I Did Not Expect to Make this Video... (Massive Warning Issued)
Summary
TLDRIn this video, the creator discusses FedEx's recent earnings report, highlighting a significant drop in quarterly profits and a lowered full-year revenue forecast. The CEO of FedEx points to a softer industrial demand and criticizes the Fed's rate cut as a sign of economic weakness. The video suggests that despite the Fed's attempt to stimulate the economy, consumer behavior may have shifted, potentially reducing the impact of such measures. The creator anticipates a short-term market high but warns of a possible downturn as recession risks get priced in, advising viewers to stay cautious and prepared.
Takeaways
- 📉 FedEx's recent earnings report was disappointing, reflecting concerns about the economy.
- 😨 The CEO of FedEx warned that industrial demand is lower than expected, signaling weakness in manufacturing and the broader economy.
- 📦 FedEx's slower business activity, especially in their freight segment, is a bad sign for the economic outlook.
- 📊 FedEx's profit and revenue fell short of Wall Street expectations, with earnings per share missing by 25% and revenue by nearly 5%.
- 📉 The Federal Reserve's recent 50 basis point rate cut is being interpreted as a sign that the economy is in trouble.
- ⚠️ The speaker is concerned about the mismatch between market optimism and economic realities, hinting that Wall Street is ignoring key warning signs.
- 💰 FedEx is a key indicator for the economy, and its struggles are a red flag for the overall state of U.S. economic health.
- 📈 Despite the poor economic outlook, the speaker believes the stock market will remain strong for the next few weeks due to a 'sugar high' from recent Fed actions.
- 💸 Companies like FedEx provide more accurate data than government sources, according to the speaker, because they are heavily regulated and can't mislead investors.
- 🛑 The speaker warns of an impending market correction after the current rally fades, with potential negative impacts from upcoming tech earnings and broader economic data.
Q & A
What is the significance of FedEx as a bellwether for the economy?
-FedEx is considered a bellwether for the economy because its performance reflects overall economic activity. If FedEx is doing well, it typically indicates strong demand and economic health. If FedEx is struggling, it often signals that economic activity is slowing.
What concerning trend did the CEO of FedEx highlight in the earnings report?
-The CEO of FedEx highlighted that industrial demand was softer than expected, especially in shipments between manufacturers and companies, which is FedEx's most profitable segment. This decline signals a broader economic slowdown.
How did the FedEx quarterly profit report compare to expectations?
-FedEx reported a 25% decline in earnings per share (EPS), significantly missing Wall Street's estimates. The company posted an EPS of $3.60, while analysts expected $4.75. Revenue also missed by $300 million, coming in at $21.6 billion versus the expected $21.9 billion.
Why did the Fed cut interest rates by half a percentage point, and what does it signify?
-The Fed cut interest rates by half a percentage point due to economic weakness. The FedEx CEO emphasized that the magnitude of the rate cut reflects a fragile economic environment, as such a large cut indicates significant concerns about the economy.
What are the long-term implications of FedEx lowering its guidance for fiscal year 2025?
-FedEx lowering its guidance for fiscal year 2025, adjusting its earnings projection to between $20 and $21 per share, suggests that the company is bracing for continued economic challenges. This downward revision is a sign of further slowdown in business activity.
What specific business segments of FedEx are struggling the most?
-FedEx's Express business, which is the core of its operations, reported a 4% year-over-year decline in revenue, while the FedEx Freight business experienced a 16.3% year-over-year drop, indicating significant struggles in these key areas.
How does the speaker interpret the Fed's actions in relation to the current economic environment?
-The speaker suggests that the Fed's rate cut is not a sign of a healthy economy but rather a reaction to underlying problems. He argues that while the Fed has cut rates to stimulate growth, this may not be enough to offset the broader economic slowdown.
What concerns does the speaker have about the accuracy of government data?
