If Fed Chairman Jerome Powell is looking for a cheerful global-growth anecdote ahead of its policy announcement Wednesday, FedEx results may come as a bitter disappointment.
Shares FDX, -5.17% of the package delivery service, widely viewed as a bellwether of world economic activity, are taking a hit after sales and adjusted earnings fell short of Wall Street estimates, and FedEx cut its fiscal 2019 profit view for a second straight quarter.
“Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue,” said Alan Graf, the company’s chief financial officer, who ticks all the boxes for our call of the day, with his gloomy summation on the company’s conference call after the market’s close Tuesday.
Note that strategists have emphasized the continued momentum in the stock market depends in part on the coming first-quarter earnings season. If things do turn a little sour, Graf’s words may come back to haunt us in the weeks to come.
Meanwhile, FedEx CEO Fred Smith spoke of encouraging signs for the domestic business in an interview later on Tuesday, and some “green shoots” on the international side. But there was a caveat.
“No question about it, if there’s not some solution to Brexit and some resolution of the U.S.-China trade dispute, it’s unlikely [we will] see much global growth in our fiscal 2020 or calendar 2019,” Smith told CNBC’s Jim Cramer late Tuesday.
While Brexit remains a complete mess, a troubling trade headline cropped up to dent stocks Tuesday, with a report China could back off some of its trade promises. So far for Wednesday, stocks are slipping a bit. FedEx might be helping there, thought investors are pretty focused on the outcome of the Fed meeting and press conference with Powell, who’s expected to keep the dovish status quo.
“The global supply chain remains under heavy pressure and the market continues to ignore it because of the ‘global policy panic,’ by central banks,” said Steen Jakobsen, chief investment officer at Saxo Bank, in an emailed comment. He notes correlations between “fundamentals” and the stock market are the lowest in a month, referring to this Nordea chart making the rounds:
