FedEx results will shine light on economy

The package carrier is a leading indicator as investor focus returns to the domestic economy in the week ahead. Europe won't go away. The Fed will acknowledge a stronger economy. Best Buy, Joy Global, and Research In Motion report quarterly results.

By Charley Blaine Dec 9, 2011 10:56PM
Charley BlaineUpdated 3:10 a.m. ET Monday

Nobody -- except maybe the Germans and French -- likes the deal that is supposed to lead to a new world in Europe.

It's too focused on austerity. It's not clear if eurozone countries will be willing to give up some of the control of their domestic economies. The British certainly don't want any part of the deal.

But stocks rallied anyway Friday, with the Dow Jones industrials ($INDU) jumping some 187 points. Stocks may continue to rally in the coming week as domestic concerns take center stage again.

There's a big Federal Reserve meeting, several important economic reports and two widely anticipated initial public offerings. And one earnings report -- from package shipper FedEx (FDX) -- may shed some light on where the economy is headed.

FedEx expects its biggest day of the year on Monday as people and businesses rush to ship holiday packages. It reports fiscal-second-quarter results before Thursday's open, and its outlook for business in the United States and the world will be studied carefully.

Article continues below video.
Europe remains an issue and was weighing on trading in stock index futures early Monday. Moody's Investors Service said the apparent deal doesn't change anything and doesn’t diminish the risk of credit-ranking revisions. Decisions on the credit ratings on all eurozone countries could come in the first quarter, Moody’s said.

Why FedEx matters
When FedEx and its rival, United Parcel Service (UPS), see package volumes jump, that's bullish for the economy.

What FedEx and UPS have seen in recent quarters is lots of growth in business between the United States and Asia and modest growth in the U.S., which has struggled through a recession and a slowing economy.

But watch how FedEx phrases its guidance because it's raising prices 4.9% as of Jan 2. Listen to how it sees package volume growth. That will offer a sense of whether the uptick the domestic economy has seen will have strength.

FedEx stock has had a big fourth quarter, rising some 15%. For the year, it's down 10.3% after a third quarter that saw the shares sink 28.7%.

Analysts expect $1.52 a share in earnings, up from $1.16 a year  ago. Revenue is expected to rise 13.7% to $10.6 billion.

Markets for the week



12/9/2011

12/2/2011

% chg.

YTD chg.
Dow Industrials

12,184.26

12,019.42

1.37%

5.24%
S&P 500

1,255.19

1,244.28

0.88%

-0.19%
Nasdaq 

2,646.85

2,626.93

0.76%

-0.23%
Russell 2000

745.21

735.02

1.39%

-4.91%
Crude oil 

$98.68

$100.96

-2.26%

7.99%
(per barrel)











U.S. Dollar Index 

78.68

78.73

-0.06%

-0.77%
10-yr. Treasury

2.05%

2.04%

0.49%

-37.91%
Gold

$1,716.80

1,751.30

-1.97%

20.78%

Here are the other key events for the week.

Initial public offerings: 12 are due in the coming week, according to Renaissance Capital.The biggest are a deal expected to raise at least $100 million from online-game developer Zynga, which will trade with the ticker ZNGA,and upscale fashion retailer Michael Kors, which will trade with the ticker KORS. Kors is seen raising about $42 million. 

Tuesday: Earnings from Best Buy (BBY), financial-research vendor FactSet Research Systems (FDS) and education services vendor Learning Tree International (LTRE). Best Buy will command a lot of attention because it has emphasized electronics and has been struggling in the last few years.

Wednesday: Mining equipment maker Joy Global (JOYG) and payments authorizer Verifone Systems (PAY).

Thursday: In addition to FedEx, there are reports due from consulting giant Accenture (ACN), Adobe Systems (ADBE), credit-card company Discover Financial (DFS), Pier 1 Imports (PIR) and Research In Motion (RIMM).

Pier 1 raised its third-quarter earnings guidance to a range of 20 to 21 cents a share. It had previously projected 18 cents a share.  Shares are up 31% this year.

Research In Motion is under tremendous competitive pressure from Apple's (AAPL) iPhone and phones using Google's (GOOG) Android platform. Shares are down 72% this year alone.

