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.
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.
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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.|
|U.S. Dollar Index||78.68||78.73||-0.06%||-0.77%|
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.
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.
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.
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. 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.
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.
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.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?
Endeavor, the 'cold statement' is called for... The person is stealing from me. He can go south and leave there. Why should I be robbed at tax collector point to provide him "Free" heat? I have to pay for my heat if I want it.
If you insist that government provide free heat what next? Free electric? Free water and sewer?
Who shall pay?
I think the problem is out of hand when people think they are 'entitled' to free heat.
That is why the country is broke. We keep trying to provide luxuries to everyone. What degree of free heat? 50 degrees, 60 degrees, 70 degrees, 80 degrees? Sorry, but this is not the duty of government to provide free heat.
Endeavor... Dr. Obama? The country already realizes what a snake oil salesman he is. The country understands the harm his socialist policies have already done. That is why 75% thing the country is on the wrong economic path.
It is the donkey party that persists in its attempts to Tax, Spend, Borrow and Debase our way to prosperity. The real people hurting are those in the inner city where unemployment is nearing 20%. Thanks "57 States"...
Heating assistance? You mean WELFARE? You mean to seize moeny/property from one group to give FREE assistance to another? Let those people FREEZE, the country would be better off. This socialism starts with the smallest of things...
You Sir, are not "ENTITLED" to heat. Get yourself a stove and go chop some wood. Better yet get a JOB and stop leeching off the rest of us!
ActiveRIA, interesting thoughts on the Republican debate... I have just one comment about your Ron Paul assessment. It is not Ron Paul out of the mainstream wanting smaller government and less government "solutions" (usually costy failures). It is the Donkey party led by the socialist-in chief that is out of the mainstream. Fully 75% of America feel the country is omn the wrong track. People grow tried of '57 States and his TAX, SPEND, BORROW and DEBASE policies that have driven unemployment from 7.1% to over 10%.
We need the government to get out of the way. In short we need actual LEADERSHIP something sorely lacking with Mr. Obama.
"Fairness" used to mean EQUAL. Today the Donkey Party believes fairness means seizing money from those that have to give to those that need (or want, it is hard to believe they need when they have flat screens and cell phones)...
This next November we can put America on the right track again, by simply firing ANOTHER 2500+ Donkey office holders. The choice will be simple, jobs or socialism?
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[BRIEFING.COM] The stock market ended the Thursday session on a modestly lower note, but a late-morning rebound lifted the indices off their lows. The S&P 500 shed 0.2% with seven sectors ending in the red.
This morning, European equities and U.S. futures slumped around 6:00 ET after Ukraine's President Petro Poroshenko was quoted as saying Russian forces have invaded an area southeast of Donetsk. The news pressured the markets, but a brief uptick took place after a correction to ... More
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