*YIKES* Earnings *JUST OUT* COLLAPSE in Economic WARNING.
Summary
TLDRIn this video, Kevin discusses the Federal Reserve's recent actions and FedEx's warning signs for the economy. FedEx's Q1 earnings showed weaker demand and a 24% drop in adjusted operating margin due to consumers opting for cheaper shipping. The CEO highlighted a soft industrial economy and e-commerce resetting as challenges. Kevin also touches on the Fed's 50 basis point cut and the lack of transparency, comparing it to Orwellian doublespeak. He suggests the economy may be facing more significant issues than acknowledged.
Takeaways
- π FedEx reported weaker-than-expected earnings, indicating a challenging demand environment.
- π¨ The CEO of FedEx highlighted a significant drop in industrial business-to-business volumes.
- π¦ Consumers are opting for cheaper shipping options, reflecting economic strain.
- π FedEx's forecast suggests ongoing issues with demand and profitability in the shipping sector.
- π‘ The Federal Reserve's recent actions have raised concerns about the overall economic outlook.
- π€ Analysts are questioning the Fed's lack of transparency regarding economic conditions.
- π FedEx's stock fell approximately 11% in after-hours trading following the earnings report.
- π International markets are performing better for FedEx compared to the US domestic market.
- π¬ The Fed's communication strategy is seen as increasingly secretive, potentially leading to market volatility.
- π A flash sale for wealth-building courses has been extended until midnight, reflecting high consumer interest.
Q & A
What warning did FedEx's CEO provide during the earnings call?
-The CEO indicated that the industrial economy is weak, affecting business-to-business volumes, and they are experiencing a significant decline in demand.
How did FedEx's stock perform after the earnings call?
-FedEx's stock dropped about 11% in after-hours trading following the earnings call.
What does the term 'Orwellian move' refer to in the context of the Federal Reserve's actions?
-It refers to the perception that the Federal Reserve's actions, such as cutting interest rates without clear justification, resemble the contradictory language used in George Orwell's '1984', where reality is manipulated.
What trend did FedEx report regarding consumer shipping preferences?
-FedEx noted a shift where consumers are opting for cheaper, deferred shipping options instead of priority services, indicating financial strain among consumers.
What factors are contributing to FedEx's weaker demand forecast?
-The weaker demand forecast is attributed to a soft industrial economy, reduced business-to-business volumes, and a shift in consumer preferences towards lower-cost shipping options.
What is the significance of FedEx's performance in relation to the overall economy?
-FedEx is often viewed as a leading economic indicator; its performance can reflect broader economic trends, making its weak results a concerning sign for the economy.
What did the CEO of FedEx say about the company's outlook for the rest of the year?
-The CEO expressed cautious optimism, suggesting that demand might moderately improve due to a slight recovery in the industrial economy and low inventory levels, but acknowledged ongoing challenges.
How did the Federal Reserve's recent actions impact market perceptions?
-The Federal Reserve's decision to cut rates without clear explanations has led to increased skepticism and confusion in the markets, contributing to volatility.
What does the term 'flash sale' refer to in the context of the video?
-The flash sale refers to a limited-time offer for courses on building wealth, which was extended until midnight due to high demand.
What is the overall sentiment regarding the economy as expressed in the video?
-The sentiment is largely negative, with concerns about weakening economic indicators, including FedEx's performance, the restaurant performance index, and the Federal Reserve's lack of transparency.
Outlines
π Economic Warnings and FedEx's Struggles
The speaker begins by expressing shock over recent comments about the Federal Reserve and a major American company's warning, which is seen as an economic red flag. Despite a stock performing well, it's not doing well on the day of discussion. The speaker mentions an extended coupon code for wealth-building courses on his website, mekevin.com, due to high demand. The main focus then shifts to FedEx's CEO's recent earnings call, which revealed weaker than expected demand and a 24% drop in adjusted operating margin for the June-August quarter. The drop is attributed to weaker demand trends as customers opt for cheaper shipping options. FedEx's stock falls by about 11% after hours. The CEO acknowledges a soft industrial economy affecting business-to-business volumes and mentions a potential e-commerce reset. There's also mention of modest improvements in global trade dynamics and a hope for inventory rebuilding in Q3 and Q4, although no signs are seen as of September 19th.
π FedEx's Q1 Results and Economic Indicators
The summary of FedEx's Q1 results indicates a challenging demand environment, particularly in the US, with a shift towards lower-profit services. The company anticipates a moderate improvement in the demand environment throughout the year, driven by industrial economy recovery, e-commerce growth, and low inventory levels. However, they do not foresee any pricing improvements in Q2. The international economy's increased demand somewhat offsets the domestic downturn. The speaker also discusses the Federal Reserve's actions, suggesting a lack of transparency and a potential loss of credibility. There's mention of other economic indicators, such as the restaurant performance index, which is heavily negative, suggesting a recession. The speaker questions the Federal Reserve's economic outlook and the lack of clarity provided.
