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FedEx Cautions on Global Economic Outlook

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Today's financial recap and tomorrow's financial outlook.

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MINYANVILLE ORIGINAL Markets continued to work off overbought conditions as traders continued to unwind bets that the Fed would expand its balance sheet and start QE3 at last week's FOMC meeting. Treasuries continued to struggle and the Treasury curve continued to flatten, signaling deflationary activity. The Russell 2000 (^RUT) small-cap index continued to underperform the broader S&P 500 (^GSPC) index, a sign that weakness may be on the horizon. In the morning, the NAHB Housing Market Index -- a gauge of builder and seller confidence -- rose to 40 from last month's 37, the highest point since 2006.

FedEx (FDX) reported first quarter earnings in the morning of $1.45 per share and $10.79 billion in revenues. While the company beat current expectations, these expectations had been lowered two weeks ago when the company reduced its earnings forecast from $1.45-$1.60 to $1.37-$1.43, vs. expectations of $1.57. Regardless, the future earnings outlook for FedEx was bleak. The company forecast second quarter earnings-per-share at $1.30-$1.45, much lower than Street expectations of $1.67. Full-year EPS was forecast at $6.20-$6.60, which is also lower than the $6.99 estimate.

In Spain, the Bank of Spain reported that bad bank loans rose to 9.86% of total loans in July from 9.65% in June, a total of 169.3 billion euros in loans. Spanish bank lending also fell 4.53% annually. The Deputy Prime Minister of Spain also commented that the country may seek a EU bailout after Spanish bonds came under pressure after EU politicians have been complacent over taking further action.

Tomorrow's Financial Outlook

Overnight, the Bank of Japan's monetary policy committee will decide whether or not appreciation in the yen will warrant further bond purchases. Today, Nikkei reported that the committee was considering additional easing as exports had fallen due to a rising yen and a declining dollar. If the BoJ did decide to ease, this would continue the wave of global monetary easings we've seen over the past three weeks.

Building off of today's solid NAHB Housing report, the US will release housing starts and building permits in the morning. Economists are expecting a rise to 765,000 from last's month 746,000 in housing starts and a decline from 812,000 to 795,000 in building permits.

In earnings, General Mills (GIS), AutoZone (AZO), Bed Bath & Beyond (BBBY), and Adobe (ADBE) will report earnings. Adobe's earnings are expected to fall short of the $.59 EPS and $1.11 billion revenue estimates due to continued weakness in the PC sector.

Twitter: @MichaelSedacca

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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