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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • IT ALL HANGS ON THE FED - By WSS Research Desk 0 comments
    Jun 19, 2013 2:20 PM | about stocks: FDX

    By Carlos Guillen

    Stock benchmarks are all trying, but finding it rather difficult to move into winning territory as investors wait with great anxiety for the Federal Open Market Committee's directive scheduled to be released shortly at 2:00 P.M. So far trading activity this week has all been about the Fed; that is with the expectation of no tapering, and this has had equity markets making strong moves to the upside. Today it is apparent that most investors have already built that into their expectations, and as such stocks are on wait mode.

    While there have not been major economic data points to lift markets in the session, earlier today the Mortgage Bankers Association's weekly applications report was somewhat of a negative driver as it showed a 3.3 percent drop in applications versus a 5.0 percent increase the week before. The indexes for refinancing and home purchase applications each dipped more than 3 percent with the weakness being attributed to rising mortgage rates. Clearly in the near term everyone will be refocusing on interest rates as it may serve to predict when Fed tapering may begin.

    Over in Japan, stock markets had a strong up session fueled by economic data that showed a 10.1 percent increase in exports, which was the biggest jump in three years. The strong growth in exports news had the Nikkei up 1.8 percent.

    Fed Chairman Ben Bernanke's news conference will begin at 2:30 p.m., and at the moment the word on the Street is that he will not likely start rolling back its easy-money policies in the near term; however, if he does begin tapering, we can certainly expect to finish the trading session deep in the red ... hang on ladies and gents, it is going to be a rough trading afternoon.

    FedEx Beats but Outlook Cautious
    By David Urani

    FedEx posted its fiscal fourth quarter earnings results today, and on the bottom line it beat by a solid $0.18. That result was helped to an extent by a 9% year over year decline in fuel expenses. Meanwhile revenues were up 4% to $11.4 billion, in line with consensus.

    While it was a good bottom line result, the company is taking a cautious tone with the results, noting that the global economy remains difficult. While Ground segment revenues were up 12%, Express was up just 3% and within that it seems customers are putting off a lot of the pricey international air shipments.

    Over at its Freight (trucking) segment, FedEx showed a 1% decline in revenue, although margins improved. They are prepared to raise Freight rates by 4.5% in July which could be a positive sign for the trucking industry, but at the same time this may be a preventative measure as new laws go into effect in July that decrease the maximum allowed weekly driver hours which threatens to raise the cost of drivers.

    Management sees fiscal year EPS between $6.67-7.04 which is below the current $7.30 consensus estimate; a cautious outlook that factors in continued trade-down to lower-priced services. Yet, another part of that guidance also includes their prediction for US GDP, which is just 2.3%. The company is also continuing to cut back on overcapacity in Asia.


    Stocks: FDX
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