π¨ Concerns Over the Federal Reserve's Communication
The final paragraph delves into concerns about the Federal Reserve's communication after their recent meeting. The speaker points out that the Fed has signaled more worry about the economy without providing clear reasons, which is concerning. There's a critique of the Fed's approach to managing market expectations and a suggestion that their lack of transparency could lead to increased market volatility. The speaker also touches on the potential impact of the Fed's actions on inflation and the credibility of the institution. The paragraph concludes with a reminder about the coupon code for wealth-building courses expiring at midnight and a suggestion to use the speaker's research to inform personal investment decisions. The speaker also mentions his other financial services and the disclaimer that the video's content is not personalized advice.
Mindmap
Keywords
π‘Federal Reserve
π‘Red Flag
π‘Earnings Call
π‘Adjusted Operating Margin
π‘E-commerce
π‘Industrial Economy
π‘Inventory Rebuilding
π‘Pricing Environment
π‘Orwellian Move
π‘Flash Sale
π‘Market Volatility
Highlights
FedEx's earnings call reveals weaker than expected demand and a 24% drop in adjusted operating margin.
FedEx stock drops about 11% in after-hours trading following the earnings report.
CEO of FedEx indicates a soft industrial economy is weighing on business-to-business volumes.
E-commerce appears to be resetting after a low, with some modest improvement in global trade.
FedEx's results reflect a challenging demand environment, particularly in the US domestic market.
There's an increased demand for lower profit services as people shift to cheaper shipping options.
FedEx expects the demand environment to moderately improve in the second half of the year.
International economy helped offset some of the pain felt by FedEx, performing better outside the US market.
FedEx faces a contract termination headwind with the US Postal Service going into Q2.
The Federal Reserve's 50 basis point cut is seen as a sign of strength, raising questions about economic health.
Robo Bank and Scotia Bank criticize the Fed for not providing clarity on economic concerns.
The Fed's lack of transparency could lead to a loss of credibility and increased market volatility.
Economic indicators like the restaurant performance index are heavily negative, suggesting a potential recession.
The Fed's decision to cut rates without explaining the rationale adds to market uncertainty.
The Fed's projections include no change in GDP growth and a higher unemployment rate, contradicting textbook economic theory.
The coupon code for Meet Kevin's courses on building wealth has been extended until midnight due to high demand.
Meet Kevin offers a lifetime access pass to his wealth-building courses at a one-time payment.
Kevin discusses the importance of diversifying investments with real estate and risk mitigation strategies.
The video provides generalized perspective and should not be considered personalized financial advice.
Transcripts
holy smokes I can't believe what was
just said both about the Federal Reserve
but then also a huge warning from a
company major American company that's
giving us a red flag and it's often
considered a red flag for the economy
and even though this stock has been
doing extremely well lately it ain't
doing well today let's talk about that
in just a moment and we're going to get
into why One bank is actually calling
what the FED did and orwellian move yeah
interesting okay first though before we
get into the orwellian move and all that
good stuff we really got to talk about
what just happened and what just
happened is so many of you wanted that
coupon code that expired at lunch we
couldn't get back to the rest of the
emails so we've extended it until
midnight we had a flash sale going on so
that way if you want to sign up for the
courses on building your wealth get in
to those course member live streams you
want to be a part part of those for life
you pay once you're in forever go to me
kevin.com we've extended it until
midnight just to make it a little easier
given that we've gotten so much interest
in following up after that expiration at
lunchtime so again it's extended for a
few extra hours just until midnight
flash sale on the courses on building
your wealth you pay once you have
lifetime access forever so if you want
to know what's going on uh as Hedges if
you want to compare and go okay I want
to inverse trade Kevin you could do that
uh whatever ever you want get that
Insight on why I'm making moves the way
I am with a multi-million dollar
position or multiple positions whatever
you get to see it and the
rationalization as to why so you could
see if it fits into your portfolio or
not okay first though after this FedEx
folks this is not good take a look at
this this is the chief executive officer
over at FedEx in the earnings call that
just came out minutes ago for the June
July and August a quarter this it's kind
of sort of an interesting earnings
calendar because it really encapsulated
that week or summer that June July but
their forecast comes in weaker as well
suggesting that the issues that they're
facing here are actually continuing not
only are they forecasting weaker demand
but their margin got hosed by about 24%
on adjusted operating margin in the
quarter and that's because demand Trends
are weaker than expected as people are
downgrading to cheaper shipping options
folks This is FedEx and if you look at
FedEx stock right now in after hours
it's down about
11% and here's what was said on the call
the CEO says well thanks for the
question I will just start by saying yes
this point that we've talked about
before the soft industrial economy is
clearly Weighing on businessto business
