McDonald’s Corporation (NYSE:MCD) should have a lot of people hoping their recently trademarked McBrunch can turn around the fast food giant’s flagging sales (although a McDonald’s Corporation (NYSE:MCD) spokesperson has said there’s nothing to see there), or we might all be the worse for it.
Investor Marc Faber of the Gloom, Boom & Doom Report sees a lot of gloom in McDonald’s Corporation (NYSE:MCD)’s results, and maybe even a wee bit of doom. But more so, he sees their struggles as a reflection of the global economy as a whole, and the overall state it’s in. He spoke with CNBC yesterday about his theories.
“Now McDonald’s is a very good indicator of the global economy. If McDonald’s doesn’t increase its sales, it tells you that the monetary policies have largely failed in the sense that prices are going up more than disposable income, and so people have less purchasing power,” Faber said.
Faber surmises that the market is currently in a late-stage rally and that a bear market is looming in the near future, with a 20% to 30% correction. Faber suspects the credit market will weaken next in the lead-up to the bear market, following the weakening of the high yield and junk bond markets already. Faber predicts the market will begin to go down in October and November. As he points out, new highs are rapidly diminishing at record rates, while 12-month lows are increasing, highlighting how poor the current technicals of the market are.
As for McDonald’s Corporation (NYSE:MCD), things can’t get a whole lot worse for the fast-food giant. Same-store sales have been level globally, and down 1% to 1.5% in mature markets, and the company has recently been subjected to scandals involving food safety in China, and sanitary concerns in Russia, where five restaurants were temporarily shut down.
McDonald’s Corporation (NYSE:MCD) stock reached its 52-week low (that important indicator of Faber’s) on Wednesday, before rebounding over the past two days. It is up 0.95% so far today in early trading, to $93.84. For the 52-week period, the stock is down 3.57%.