Early in May Freeport-McMoRan (NYSE:FCX) CEO Richard C. Adkerson said there was a lot of uncertainty still out there concerning the markets, and the longer the sovereign debt crisis goes on and economic news comes out of China, the more uncertainty that comes.
Some analysts are more optimistic. “There are headwinds, concerns both in Europe and in Asia that are making investors rethink their decisions and maybe take some profits, but I believe that the longer-term growth story remains intact,” said Michael Cuggino, who manages about $6 billion at Permanent Portfolio Funds. “I don’t think it’s a broader slowdown. I think it’s a correction.”
I think Cuggino is wrong. This isn't just a correction (although you could apply it to to some economic sector if you tried hard enough) there are just too many things out there to make this more than a simple correction.
Of course saying the longer-term growth story remains intact is something I agree with, but it covers too much territory to call it a correction.
The long-term effects that will come from the debt crisis in Europe and the slowdown in China is enough to confirm that, let alone the secondary effects emerging from that.
China has already changed the optimism and hopes of numerous companies who had been counting on their continued high level of growth to continue.
This doesn't mean there won't be growth in China, but assuming they don't have a bubble that bursts, their economy will still slow down from former expected levels of growth.
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