-The speaker expresses skepticism about government data, particularly from the Bureau of Labor Statistics (BLS) and the Federal Reserve. He believes the data may be inaccurate or misleading, especially in an election year, and suggests that corporate earnings reports provide a more reliable view of the economy.
How does the speaker believe Wall Street will react to the FedEx earnings report?
-The speaker believes that Wall Street may not immediately react negatively to the FedEx earnings report, as markets are currently in a 'sugar high' due to the Fed's rate cut. However, he expects markets to face challenges after the election and as more economic data comes in.
What is the speaker's outlook for the stock market in the near term?
-In the near term, the speaker expects the stock market to perform well, particularly in sectors like Tesla, small-cap stocks, and cyclical companies. He believes the market will remain bullish for the next few weeks, but warns that economic realities may eventually weigh on stocks, especially after the election.
Outlines
📉 FedEx Earnings and Economic Concerns
In this video, the speaker highlights the significance of FedEx's earnings report as a bellwether for the economy. The Fed was misleading in its projections, and FedEx's CEO raised concerns about the recent interest rate cuts, signaling a weakening economic environment. The speaker dissects FedEx's disappointing quarterly profit drop and how this reflects a broader economic slowdown, especially with industrial demand falling short. The decline in after-hours trading and FedEx’s lower revenue forecast underscore deeper concerns about the economy's health.
📊 FedEx's Lowered Guidance and Wall Street's Misjudgment
FedEx has adjusted its guidance lower for fiscal year 2025, with anticipated earnings between $20-$21 per share, down from the previously expected $22. The speaker criticizes Wall Street's underestimation of FedEx's challenges, including analysts like Bank of America’s Ken Hoer, who trimmed estimates too late. FedEx’s sales growth is expected to be minimal, and the company's freight business is seeing significant year-over-year declines. The overall trajectory for FedEx's key businesses looks bleak, worsening from previous quarters, with no signs of recovery.
📈 Market Reactions and Near-Term Predictions
Despite FedEx’s warning signs, the speaker predicts that the markets, driven by optimism from the Fed's rate cuts, are unlikely to react immediately to the negative news. There may be short-term bullishness over the next few weeks, with stocks like Tesla performing well. However, as election risks loom and more accurate economic data emerges post-election, markets may start reflecting the true economic slowdown. Long-term, the speaker warns of more downside once recession risks are priced in, but near-term market optimism will likely persist.
🚨 The Fed's Limited Impact and Future Economic Outlook
The speaker argues that the Fed’s rate cuts may no longer have the desired impact on consumer behavior, as the economy and spending habits have changed. The speaker expects markets to continue rising in the short term, particularly for stocks like Tesla, but warns that after key events like the robotaxi reveal and the election, broader market declines are likely. The Fed’s actions, such as the recent 50 basis point cut, might not have the same power as in previous cycles due to shifts in the economy’s underlying dynamics. The speaker recommends keeping cash ready for future opportunities.
Mindmap
Keywords
💡FedEx
💡Federal Reserve
💡Rate Cut
💡Earnings Report
💡Economic Indicator
💡Supply Chain
💡Recession
💡Market Reaction
💡Consumer Spending
💡Election Risk
Highlights
The speaker makes two videos a day, with unscheduled videos being released when urgent information needs to be shared.
The CEO of FedEx calls out the Federal Reserve's rate cuts, suggesting the Fed's actions are concerning for the economy.
FedEx's quarterly profit dropped significantly, indicating declining demand for speedy deliveries and hinting at economic slowdown.
FedEx is often seen as a bellwether for the economy, meaning its struggles could reflect broader economic issues.
Industrial demand was softer than expected, which is problematic since shipments between manufacturers are highly profitable for FedEx.
FedEx's CEO remarks that the magnitude of the Fed's recent rate cuts signals a weak economic environment.
FedEx missed earnings estimates by 25% and its revenue by 300 million, showing that the company’s performance is deteriorating.
FedEx has lowered its revenue forecast for the year, further reflecting uncertainty and declining business conditions.
