A Once-in-a-Lifetime Stock Buying Opportunity?

The recent plunge of the purchasing manager’s index (PMI) to its lowest level ever could be a sign it’s time for stock buying

Frank Holmes | April 8, 2020 | SmallCapPower: If it’s equities you’re looking for, there couldn’t be a better time than now to go bargain hunting. Business activity in the eurozone collapsed at the fastest rate ever recorded by IHS Markit in March. The composite purchasing manager’s index (PMI), which includes both the manufacturing and services sectors, plunged from 51.6 in February to 31.4, the lowest reading on record since the series began––lower even than during the global financial crisis.

(The following is an excerpt from an article originally published on usfunds.com on March 30, 2020)

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As a reminder, this is preliminary data. We’ll have the final PMI results on Wednesday, but I don’t expect to see much change.Take a look at the impact the virus may have on global fuel demand. IHS Markit has modeled out what it believes will be fuel consumption declines on a scale that’s never occurred before, due to widespread restrictions on travel that’s deeply affected commerce. Although this is a global pandemic, “demand destruction will be most severe in Europe and North America,” writes Rob Smith, director of IHS Markit’s Refining and Marketing group. In April, European and North American fuel demand could drop by half (or more!) compared to the same month in 2019.

“Most airlines are culling their flight schedule by upwards of 50 percent,” Smith says, “with most European airlines cancelling better than 90 percent of their flights. And speaking of Europe, commuter vehicle traffic in heavily affected cities like Milan, Paris and Madrid has fallen as much as 80 percent after lockdown measures took effect. Meanwhile, vehicle mileage in the U.S. is “only” expected to contract by 55 percent.”

“The global auto industry,” IHS Markit continues in a press release dated March 26, “is expected to witness an unprecedented and almost instant stalling of demand in 2020, with global auto sales forecast to plummet more than 12 percent from 2019, to 78.8 million units.”

As I said earlier, these could be attractive buying opportunities!

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