volumes and it was definitely much
weaker than we expected and we have to
make adjustments accordingly as you know
shipments linked to industrial
production are the highest yielding and
most profitable at the same time
e-commerce is resetting I'm not exactly
sure what that means and starting to
grow again oh well there's your
definition so in other words hey we're
coming off a low on Ecom maybe we're
finally starting to see a little bit of
growth again out of etsy and Amazon and
some of these others when it comes to
the consumer but that industrial
production is so low FedEx is basically
saying we are hanging our hats on some
inventory rebuilding please in Q3 Q4
calendar which would be their Q2 their
Q2 would be September October November
but they ain't seeing it yet here on
September 19th e-commerce Trends re
resetting we're also seeing some modest
Improvement in global trade so the
Dynamics of the profile of traffic have
changed okay in other words hey like we
were not expecting such a massive
slowdown in the most profitable portion
of our business but hey at least cheaper
things have a greater volumes but let's
actually get into some of the other
details here look at this I'll just show
you the best parts of this and then I
want to get to what was just said about
the FED our results reflect a
challenging q1 demand environment which
was weaker than expected particularly in
the US domestic Market this is not like
it's just China don't get me wrong there
are a lot of surprises and problems in
China I mean you look at Mercedes citing
a rapid deterioration in the Chinese
economy reducing forecasts and expect
and they expect earnings to be
significantly below their prior years
Sketchers is warning about worst
conditions in China on the back half of
the year that this year is going to be
more disappointing than thought uh and
you've got now Nick T from The Wall
Street Journal warning that the wait for
data is probably going to leave us with
more bumpiness for the rest of the year
as the Federal Reserve tries to actually
truly calibrate where the hell we are
right now which is interesting and sort
of all adds to the volatility what we
might expect especially as we start
getting earnings from companies telling
us a little bit about what's going on in
the economy right now and companies like
FedEx they're not happy and they're
usually a big tell for what's going on
with the economy and they can be seen as
a leading indicator because they're
giving you guidance that is weaker than
expected listen in
our results reflect a challenging q1
demand environment which was which was
weaker than expected weakness in
industrial economy pressured our
business-to business volumes
particularly in the US and even though
we had increased demand for our lower
profit Services some of this demand
increase was driven by a shift in
preference so it's not like people were
actually shipping more it's that instead
of shipping things with a priority
service they were using deferred
services in other words people are
Expediting their shipments at lower
rates than they' used to something that
is typically associated with a harder
environment for the consumer or a time
when the consumer is feeling more strain
you'll see more of this from them
volumes were pressured led by weakness
in the US market not great let's go to
the next page here uh o actually we had
one more note here uh at the midpoint of
our Outlook range we expect the demand
environment to moderately improve as we
move throughout the year driven by a
slight recovery in the industrial
economy e-commerce growth and low
inventory levels we anticipate some
improvement in the pricing environment
skewed towards the second half of the
year which means they're not going to be
able to make any Improvement for Q2 in
terms of pricing because right now
they're just trying to get volumes back
and while they're hopeful that things
might get get better so far they have
not been getting better increased demand
for in the international economy helped
offset some of the pain so actually wild
here the outside of US market was
actually doing better for FedEx and when
they give guidance they suggest yes
maybe at the high end we can actually
expect uh some increases in industrial
production but at the low end of their
guidance they suggest that the demand
environment could continue to remain
being very competitive and that the
industrial economy remains challenged
it's not great going into Q2 especially
as they face a contract termination
headwind with the US Postal Service on
top of that uh so not great uh if we
keep going to another note here look at
this pretty dramatic changes when you
talk about the mix shift that we uh
experienced and volumes were there
volumes were pretty strong but again
that same volume that you know what they
call strong it's just basically the
moving of volume from one service to
another to the cheaper service was
surprising to them and something that
they didn't expect and something again
that they generally don't see with the
exception of times when the consumer is
really really pressured so not great not
a good report here at all uh from FedEx
now on top of this I find it very
interesting Robble Banks piece on the
FED as well as Scotia bang on the FED
take a look at some of these comments
here after the fomc cut to 50 basis
points as only in the past crises Jerome
Powell didn't tell us what was behind
the
recalibrating and so they are asking
themselves at Robo Bank wait a minute
what a 50 basis point cut as a message
that the economy is strong so does that
mean if they cut by 75 basis points the
economy is booming this sounds like
something out of George Orwell's
1984 war is peace freedom is slavery and
ignorance
is strength so when you start putting
together some of these pieces such as