FedEx Express business was down 4% year-over-year, while FedEx Freight business dropped a drastic 16.3% year-over-year.
The speaker highlights that government data may not be fully reliable, but company earnings reports offer a clearer view of economic conditions.
The speaker suggests that FedEx's earnings results are a major red flag for the economy, despite the market being on a 'sugar high' from recent rate cuts.
A parallel is drawn between current market behavior and 2007, when the Fed cut rates but the economy still declined.
The speaker predicts that in the near term, certain stocks like Tesla may perform well despite broader economic concerns.
The speaker anticipates that markets will face significant challenges after the upcoming election, once more accurate economic data emerges.
Consumer behavior is changing, and the Fed's rate cuts may not have the same impact on spending as in previous economic cycles.
Transcripts
I just want to tell you right now to
start this video I make two videos a day
here on this channel if I make a third
video that comes out like later in the
evening time like this one it's an
unscheduled video and it's something you
need to hear as soon as possible and
that's what this video is oh my gosh
guys I don't I don't know how much more
obvious it could be the Fed was lying to
us
yesterday with FedEx's earnings
report and more specifically what the
CEO of FedEx just said specifically
about the fed's rate cut like not too
often do you get CEOs that basically
call out the fed and uh this is pretty
unique and I just have to say kind of
concerning I I I mean not kind of but
like very concerning okay so the
headline of this article says FedEx
quarterly profit disappoints as demand
for Speedy Delivery wains this does come
after FedEx reported earnings today and
after hours and as I talked about in the
video earlier today FedEx is a
bellweather company for the economy
meaning that if FedEx does well the
economy is doing well if FedEx does not
do well most of the time the economy is
also not doing okay and yeah judging off
of the 11% decline here and after hours
for FedEx which is probably going to get
a lot worse before it's over I would say
FedEx is not doing okay okay so this
article says FedEx reported a steep
quarterly profit drop and lowered its
full year revenue forast on Thursday
after its customers continue to trade
down from Speedy pricier delivery to
cheaper slower option okay so this is
the first part that's really bad but not
the worst CEO Raji said industrial
demand was softer than expected
shipments between manufacturers and
other companies in that segment are the
most profitable for FedEx which is often
seen as a bellweather for the US economy
okay let's break this down in a little
bit more English if you
will
FedEx transports things from companies
that make things to companies that sell
things or let's say if you are a part
supplier for GM for an example and let's
say you make tires or you make
drivetrains or whatever it is you make
those products FedEx ships them to GM to
assemble them and I'm just trying to
simplify this right that is what the CEO
of FedEx is referencing that this demand
was softer than expected so less things
being built or manufactured less things
things being
shipped that is not good but hold on it
gets worse R Raji says quote the
magnitude of the Fed rate Cuts yesterday
signals the weakness of the current
environment referencing to the federal
reserve's decision to cut interest rates
by a half of a percentage point on
Wednesday he said this on the conference
call today
basically you guys seen Jerome pow cut
rates a half of % like that's that's a
jumbo rate cut things are clearly not
good is basically what the CEO of FedEx
just said now in this article from baren
it says the economy just isn't helping
and there is a troubling shift happening
which shows why the FED just cut
Benchmark interest rates Thursday
evening FedEx reported adjust Ed
earnings per share of
$3.60 from sales of 21.6 billion Wall
Street was looking for earnings per
share of
$4.75 that means you missed estimates by
a115 about
25% on sales of 21.9 billion so they
missed on Topline Revenue by 300 million
that's not as bad that's that's almost
5% but not
terrible which it yes it is terrible it
is bad but it could have been worse from
the standpoint of oh it's not terrible I
mean EPS was down 25% lower than
estimates 5% for Topline Revenue we'll
take that no don't be confused that's
still really bad it says looking ahead
FedEx expects to earn between $20 and
$21 a share in its fiscal year 2025 the
range given in June was 20 to $22 per
share now it was a little bit more
specific than that on the lowend Range
FedEx guided for
$17.90 or so if if my memor is correct
in the $17 range on the higher side
FedEx guided for about $20