The Fed and other reports
The Fed rate-making body, the Federal Open Market Committee, meets Tuesday to discuss interest rates and policy changes it might make to boost the economy.

It will concede that the economic data have improved of late. Private-sector employment has been growing, and jobless claims are below 400,000. Retail and auto sales are improving. Manufacturing continues to be fairly strong.

The weak link will be that job growth is anemic at best, and housing continues to struggle under the weight of heavy foreclosures.

It will leave its key federal funds rate at 0% to 0.25%. It may discuss another round quantitative easing -- buying securities to boost the economy. But don't expect a lot of action.

Also due in the week ahead:
Retail sales for November, due Tuesday from the Commerce Department. Look for a decent gain, set up by the Black Friday holiday shopping.

Jobless claims for the week of Dec. 10, due Thursday from the Labor Department. Look for some improvement, helped by staffing for holiday shopping.

Producer Price Index for November, due Thursday from the Labor Department. Inflation pressures are easing, IHS Global Insight says. Look for 0.2% heading growth and 0.1% core growth.

Industrial production for November, due Thursday from the Commerce Department. Look for a small gain, if only because automakers had a big month in October.

Empire State and Philadelphia Fed manufacturing surveys, due Thursday from the Federal Reserve Banks of New York and Philadelphia. These should show some modest growth from the lows of the summer.

Consumer Price Index for November, due Friday from the Labor Department. Look for a small headline loss, due to lower gasoline prices.
55Comments
Dec 12, 2011 5:07AM
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The stock market is a rip off and the system is broken beyond repair.  Nothing but crooks trying to clean us out! They should all be put on trial for treason!
Dec 10, 2011 3:35AM
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I think some of the shipping numbers might be high as well, because they are buying stuff cheap from online sales.  Especially phone and other electronics that require subscriptions, they get it off discount or even free with expectation to have service on their device.  And other items are being bought from ebay and the like.  Essentially, higher shipping volumes doesn't really mean people are spending lots of money, it just means they're finding better deals online direct with the manufacturer, or special deals from service providers etc or even buying trade in items from ebay and craig's list etc.  So shipping volume may be becoming a misleading indicator.

Dec 10, 2011 1:39AM
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The sale of double or single sheet toilet paper gives a much better outlook. Believe it. Think about it. Look into it for yourselves.
Dec 11, 2011 8:01PM
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PizzaDuring the Republican debate, Bachmann was upset that 47% of Americans pay no federal income tax, but she fails to see that the Reagan tax cuts are why the poor don't qualify to pay taxes. It's a little ironic that the Tea Party anti tax candidate wants a tax hike on 47% of the population, I thought the Tea Party was against tax hikes. Instead of hating on the poor Bachmann should be upset that 47% of Americans are so poor and Her focus should be on getting these folks out of poverty and into a higher tax bracket so they can contribute.Party
Dec 12, 2011 5:28AM
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The Fed keeps diluting the value of the dollar in order to play global sheriff, we need to stop it. Americans pay for Europe and are out of work because of China. That´s about average Americans only, the ultra-rich are the ones behind it and their profits have been increasing every year. "markcastle" who wrote below is 100% right, but not only Wall Streeters should be put on trial but also Bernanke.
Dec 10, 2011 11:12PM
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I WORKED FOR THIS COMPANY FOR 23 YEARS  I WAS FIRED FOR BUYING PELLETS ON MY LUNCH BREAK TO HEAT MY HOME FOR MY THEN 11 YEAR OLD SON AND I  I NEVER HAD A WARNING LETTER, WAS NEVER A SECOND LATE TO WORK AND HAD NATIONAL AWARDS THIS COMPANY DIDNT DO A THING TO HELP OUT A VALUED EMPLOYEE I MET FRED SMITH  5 TIMES HE SAID WE WERE THE BACKBONE OF THE COMPANY I GUESS IT WAS ALL LIES   BUT THE BEST THING WAS THE GUY THAT FIRED ME WAS CAUGHT STEALING GAS AND WAS GIVEN ANOTHER CHANCE BECAUSE I TOLD MY BOSS HE WOULDNT DO IT AGAIN  THEN HE FIRED ME A FEW YEARS LATER I LOST ANY RESPECT FOR THIS COMPANY AFTER THIS AND IF YOU ALL MUST KNOW THE BOTTOM LINE IS MONEY THEY DONT CARE ABOUT YOUR PACKAGES  MONEY  MONEY AND MORE MONEY  THEY TREAT THERE WORKS LIKE CRAP    23 YEARS AND TO BE FIRED BECAUSE I USED THERE VAN TO TRANSPORT 10 BAGS OF PELLETS EVEN THOUGH I WAS ON MY LUNCH BREAK     SO USE THE POST OFFICE AND LET THESE GREEDY MONEY HUNGRY  PEOPLE  GET WHAT THEY DESERVE
Dec 10, 2011 10:00PM
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Thumbs up nice post chlodo ..