the Bloomberg piece here via Yahoo
finance FedEx slums on quarterly profit
Miss and you have this quote here the
sense of urgency isn't there to pay for
extra or pay extra for Ultra fast
shipping said Bloomberg intelligence
that usually happens when things are
kind of tough when people are trying to
save money when they're strained when
you have this combined with a lot of
folks sort of raising their eyebrows at
the FED going wait a minute why did you
go and not tell us why at the same time
as you have other factors in the economy
we've already talked about weakening
whether it's the labor market or
otherwise and you have this right here
the restaurant performance index so
heavily negative that you generally
don't see this level of negative
performance outside of a recession you
kind of start scratching your head what
did the Federal Reserve see that freaked
them out and why aren't they giving us
more clarity this is something else that
right here Scotia Bank says as well the
fomc is signaling more worry about the
economy but didn't say why in doing so
they buried increased pessimism towards
Outlook in the remainder of their
projections and offered no explanation
of why now this is a a sign of a Federal
Reserve that would rather not tell us
what weakness they're seeing other than
a brief mention of the anecdotal
evidence in the beige book which you
know they tend to become a little bit
more anecdotally focused at turning
points in the economy which is bad
that's why they're going 50 uh but it's
also you know it'd be nice to have a
little bit more clarity because that's
not coming through apparently to markets
which are going to all-time highs right
now which is which is fine but it's
remarkable because the underlying
elements of the economy are not fine and
Jerome Powell essentially lied to us now
to some extent you can't blame him
because frankly if he comes out and says
yeah things are bad then the markets are
actually going to crash and then you're
going to he will literally create a
recession in one sentence the problem is
this is how the FED loses credibility
again it's not by creating a second wave
of inflation it's about lying to us
about the state of the economy and then
things get so bad that now nobody
believes the FED again until they
actually turn the money printers back on
and people are showered with money you
know what that does for inflation I
guess is anybody else's guess but anyway
look at this how can you cut 50 and
project easing through 2025 yet all of a
sudden we're delivering the same GDP
growth forecast through the entire
projection and a higher unemployment
rate than you previously predicted in
the textbooks that I studied long ago if
you ease more you probably get more
growth and lower employment all else
equal so yeah like obviously you're
concerned about GDP uh and labor here
but the fact that they didn't give us
clarity on this Outlook concern they
clearly have and nobody really asked
questions about this in fact they go as
far as saying Powell Got Away got got
away scotf free from having to explain
what was happening on the economy it's
to them a sign that the Federal Reserve
has now entered a new era where the FED
has clearly ended its approach of
handholding into perfect meeting setups
and as a as a result you might expect
even more Market volatility around the
FED because now they're kind of being a
little secretive so let's see cuz we've
got a lot of fed speak coming up next
week uh you know one one fed speaker
tomorrow a bunch of them on Tuesday of
uh on Monday of next week and then a
bunch on Thursday of next week it's
crazy but anyway as you know coupon now
expires at midnight tonight it's just a
quick flash sale uh and even if you
don't agree with my perspectives or my
concerns the idea is use my research and
consider implementing some parts of it
into your portfolio or not as it's fit
I'm not encouraging you ever to copy
exactly what I do because I'm a very
different person I've got a lot of
different things going on from house
Haack which is absolutely killing it the
financial advice service we can actually
cater a real portfolio for you over at
stock ha.com and balance that with
growth real estate and risk mitigation
uh these these are all things that we do
so check this all out but most
importantly go to meetkevin.com check
out that coupon code and folks we'll see
you in the next one but in terms of the
economy not great right after the FED
meeting why not advertise these things
that you told us here I feel like nobody
else knows about this we'll we'll try a
little advertising in CR congratulations
man you have done so much people love
you people look up to you Kevin P there
financial analyst and YouTuber meet
Kevin always great to get your
take even though I'm a licensed
financial adviser licensed real estate
broker and becoming a stock broker this
video is not personalized advice for you
it is not tax legal or otherwise
personalized advice tailor to you this
video provides generalized perspective
information and commentary any third
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shall never be deemed reasonably
sufficient information for the purposes
of evaluating a security or investment
decision any links or promoted products
are either paid affiliations or products
or Services we may benefit from I also
personally operate an actively managed
ETF I may personally hold or otherwise
hold long or short positions in various
Securities potentially including those
mentioned in this video however I have
no relationship to any issuer other than
house Haack nor am I presently acting as
a market maker make sure if you're
considering investing in house Haack to
always read the PPM at house.com
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