Articles About Global Outlook
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We just returned from WEFTEC — the premier U.S. water and wastewater management show. Our recent discussion (Game Changer) highlighted the negative impact of low oil prices.
Third-quarter earnings confirmed the worst-case scenario — plunging oil prices are whacking almost the entire industrial sector. The theme is hardly new, as the pattern of our headlines has revealed over the past fifteen or so months:
Our “Batten Down The Hatches” call proved timely as the market sold off by about (10 percent) before staging a partial recovery
Third-quarter earnings are confirming the worst-case scenario, i.e. — not only are energy related end markets in a downturn, but conditions continue to worsen.
We anticipate no substantive improvement in manufacturing activity. Not in the U.S. or internationally. If anything, headwinds may have become slightly more pronounced because a U.S. — Iran “deal” that everybody hates except a) the Iranian government and b) the Obama administration will result in the release of Iranian oil supply back onto the global market. Oil had rallied from about $50 to $60 over the past month (I like round numbers), but has since roundtripped. Expect further, deeper capital spending cuts in the U.S. oil sector to continue affecting demand for large capital equipment.
First quarter results confirmed our view. Capital expenditures are being slashed in the oil sector, the stronger U.S. dollar is enabling Japanese machinery competitors to gain share in the Middle East and Latin America, and lower soft commodity prices translate into a continuing North American decline in demand for farm equipment.
I've always been a big fan of thunderstorms. I especially enjoy that quiet moment of anticipation right after you see a flash of lightning. There's a tension in the air, a sense of excitement. You know what's coming, and you wait for it...I feel like we're in that moment, right now. We're waiting for the boom.
Global economic activity remains good -- noise about China slowing, notwithstanding -- and despite the ObamaCare debacle, non-Christmas-related consumer spending looks pretty good. Europe is still Europe and China continues to grow 7-8 percent -- even as the government seeks to clamp down on its own shadow banking system. And India remains a mess.
The complete Industry News section from the June 2011 issue of Power Transmission Engineering.
Global economic demand remains solid - even if you couldn't tell by recent third-quarter results and despite all efforts by U.S. politicians of both political parties. Let's go through what happened and what is coming.