THE ONLY NEWS THAT MATTERS TODAY
The economy isn’t falling off a cliff just yet. FedEx raised their guidance this morning in a move that confirms much of the confounding economic strength we’ve seen in corporate earnings and recent data such as the rail freight traffic. This news comes on the heels of a very positive report from UPS just last week. These transports are key indicators of economic strength as they transport the majority of consumer related goods. FedEx was very upbeat in a report released this morning:
“Our revenue and earnings growth are exceeding original expectations, primarily due to better-than-anticipated growth in FedEx Express and FedEx Ground volumes. Our package volume growth rates in our first quarter are continuing at a pace similar to our fourth quarter. Of particular benefit to our earnings is the continued strong demand for our higher-margin FedEx International Priority® (IP) package and freight services, with IP package volumes expected to grow more than 20% again this quarter. Customers are favorably responding to our superior service offerings, the capabilities of our unparalleled global network and the best-in-market cut-off times we now offer from numerous points in Asia.”
Of course, when gauging the earnings game you have to consider the incredible ineptitude of the analyst community, however, this news is hard to be viewed as anything but a near-term positive.
Hi TPC … how much weight do you give to surprises in the Dow Transports? Would you say this is a situation like a month ago with State Street?
TPC,
I hope you are checkin the news out of China. They are reducing production of many metals my friend, gonna use those dollars to snap up resources is my bet.
Watch out for commodities in the next 10 years, but of course, nothing is for sho.
roger that,presc
Interesting times ahead boatman. Chinese don’t wanna get it stuck to them like iron ore producers are doing now, since China does not have that as a native resource.
It’s gonna get interesting I think. Companies with no debt and/or assets in the ground is what I’m looking at.
good luck to ya.
This weekend I was looking through some old notes on news near the 2007 market top:
10/26/07 the recurring theme is that strong global growth is more than making up for weak domestic growth, keeping earnings growing.
10/29/07 FDX: “While overall economic growth has slowed, there are several indicators for a healthy holiday season,” the company said in a statement. “The consumer remains steady and e-commerce will continue to drive holiday spending while sales of luxury goods and electronics should remain strong.”
10/31/07 Earnings news was good. Among others, Kraft (KFT 33.17, +0.57), Clorox (CLX 62.72, +1.72), MasterCard (MA 184.10, 26.95) and Newmont Mining (NEM 50.11, +3.66) topped expectations.
As you know, while 10/31/07 was not the exact top, prices have not recovered to that level in the last 2 years and 9 months. We have a tendency to project recent activity into the future, but leading indicators suggest that we will get negative “surprises” in measures of concurrent economic activity. Stock prices might continue to rise until the negative news reaches a tipping point. The question in my mind is, “What will trigger the stampede to the exits?”
Nice find. In fact, Oct 2007 was the artificial top solely because of the quadruple witching expiration f-job where they did an emergency 75 bps cut before the market opened. I remember that day so well….Dow was up 285 or so and just stayed there into expo.
Too bad that trick can’t be used again….
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aCqkVIlPUNno&pos=5
Short interest at 2 year low. Barton Biggs bullish again.
Biggs called the recent bottom with his actions by selling his US equities near the July bottom. Has his mad frenzy to buy back in after the run-up now signaled a nearing top?
Short interest being so low seems to be a (contrarian) bearish signal.
I thought that the death cross would have drawn in more shorts, so that a big short squeeze back to near 1200 could be orchastrated.
FedEx? Aren’t those the bastards that stranded Tom Hanks on that island?
yes, but at least they left him with Wilson
FedEx and UPS earnings are obviously positive short term, but don’t count on their guidance.
These businesses have very little visibility as there is no meaningful order backlog.
They rely mainly on publicly available information to make up their view of “holiday spending”.
That said looking at recent consumer confidence, retail sales and some alternative indicators like consumer metrics, there is just no “steady spending” visible.
http://www.consumerindexes.com/index.html
So Fedex is making a ton of money bringing in parcels from China. That is so incredibly bullish. Which Chinese companies should I buy???
Certainly over 7,700 bancrupcies of trucking companies since 1-1-2008 have boosted FDX/UPS. The exact # is not known but 7,700-/+ is what has been put out in trade publications.
http://www.reuters.com/article/idUSTRE61H4IT20100218
Good find.
touche’ of the week goes to in trucking