You don’t have to be Nostradamus to know there’s going to be another stock market crash.

Indeed, on 6 October, Michael Burry, the famous hedge fund manager, posted on X: “the stock market is quite obviously in its first stage of grief, denial. Per 2000 and 2008, this stage lasts 6-9 months.” Is he right?

Seeing into the future

There are all sorts of financial indicators that people use to try and predict the timing of a market meltdown. Bond yield spreads, debt levels, and cyclically-adjusted price-to-earnings ratios are typical.

But what about the Cardboard Box Index? Apparently, it’s been mentioned by the former chair of the Federal Reserve, Alan Greenspan. The idea is that falling cardboard sales reveal a loss of consumer confidence, which could be a forward indicator of a recession and, in turn, might result in a stock market crash.

Indeed, a look at the chart of US paperboard sales shows there’s a reasonable (not perfect) correlation between falling demand for this type of packaging and an imminent downturn in the wider economy.

A closer look at the numbers reveals that sales have fallen during four of the past six quarters and seven of the last 10.

Of course, we’ll soon know how reliable this measure is. However, history tells us that there’s bound to be another market meltdown at some point.

Regardless of when it comes, there’s another FTSE 100 stock that has a vested interest in the sale of cardboard boxes and other types of packaging. How’s it doing?

A global reach

Mondi (LSE:MNDI) has over 100 production sites in 30 countries.

Its share price climbed rapidly at the end of July and into August, but since then, it’s been in steady decline. The initial optimism surrounding the publication of the group’s half-year results has faded.

Despite the positive reaction at the time, I didn’t think the results were particularly impressive. Although revenue increased, its earnings, margin, and return on capital employed all fell.

This follows three successive financial years where its underlying EBITDA (excluding changes in the value of its forestry assets) and margin have dropped:

• 2021: €1.157bn/16.6%
• 2022: €1.848bn/20.8%
• 2023: €1.201bn/16.4%
• 2024: €1.049bn/14.1%
• 2025: €1.001bn/13.1%

Initially, investors overlooked the uninspiring numbers and appeared to welcome a growing order book, rising paper prices, and significant cost savings. But this was short-lived. The group’s share price has tumbled approximately 20% since the start of August.

Yesterday (15 October), the group released its latest trading update, which was also disappointing. Underlying EBITDA in Q3 was €24m lower than for the previous quarter reflecting the impact of planned maintenance at some of its plants. A year earlier, it was €7m more.

Rising inflation remains a concern although the group was able to offset much of this by raising its prices. It reported “positive price momentum” and “good order books“.

My view

Personally, I think it’s a little premature to consider taking a stake in Mondi.

I’d like to see more evidence of a recovery before parting with may cash. To be honest, the Federal Reserve chart doesn’t fill me with a huge amount of confidence. Fortunately, there’s another growth stock that I think is far more exciting…

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James Beard does not hold any positions in the companies mentioned.