205 um on the higher side so yes they
are doing a bit of really rough rounding
for the sake of this article but still
FedEx lowered guidance even Wall Street
got this one way wrong Bank of America
analyst Ken hoer was ready for some
seasonal weakness reminding investors
that investors that FedEx fiscal first
quarter which spans the summer months is
typically a slower quarter for the
economy hoer trimmed his earnings
estimate ahead of the report to $476 a
share from $521 a share reflecting a
slowing economy he wasn't aggressive
enough FedEx also said that sales growth
is expected to be a low singled digit
percentage increase so maybe
2% maybe
3% that's really not good now I think
this also as a visual visual kind of put
this in puts us into a little bit of
context as well you can see um in the
latest numbers reported the FedEx
Express business was down
4% year-over year which is bad last
quarter you were down 2% year-over-year
so thanks are not getting better they're
actually getting worse okay if you look
at the FedEx Freight business that was
down
16.3% year-over-year last quarter you
were down 4.7% year-over-year you down
16.3% are you kidding me that is
terrible it says and this is kind of
more of again that visual chart this is
revenue from FedEx Express which is um
their their main part of their business
if you will the the FedEx trucks that
you see um yeah and this does not look
good either right this is definitely on
a downside trajectory just looking at Q4
of 2022 which is it comes here uh q1
2023 it's actually it was actually Q4
2022 you had revenue from the FedEx
Express side of their business at 19.18
billion the latest
q1 again which is
um this late latest quarter was 18.3
billion yeah that's really really not
good okay you have seen some incredible
weakness in the last couple of years and
this is the worst quarter in years for
FedEx now again I don't scrutinize a lot
of specific companies here on this
channel all too often but only important
companies for the economy like FedEx
like
UPS like
um Walmart right Dollar General perhaps
those are the companies that I really
pay attention to that report earnings
especially last quarter because we got
to face the facts here whether it's
because of the election whether it's
just because of an influx of immigration
or bad practices and in data for one
reason or another or for all of those
reasons the government data we get is
not correct it's not accurate Jerome
Powell literally said that on the podium
yesterday that perhaps if we knew the
jobs were going to come in so low with a
revision we probably would have cut
rates in July crap government screwed
even the Fed so the government you know
the FED all all all of these guys have
zero Ram ations for you know lying to
you and and and to some degree they're
actually incentivized to lie to you
especially the fed and and and not tell
you the full truth I I think we can all
agree on that
so you you can't really count on the
government data okay but what you can
count on is company earnings because
companies they're not allowed to lie to
you it's strictly forbidden you will go
to prison if you lie to investors okay
much different than the FED much
different than the government or the BLS
if you will if you don't want to just
call out the government just call out
the agency the bar bu Bureau of Labor
Statistics okay we'll call them out
specifically so what do we have here the
best we got is earnings to judge the
state of the economy and what companies
say and what I heard from FedEx this
evening is what I would call outright
scare
saying basically you've seen what the
FED did that just highlights the the the
problem in the economy right now what
let me tell you right now I don't think
the markets are going to react to this I
think markets are on a sugar high I
think the next couple of days or perhaps
the next 3 to four weeks could be
positive for markets until we price in
election risk and then after the
election we'll start to get more
accurate data coming out from the
government and then maybe it'll start
reflecting the actual decline in
economic activity that we are seeing
right now but long story short I'm not
expecting markets are going to react to
this I think Tesla stock can do very
well and it will do very well I think
small caps will do very well cyclicals
value dividends right U probably even
big Tech will likely do very well now as
we head into really the second half of
October after this let's say 2 3 4 week
period that we're going to have a
bullishness ahead in my opinion that's
when we're going to start running into
big Tech earnings more important
companies and that's going to start
potentially Weighing on markets if these
companies have bad things to say you
know back in 2007 the FED cut rates 50
basis points on September 18th I've made
that very clear for you literally the