 

"Weakness in the demand for goods and services is the principal restraint on hiring"

 

i would only add that a second principal restraint is that many US companies have moved their production overseas.  it is time to incentivize them to bring the jobs home with tax credits for domestic employment and a surtax for every job located overseas ...

 

these greedy corporate behemoths understand only that which hits them in their wallets ...

Dec 11, 2011 12:57AM
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Martini glassPeople pick stocks carefully after examining their track record, why do people vote like their rooting for a football team. Take time this Holiday season and track your teams real success. Have they done what they promised or did they do the opposite. Did they grow government when they had the opportunity to shrink it, did they over spend when they had opportunity to cut back, did they increase our boarder patrol when they controlled all Houses, did they reduce the debt as promised or balance the budget as promised during their campaigns or is my team a big lie.Broken heart
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OK - What would FedEx and UPS be charging if the USPS were out of business? And would anyone use them then? While buying and then shipping does mean a lot to the economy what would really mean more is if the CEO's got off their duffs and hired Americans with the excess cash they have been piling up. You have to spread the money around if you want it to come back to you ten fold. That my friends is the whole issue in a nutshell.

 

There is no confidence of leadership in fact there are no leaders in America to speak of. Hire American Buy American and grow and prosper. Fire American for stashing profits will only bring doom to all.

Dec 11, 2011 12:45AM
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Everything I buy comes UPS what the hell does FED X know.
Dec 11, 2011 7:05PM
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HotMirage-- I believe in a small efficient government that pays their bills instead of passing the buck to our children. So what reason would I have to vote Republican, Reaganomics increases the poverty rate which pushes more people onto entitlement programs and grows government costing everybody more, Reaganomics relies on borrowing money from China to pay for millionaire tax cuts and skyrockets our debt in order to create the illusion or mirage of prosperity. When republicans held all the Houses they increased government size by 70% adding No Child left behind, Medicare drug program increasing entitlements 60 billion per year, Home land security 50 billion per year and they ran around the world spending two trillion dollars in an attempt to kill two people and then to pay for their expeditions around the world they cut taxes increasing out debt further. Reaganomics created about 18 million jobs in 20 years, Clintonomics created 22.7 million jobs in 8 years, reduced government by 400,000 employee's saving money and making government more efficient, while balancing our budget in four years and reducing our debt by about 12%, putting the U.S. on track to pay the debt off by 2014. With 20 years of Clintonomics we could have potentially created 56 million jobs instead of the 18 mil by Reaganomics, when you do your home work, the Clintonomics that Obama's trying to get though our obstructive Congress in clearly the best choice for the American people.Nerd
Dec 11, 2011 7:10PM
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Surprised good outrage and post old man.  look at the AP newswire today ... internet sales for the holidays are up 15% as the upper classes party on due their wealth shift and tax welfare system (as an example they pay ZERO PERCENT on the first $69,500 of capital gains from stock sales even if they make $200 million in income for 2011 and 2012).

 

they can afford millions for defense spending and they can block insider-trading reform for congress so they can continue to make their millions, but they can't give a subsidy for heating oil to the working poor who they have thrown out of work by letting the big corporations pay them off with lobbyist money to move jobs overseas and block all infrastructure work to "stop obama" by further killing the economy.  it is truly sickening sir - may God keep you for the winter .... 

