Submitted by Tony Sagami via MauldinEconomics.com,
On July 14, I wrote about the danger developing in the transportation sector, and things are looking even worse today. Here’s what I mean:
Look Out Below #1: Royal Dutch Shell reported its quarterly results last week—$3.4 billion, down from $5.1 billion for the same quarter a year ago—and warned that “today’s oil price downturn could last for several years.”
In anticipation of tough times, Shell slashed its 2015 capital expenditure budget by 20% and is going to lay off 6,500 high-paying jobs (not Burger King-type jobs) this year.
Look Out Below #2: UPS is a very good barometer of the consumer end of our economy: It’s the largest component of the Dow Jones Transportation Average both by sales and market valuation.
And UPS isn’t very confident about the US economy. Here is what UPS CEO David Abney said in a recent conference call with analysts:
If you just look at in [sic] January, the GDP forecast we thought was going to be about 3.1%. Now the thinking in July is about 2.3%, so let’s say a pretty significant decrease.
Why so glum?
The continued strength of the US dollar and I think this impending rate hike by the Fed appears to be holding back some US growth.
Abney has good reason to complain: UPS’s revenue fell 1.2% over the last 12 months. Not good.
Look Out Below #3: Rolls Royce may be best known for its luxury limousines, but the heart of its business is making engines for jet airplanes. Along with General Electric, the company dominates the aerospace engine business.
Business isn’t so good. Rolls Royce just issued its fourth profit warning in the last year and a half and is shutting down its $1.56 billion share buyback, introduced a year ago, to conserve cash.
The problem? Weak demand for its jet engines.
Hey, if Rolls Royce doesn’t want to buy its own stock… why should you?
Look Out Below #4: The reason Rolls Royce is suffering is that the airborne freight market is shrinking. While the passenger cabins you and I sit in may be full, the belly of the plane where the cargo freight is held is growing increasingly empty.
The International Air Transport Association (IATA) reported that air freight load factors have dropped to lows not seen since 2009.
“The expansion in volumes we saw in 2014 has ground to a halt, and load factors are falling… we have to recognize that business confidence is flat and export orders in decline,” said the CEO of IATA, Tony Tyler.
Look Out Below #5: The trans-ocean freight business isn’t doing any better; the number of idle container ships has increased two months in a row.
The number of idle ships (over 500 20-foot-equivalent units) has jumped from 82 to 108. Yup… business is so bad that the owners of 108 ships don’t have any business whatsoever.
“The traditional peak summer season has so far failed to provide a boost to vessel demand, as the weak cargo outlook is forcing carriers to cut back on their capacity deployment plans,” reported Alphaliner, a container shipping watchdog.
Look Out Below #6: The reason why all these transportation companies are struggling is that global trade is simply shrinking.
Moreover, world trade is falling at the fastest pace we’ve seen since the last financial crisis. Global trade shrank 1.2% in May from the previous month, and the little-followed World Trade index (which tracks import and export volume) fell to 135.1 in May.
Look, transportation companies prosper when the economy is rocking and rolling. However, they are among the first to feel a business slowdown when things turn downward.
My bashing of the transportation industry is just as much of a warning about the overall economy as transportation stocks. Do you have a contingency plan to protect your portfolio when things turn ugly?
The best time to prepare for trouble... is before trouble arrives.
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Prep now! - "It wan't raining when Noah built the ark."
If you believe that fairytale
you are referring to the FED monitary policy of course
Looks like 7 people believe the Noahs ark story.
SMDH , America is doomed with these imbeciles.
Trouble is Rolls-Royce cars belongs to BMW who build the KD units in Regensburg in Bavaria to be screwed together at Goodwood in England. R-R jet engines is a separate company and I doubt you will be buying a new Trent engine every year ! Their orders are down because of Airbus and the wonders of the Pentagon and its F-35 white elephant dropping the alternate engine supplier to save money on the Flying Albatross
… and the automobile business has not been a part of the aircraft engine manufacturer Rolls-Royce since 1973.
I believe the bits for Rolls Royce cars are made at Dingolfing and Landshut before being sent to Goodwood for Ikea style assembly.
Nothing to see here folks
Obama is giving Irani 150 billion, shutting down all the coal fired power plants, funding ISIS, and his DOJ is soon to begin investigating the group that is publishing undercover videos of the Planned Parenthood abortion mills.
Everything is awesome.
Support the DNC - Abort a viable Black baby
The fudgepacker needs its azzhoe roto rooted
It's those 'Chicken Little-Types' over there at Zero Hedge.
If you don't like the economy buy stocks, its a no brainer.
And "Jeb!" looks to further his campaign by selling guacamole bowls... The economy is saved!
https://jeb2016.com/shop/lifestyle/guaca-bowle/
Guaca BowleJeb and Columba love whipping up guacamole on Sunday Funday. Now, you can get in on the act with this “Guaca Bowle.” Jeb’s secret guacamole recipe not included…yet.