the same day we cut rates again this
year but what actually happened back in
July during the Q2 earnings results
Walmart issued basically a dire warning
that the consumer was slowing down and
that's one of the reasons that prompted
the FED to start reducing rates now back
in 2007 2008 there was a lot of phony
data as well coincidentally it was an
election year 2007 and there was a lot
of revisions to data as well then so the
best kind of heads up you had on the
economy was Corporate America because
they have to be honest with you they are
audited and they will go to prison if
they are not unfortunately I think this
is another one of those scenarios I
think Wall Street should pay attention
to FedEx I think this should be a huge
red flag but is Wall Street really going
to care too much probably not again
we're on a sugar high from the FED
cutting rates 50 basis points and
telling us exactly what we wanted to
hear that the economy is great we're
just normalizing fed policy we're going
to throw you a 50 basis point cut in
fact there's a big problem and FedEx
just highlighted that so again nothing
changes in the near- term if you want to
trade this Market to the upside that
makes some sense I think Tesla's going
to do very well I think certain areas
will do very well but I do think you
want to have a lot of cash on the
sidelines and You by all means want to
be ready to go shopping when recession
risk gets priced into our markets
remember like 2022 you don't actually
have to see a recession to see a lot of
downside
long before we go into a
recession technically speaking the
government says we're in a recession
you're going to see a ton of
downside for stocks we seen that in 2022
S&P fell 27% we probably would have
fallen more maybe
35% 30ish per if we actually went into a
recession but at the lows you were down
27% you were literally pricing in a 100%
chance of a recession now I think
perhaps you'd need to fall at least 35%
now to fully price in a recession maybe
more than that depending on the
severity but eventually that day will
come where the economy does get worse
and we will be forced to price in a
recession and I I I I do think Wall
Street also wants to see how people
react to this 50 basis point cut and
unfortunately I don't think it's going
to do much of anything I think one the
psychology has changed with especially
younger people people really from like
maybe teenage years years right 18 19 20
to you know 40y olds uh where people got
a lot of money with with Co they spent a
lot of money ran through that money and
then the last couple of years they've
been eaten alive by the the price of of
living I don't think people are going to
rush out to go buy that new car go buy
that new house go get that personal loan
to do this and that go on vacation just
because the FED cut ratees 50 basis
points so I think we need to be a little
tank in our expectations for what fed
policy is actually going to do to
consumer spending behaviors I I I just
don't see it having that much of an
impact after all the FED cut rates and
treasury yields actually Rose it it it
became less affordable to buy new loans
or or get new loans buy new things on
credit than it was even two days ago you
think from that standpoint the FED could
still be way behind the curve if let's
say a 50 basis point cut is acting like
a 25 basis point cut in actual real
terms of boosting consumer consumption
consumer spending if the consumer has
changed if the underlying you know um um
you know principle of the economy has
changed then the action from the FED is
probably not going to give you the same
result as it did in Prior Cycles so in
fact the FED cutting rates let's say a
whole point like 1% may only be
equivalent to like 50 basis points in
real terms which is something that I
think time will tell us but I'm I'm I'm
like 90% sure that's the the cause and
effect of the FED lowering rates right
now I just don't think it's as impactful
as it was in previous Cycles so we will
see again I think markets are going
higher in the near- term I think Tesla's
stock as as I said in the last video is
likely going through a short squeeze now
and I think it's probably going to
continue a whole hell of a lot higher in
just my personal opinion I don't think
there's much to stop Tesla here over the
next 3 weeks until the robotaxi event
itself um after that after the election
specifically for the broader markets
that's where we could find oursel up
shits Creek but I think you have some
time here where markets are on a bit of
a sugar high so let me know what you
guys think about this down below in the
comment section I would love your
thoughts hit the like button subscribe
to the channel uh you guys have a great
rest of your day and I will see you in
the next one
تصفح المزيد من مقاطع الفيديو ذات الصلة
5.0 / 5 (0 votes)