The Zacks Analyst Blog Highlights: Archer Daniels Midland, Molina Healthcare, Eli Lilly, Spark Energy And Lamb Weston
Zacks Investment Research | Jan 23, 2019 10:50PM ET
For Immediate Release
Chicago, IL – January 24, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Archer Daniels Midland Company (NYSE:ADM) , Molina Healthcare, Inc. (NYSE:MOH) , Eli Lilly & Company (NYSE:LLY) , Spark Energy, Inc. (NASDAQ:SPKE) and Lamb Weston Holdings, Inc. (NYSE:LW) .
Here are highlights from Wednesday’s Analyst Blog:
Stocks to Prepare for a Global Economic Slowdown
On Jan 21, the International Monetary Fund (IMF) reduced its global economic forecasts for this year and the next. A slowdown in Europe and certain emerging markets, and the ongoing trade conflicts were cited as the major reasons for these cuts. The global lending agency also thinks a slowdown in China and a likely “No Deal” Brexit are the other factors causing a reduction in its projections.
The IMF’s fears were echoed by fresh official data released by China’s government. The world’s second-largest economy expanded at its slowest pace in 28 years in 2018, likely an outcome of the U.S.-China trade war.
With a global economic slowdown looking imminent, it makes sense to fortify your portfolio for such conditions. In such an event, demand for products and services generated by utilities, consumer staples and medical companies remain invariant. Investing in stocks from these sectors looks like a smart option.
IMF Reduces Global Forecasts for 2019 and 2020
The IMF has revised its global forecasts for 2019 and 2020 to 3.5% and 3.6%, respectively. These are 0.2% and 0.1% lower for respectively 2019 and 2020 than the projections released earlier in October. That this is the second such cut in three months is a cause for great concern. The IMF had made the last such reduction in October, citing the ongoing U.S.-China trade war as a major issue.
The latest cuts also acquire special significance since they were released ahead of the annual World Economic Forum, which began on Monday at Davos, Switzerland. Global policy leaders will now possibly have to discuss ways and means to cope with an end to an extended period of stable growth.
According to IMF Managing Director Christine Lagarde: “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising.” Lagarde has urged policymakers to prepare themselves for a “serious slowdown” by improving their economies’ ability to handle such risks.
China’s Economic Growth Slumps in 2018
Adding to global slowdown fears was the latest growth data released by China’s government, per which its economy expanded at 6.6% last year. This is the most sluggish pace experienced since 1990. Such a slump was in line with most analysts’ expectations, given that it is engaged in a protracted trade war with the United States.
And on Monday, Ning Jizhe, who heads China’s statistics bureau more or less confirmed such speculation. Speaking to reports, Ning said the trade war with the United States is weighing on the country’s economy. Of course, Ning also added that the resulting impact was manageable and the economy was being fueled by domestic demand.
A more plausible explanation is that China was facing an impending slowdown even before the trade war began in earnest. For some time now, Beijing has been trying to reduce surging debt levels without affecting growth significantly. China had prepared itself for a slower pace of expansion in any case, but the trade war has intensified its problems.
Our Choices
The latest reduction in global growth projections by the IMF is sending off alarm bells across the world. The global lender’s dim view of economic growth over the next two years is echoed by China’s latest growth figures, which indicate that a major slowdown is in the cards.
Investing in stocks whose demand remains invariant even during an all-encompassing slowdown looks prudent at this time. Picking utilities, consumer staples and medical stocks for your portfolios would be a good option. However, picking winning stocks may be difficult.
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