What Happened?

FedEx reported disappointing earnings on Tuesday evening, with a pessimistic outlook for the future. Shares dropped over 12% with the company losing almost $8B in market cap.

What Does it Mean?

FedEx along with UPS is often used as a proxy for the general economy. Many believe that if packages are being sent at a considerably pace, this is indicative of a healthy consumer as well as business activity. The dire earnings report and future projection have many wondering if this is a glimpse into the future regarding the economy.


Why Do We Care?

On the one hand this may be a clear reflection of a softer economy therefore indicating lower inflation and a successful Federal Reserve. That said in our opinion, it is hard to extrapolate what is happening within FedEx across the general economy since Amazon is now shipping most of their own packages. In fact, it was reported in late November that Amazon was set to deliver nearly 6 billion packages this year, more than UPS or FedEx, when historically Amazon would contract with these companies for their shipping needs.

We feel this is more of a changing of the guard than a general economic indicator, in fact we wouldn’t be at all surprised to hear from Amazon that shipping was even bigger than expected due to the surging demand in on-line purchases this year.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

What Happened?

The monthly Personal Consumption Expenditures (PCE) Price Index rose by 3.2% on an annualized basis, which was below the expectations of 3.3%. Core PCE fell by .1% to 2.6% on an annualized basis. Equity futures moved from red to green on the news.


What Does it Mean?

Considered by most to be the Federal Reserve’s most watched indicator, the current PCE reading continues to confirm the battle against inflation being all but over. In our opinion this gives further credibility to the idea of not a pause in rate hikes but the possibility of cutting rates sometime in 2024.

Why Do We Care?

Our position all year has believed interest rates and inflation were on their way down, which in turn would be favorable for stocks. We continue to see evidence of this and what was once a very lonely opinion is quickly being adopted by most. This doesn’t mean we are done moving higher, in fact our view continues to be optimistic regarding stocks into the new year and throughout 2024. That said, we feel some tax strategic selling may take place in the early days of 2024, which may spark a violent pullback giving those on the sideline a good opportunity to be a buyer.

Other Goodness

Quint sat down with Schwab Network to discuss a few individual names heading into 2024 which may be found HERE.

 

Until next time

~ Quint

 

Disclosures

Joule Financial, LLC is registered as an investment adviser with the SEC. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability. A copy of Joule’s current written disclosure brochure filed with the SEC which discusses among other things, Joule’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov

This does not constitute an offer or solicitation. This information should not be considered investment advice. Opinions expressed reflect the judgment of the author and are current opinions as of the date appearing in this material only. While every effort has been made to verify the information contained herein, we make no representations as to its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Past performance does not predict future results. Content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. All investing involves risk, including the loss of some or all of your investment.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.

Hyperlinks in this letter are provided as a convenience, and we disclaim any responsibility for information, services or products found on websites linked hereto.