Standard Disclaimer: You can not make this shit up.
What's wrong with you people? I turned on the television this morning and everything was awesome. Fools.
2 things: I agree that these signs are not good. Of course. BUT I still think that reading graphs in this way is a bit generic. simplistic and even dangerous. It's a bit too much to summarize the world economy in 6 graphs and 10 lines sentence. Come on...
The fact that the economy is going slower, doesn't mean that the whole world is screwed...It might means that...but it might not!
I think we should not panic but carefully look at more trends, join discussions, read articles, then eventually, we can say: ok we are done.
This is my opinion.
The above opinion was brought to you by "Deer In The Headlights Employment Relations, LLC"...
Standard Disclaimer: Are you really paying attention?
I am not following you...
THAT is classic Tyler Durden drunken rant.
All I am saying is, I would not panic for something that it's not fully understandable. in My life (engineer) I understood that before to open the mouth you need to be extra sure about what you see and how you iterpret it (avoid ambiguities is key).Sometime what we see is not what it's happening. And After so many years of crisis I also understood that whatever we think and whatever experts say, you should not trust anyone with judgements. Otherwise every person who write stuff like this should be rich. right?
Now, with this clear, I am not sayind that the world is happy oh yeah let's spend money..but I am a bit sick of having to panic because of this fricking economy. The economy is collapsing. GOOD. At least we start all from 0.
Dude, what?
He means if it is the end of corruption and psychopath banker-leaders, let the system die.
I got that part, but he's all over the map otherwise.
Sheep. Prepare to be sheared.
Spoken like a true American.
I am not from US. I am Italian living in the Netherlands with part of my family spread over US, Australia and Russia. So...sorry if I say it, but it's quite important to me that we all leave in harmony and avoid conflicts..of any type.
I know you people would love to see Russia throwing a bomb on NY...but that would be very sad for the entire world. It would not be different from US and Japan during the second world war. People who wants this are only idiots.
America is run by psychopaths and many Americans are psychopaths who love war but never have experienced real war,................YET. but the time will come , and then its a whole new ballgame.
Americans bombed Dresden and killed 25,000 people overnight. Dresden had NO military significance.
Americans dropped 2 A-bombs on Japan when Japan was ready to surrender anyway,
America started to bully the world in 1945 after WW2 and they haven't stopped. But bulllies sooner or later ALWAYS get their comeuppance. This is an absolute. Its only been a short 70 years. The future will be severe for the USA. Smart people know it and are getting out.
Do us a favor and try to spread that sentiment worldwide, ok?
Another bellwether of Ponzi Casino Capitalist demise is rearing it's ugly face in the midst of the largest stock market inflation that has ever existed in the modern World. Moreover, when the Ponzi can no longer be serviced it will implode. When it implodes, it will implode in less than 48 hours leaving NO time whatsoever for people to prepare their next move out of harms way.
Frankly, I know that I can run the TBTF banks into the ground now, and that's exactly where they are heading in short order. Furthermore, I fully believe that Lloyd Blankfein, and Jamie Dimon, are on their way out within weeks from now.
Goldman Sachs is going down, and so is JPMorgan Chase, mark my words, Z/H.
Would you by any chance be Sai Baba?
https://en.wikipedia.org/wiki/Sathya_Sai_Baba
Nyet.
I'm adept at REVERSE ENGINEERING.
Will you be shorting them into oblivion?
They have unwittingly shorted themselves due to the fact that they don't know how the system works against every move they make no matter what moves they make. In brief, GS & JPM, don't understand the structural landscape, or the fallout from years of Quants making bets on the future via static measures that had never been calibrated for tolerance on risk. A best guess at the future led them down the garden path to Ponzi Purgatory & Hell IMO.
And how will this impact the IRS, oh great one?
It will impact the IRS up the financial wazzzooo. And that's exactly where the IRS needs to take it given the bitch they have become over the years.
Up yours, IRS, I'm Canadian, motherfuckers.
"The Economy Is In TrouBubble"
America was totally fucked when the dumb black muslim won
...you left out Kenyan, Amurika hating, CIA Manchurian candidate, and gay (not that there's anything wrong with that.)
I would add wookie-beard-wearing community shuckster, but that's just me
I never heard anyone describe Donald Trump that way
wow, gay is so wonderful, hope all your kids are - bye bye you
Wow, ignorance abounds. You REALLY think he calls the shots? Bankster class is the enemy. But you focus on color? You are stooge...
No worries, investment in solar and wind generated energy will save us, the planet, and the economy. Old white people ruined this world, but Black people are going to save it.
"Remember there is History and then there is Black History."
Save it for what? It's been proven over and over again they can only destroy stuff when concentrated in large numbers. Drunken white college kids burn stuff down too, but there is a discernable lack of "rage" in their antics. You could argue the poverty angle as well, but I don't see them rioting in West Virginia, where they are just as poor as those stuck in the urban ghettos.
