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Investors are shipping their pants following FedEx’s latest earnings report.
FedEx announced lackluster fiscal Q1 revenue and EPS. Earnings per share missed estimates ($3.05 per share vs. $3.15 per share) and sales came in just below expectations ($17.05B vs $17.06B). C’mon, that’s a rounding error. The problem is that Tom Hank’s least favorite shipping provider also lowered its full-year guidance to between $10 and $12 per share, and expects trade concerns to weigh on its global shipments.
The trade war is taking its toll on FedEx. It’s no surprise that fewer goods being sold globally will result in fewer goods being shipped. Cause and effect, baby. As if that wasn’t enough, FedEx also was hampered by the termination of its deal as Amazon’s ground shipper. F*ckin’ Bezos …
Bad gets worse
FedEx shares fell 12% on the day thanks to its disappointing earnings. As a result, FDX was downgraded by three major Wall Street players … and Deutsche Bank. Tough break.
The bottom line …
Markets have been riding an unprecedented September high in 2019, but FedEx may have hinted that all good things must come to an end. The courier is one of the first companies to report earnings this PSL szn, and analysts aren’t exactly bullish on what’s to come for the remainder of the fall …
YOU’RE FED TO ME
For the second time this year, the Fed cut interest rates. Jerry Interest Rates and the Fed Board of Governors took the ax to the federal funds rate again, cutting it by another quarter percentage point.
Unity be damned
Not every Fed official was in favor of the rate cuts, however. 7 of 10 dentists, er, Fed presidents voted in favor of the decision, while Boston and Kansas City’s presidents voted against the move, claiming the economy doesn’t need the boost. And on the opposite end of the spectrum … St. Louis wanted a half-point cut. St Louis might still get its wish, as Donald Trump’s old friend Jay Powell left the door open for further cuts as the year grinds on.
Speaking of the Commander in Chief, he didn’t pull any punches when tweeting his response to the Fed’s decision, saying that Jay and the rest of the Fed-heads “failed again.” What a supportive work environment.
Stocked and loaded
On the news of the rate cuts, the markets took a beating as the possibility of further cuts in 2019 remains uncertain, before ultimately recovering by the end of trading. Turns out the market’s expectations were in line with POTUS: not good enough …
The bottom line …
Oh, you’re wondering how this affects you? OK, then. Well, for one, the lower federal funds rate means that loans will be cheaper, especially student loans, credit cards, mortgages, and car payments.
On the other hand, you’ll earn less on your savings accounts (looking at you Ally), which can hurt your buying power in the long run.
IN OTHER NEWS
- Microsoft announced a share repurchase program of $40B. The share buyback initiative, which has no expiration date, will put to use Microsoft’s $133.8B in cash and short term investments. The software giant will also increase its dividend by 5 cents to 51 cents per share. Mister Softee’s last share buyback was in September 2016, also for $40B. I think I know what’s happening in 2022 …
- Vape Nation, we are under attack. Collusion? You tell me. First, the White House alluded to potential future actions against vaping products. Then China takes Juul off the shelf just 3 short days after allowing sales of the sweet, sweet mango flavored tobacco. And now this: India has put the kibosh on the production and sale of e-cigs. The country’s health secretary Preeti Sudan stated that the entire generation will go “down the drain” (seriously, he said that) due to the product’s harmful and addictive nature. Meanwhile in India …
- MORE streaming news? Is that even possible? In the words of Dave Hester from ‘Storage Wars,’ “YEEEP.” Netflix announced that it plans to pay its filmmakers and actors bonuses if their films are successful. Depending on the movie, it may have certain goals to achieve, such as how many awards it may win or the number of viewers that stream the film. Odds are, this initiative will be put in place to keep successful projects from going to other streaming services or studios, such as [reads four page-long list of streaming services].
- Facebook has entered the chat. Facebook has launched the second generation of its Portal device, which allows users to stream and chat via video. Sooo Facetime? Not quite, as the device uses AI to create special effects and allows users to play games with friends. Portal TV will allow users to stream content from FB, Spotify, Amazon Prime, and some other providers, with hopes to sign on other big-name streamers such as Disney+ or Netflix in the future.
- John D. Rockefeller’s back, baby … well, sorta. Wealth adviser Rockefeller Capital will acquire Financial Clarity, a California based multi-family office that counts $2.3B of assets under its umbrella. The Cali firm was started in 1992 to serve the nerds working in Silicon Valley and caters to founders, venture capitalists, and senior corporate execs … as long as they have $30M in assets, of course. Peasants need not apply.
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