Dec 11, 2011 11:55AM
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2 possible outcomes: if Europe enforces what they started to agree on last Friday, the world will go thru a big recession. If they don´t, it´s business as usual and the sovereign debt crisis goes on. In the US, it´s all about presidential elections next year. No decent creation of jobs while the country practices a "free trade" policy with China, that still has much cheaper producing costs in a state-controlled economy. For the US, while it doesn´t gather the political conditions to properly address this situation, what´s left is only moron Bernanke itching to print like crazy.
Dec 11, 2011 8:47PM
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The proposed EU financial transaction tax (FTT) would be separate from a bank levy, or a resolution levy, which some governments are also proposing to impose on banks to insure them against the costs of any future bailouts. The tax .10% tax of all financial stock) transactions and .01% on derivatioves could raise 57 billion Euros ($78 USD) per year remains controversial among EU member states especially the UK.
Smile The US had a FTT from 1914 to 1966 of .1% stock issuance and .04% transfer. Today it's .0034% and raise $1.6 billion a year for support of SEC and other regulatory bodies. It sure would slow down the automated trading if there was a .1% or higher tax. Ya can hear the Wall Street lobbyists yelling now.
Dec 11, 2011 3:02PM
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What the US needs is stopping helping other countries at the same time that this policy has led the US itself to a fragile position. And the poor Chinese are laughing. Just a couple of weeks ago Bernanke extended our credit to any European bank, all this on the people of America. End the Fed, vote Ron Paul !
Dec 10, 2011 12:09PM
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My focus is still on Europe. What happens in Europe is what will most effect the global economy, including the United States. The European situation really has not changes despite Friday's summit(Dec.9th). All the analysis from a half dozen sources concludes Friday's agreement really did nothing to solve the sovereign debt issues in Europe.

 

Dec 11, 2011 8:21PM
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Disappointed and so it begins .....

 

ROME (AP) - Italian union leaders say they are going ahead with their call for a general strike Monday to protest pension reforms that are part of Premier Mario Monti's rescue package to save Italy from financial disaster.

Monti held talks Sunday night with the leaders of Italy's main labor confederations at the premier's office. Afterward, CGIL union leader Susanna Camusso told reporters that the strike was going ahead because Monti made only a "generic" commitment to look into their demands.

CISL labor confederation leader Raffaele Bonanni says the unions agree with Monti that Italy's facing a "grave" crisis but insist that the austerity measures should be fairer. The measures include drastically overhauling Italy's generous pension system, raising some taxes and reviving a home property tax.

 

just wait until the mafia families go on strike ... stay low and indoors you technocrats ....

Dec 11, 2011 7:19PM
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I don't know quite the miserly scrooge aren't we?  and with zero understanding as to how even the best trained workers can slip into need due to mental/physical health issues, the death or incapacity of the main breadwinner, a scam or theft that guts financial resources, heavy family medical bills not paid for by insurance, an incapacitating accident, the movement of all available jobs overseas, and any of the other many vagaries of life that can cause a good worker or an elderly person to fall upon hardship and need some assistance to get back on their feet. 

 

the average federal subsidy (assistance) was a TOTAL OF $800 per family last year.  "free"???  welfare???  how under informed can one person be??

 

but don't even research any of that until you first start by reading the Good Book sir, start by reading .... and prayer ... "whatever you do for the least of these" ....  <><

Dec 11, 2011 12:08AM
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as long as oil speculators run up oil and gas fed x will have to raise prices too its so sad that we half to be hostage to these greedy bastards
Dec 10, 2011 8:45PM
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In 2009, the U.S. led a global drive to increase the International Monetary Fund’s firepower to help pull the world out of recession, pitching in $100 billion. This time, it’s a bystander in a similar effort to counter the European debt crisis.
Hot Hell yes we led it because we'd just caused the world a real lot of hurt with our criminal banking and hedge funds spreading $6 trillion of securitized home loan debt around the world. But there's no way we're leading it this time to bail out $3 trillion of socialized EU debt spread around the world. We'll lead it again in 2015 when we have to cover our $6 trillion of defense and welfare debt we've spread around the world. Maybe China should just buy California and Italy?
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