I Did Not Expect to Make this Video... (Massive Warning Issued)

Summary

In 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

00:00

📉 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.

05:00

📊 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.

10:01

📈 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.

15:01

🚨 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.

Keywords

💡FedEx

FedEx is a multinational courier delivery services company that is often considered a bellwether for the economy. In the video, the discussion revolves around FedEx's quarterly earnings report, which showed a decline in profit and lowered revenue forecasts, indicating potential economic slowdown. The CEO's comments on the Federal Reserve's rate cuts further emphasize the economic concerns.

💡Federal Reserve

The Federal Reserve, often referred to as 'the Fed,' is the central banking system of the United States. It plays a crucial role in regulating monetary policy, including interest rate adjustments. In the video, the Fed's decision to cut interest rates is highlighted as a signal of economic weakness, as mentioned by FedEx's CEO during the earnings report.

💡Rate Cut

A rate cut refers to a reduction in interest rates by a central bank, in this case, the Federal Reserve. The video discusses the Fed's rate cut as a significant action that reflects the current economic environment's weakness. The magnitude of the cut is used by FedEx's CEO to underscore the severity of the situation.

💡Earnings Report

An earnings report is a financial statement issued by publicly traded companies that details their financial performance over a specific period. In the video, FedEx's earnings report is a central topic, with a focus on the company's profit decline and its implications for the broader economy.

💡Economic Indicator

Economic indicators are statistics that provide insights into the state of the economy. FedEx is described as a bellwether company in the video, meaning its performance is seen as an indicator of the overall health of the economy.

💡Supply Chain

The supply chain refers to the network of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. The video discusses FedEx's role in the supply chain, particularly in shipping goods from manufacturers to assemblers, as a measure of industrial demand.

💡Recession

A recession is a period of negative economic growth that lasts more than a few months, typically characterized by a decline in GDP, high unemployment, and reduced industrial production. The video speculates about the potential for a recession, given the economic indicators and corporate earnings reports.

💡Market Reaction

Market reaction refers to how financial markets respond to new information, such as economic data or corporate earnings reports. The video suggests that the markets might not immediately react to FedEx's earnings report due to a 'sugar high' from the Fed's rate cut, but there could be a delayed reaction as the reality of economic conditions sets in.

💡Consumer Spending

Consumer spending is the amount of money consumers spend on goods and services. The video discusses how changes in consumer behavior, influenced by economic conditions and policy decisions like rate cuts, can impact the broader economy. It questions whether the Fed's rate cut will stimulate consumer spending as expected.

💡Election Risk

Election risk in financial markets refers to the uncertainty and potential market volatility surrounding an election. The video mentions election risk as a factor that could influence market performance in the coming weeks, suggesting that markets might react differently to economic data depending on the political climate.

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