Oh, I missed the implied sarcasm in your comment. Nevermind.
Tell that to the people of Iraq, Ukraine and Syria Badger.
They don't seem to appreciate /sarc very much, I mean, it's just foreign policy!!! LOL, right?
Actually de-centralized power could save us. As well as de-centralized food production.
Meanwhile we are all niggers now. Well...except you, of course. You are late for your KKK meeting.
It's all about the Nasdaq - it is the last shoe that needs dropping before the "fall". All else is broken.
---------> Dow 20,000
---------> Dow 17,400
---------> Dow 4,000
#7 NQ going up 1.5% per day. Game over man.
A dying middle class?
The investor class is all we need, right?
Sounds like companies are starting to feel the pinch. Good.
Let's see what another 6 months of declining sales does. A few more employee purges...At some point a whole bunch of CEO's are going to realize what they've done to their golden goose. Then it will start to become very entertaining as the desperate scramble ensues...
And since the taxpayers don't HAVE the money, it doesn't matter that Congress passed this or that...There won't BE any more bailouts.
The seventh warning sign is the S&P's sideways action all year. Sideways, in the vicinity of last May's all-time high, which was the result of the biggest pump in history, off '09's lows.
Could be a bull flag. If so, the bulls gotta return to taking it straight up. No corrections allowed, and the sooner the better.
If they don't, I hope you're ready for the biggest dump in history. The likelihood of the support levels holding, anywhere south of 1800 and the '01/'09 lows; I'd put the odds between slim and none.
yes, round or near-round trip is definitely doable....look at commodities; and there is more leverage across all equity markets. margin plus portfolio loan accounts are $700B or higher.
Do you think it will be this year? I know many saavy people do, just wondered if you share the sentiment.
DC has a plan. A secret plan. But a plan.
http://www.hazardexonthenet.net/article/98450/Blast-at-US-Government-fac...
Who out here in reality-land needs this (or any) article telling us how bad things are and that it's getting worse? And I notice author's worries are about high-N-mighty friends (or clients)? Seriously, who cares?
WHERE’S THERE A CRASH? WORLD ECONOMY COLLAPSING!!!
HEADLINES JULY 2015 http://forum.prisonplanet.com/index.php?topic=100571.msg1532133#msg1532133
Hey
My dentist is having a special this month on hollow teeth with cyanide in them.
You can be the first Hermann Goering on your block.
Is this the new sleep dentistry I keep hearing about?
Actually it's called 'Sleep perchance to dream" dentistry.
It eliminates, cavities, root canals and extractions. Payment is optional.
Thanks to QE ad infinitum, money is concentrated in the upper 0.5%. And it doesn't trickle down. Hence TROUBLE!!!!
Is it just me or do those auto load ads make zero hedge almost impossible to read on my iPhone, Safari?
I had that problem on an older Windows PC before I blocked all the ad sites. Now my experience is much nicer. Don't know how you can do that on the iPhone though, unless you jailbreak it.
Look up "ad block plus"
get ad blocker, it really helps...
And for the seventh warning sign God dumped all pretense that the global economy could be saved from the decimation of demand that the 1% had wreaked upon humanity with all their lay offs, firings, wage reductions and counterproductive sanctions.
And God saw that it was good so He turned his attention to the wily serpent He put into the White House.
0) It takes more joules to acquire the fuel civilization unequivocally requires, on a continuous basis, to exist than the amount of usable joules in the acquired fuel; without said joules, said civilization is instantaneously revealed to be not an asset but a tremendous liability.
own physical gold bullion... remove 90% of the stress this shit economy heaps on you
www.teamramgold.com
Ad Block is browser specific.
If you have an iPhone, you can install adblock for your Safari browser on your other device and sync your phone to that device, if you haven't already set up a cloud synch.
You can install Ad Block on chrome and it will block adverts on your android as well.
It makes all the difference.
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
"Abney has good reason to complain: UPS’s revenue fell 1.2% over the last 12 months. Not good."
WTF? -1.2% is now considered "good reason to complain"? Really? A stock price can't have a 1.2% pullback without there being a concern? Ok, batten down the hatches cause this thing when it goes is going to have people running in the streets in panic....
Except of course the police will be in their military trucks enforcing some stock market imposed curfew....
Revenue does not equal stock price. Companies have revenue increases or decreases and the stock can do the opposite, based on perceived outlook. 1.2% does not seem like a lot, but if it becomes a trend Y/Y then it's of great concern for logistics. Most companies that have low overhead can just layoff employees to compensate for lower revenue without much pain. For logistic based companies, you have to also lay off trucks and other equipment that's part of your capital revenue producing structure. Do you have any idea what it costs to have a bunch of trucks sit idle that you pay for monthly? Or really large ships, just sitting in dock? Or automated equipment handling lines, costing tens of millions, bought with loans?