Dow tumbled 304. decliners over advancers 5-1 & NAZ sank 305. The MLP index was off 3 to 217 & the REIT index dropped 3+ to the 386s. Junk bond funds were sold again & Treasury debt was purchased (more below). Oil went up 1+ to the 86s & gold recovered 8 to 1686.
AMJ (Alerian MLP index tracking fund)
FedEx (FDX) says a drop-off in its global package delivery business has triggered a belt-tightening move. The company is closing storefronts & corp offices while putting off new hiring. The
company also said it will likely miss profit target for
fiscal Q1 & it expects business conditions to further
weaken in the current qtr. "Global volumes declined as macroeconomic trends significantly
worsened later in the quarter, both internationally and in the U.S.,"
CEO Raj Subramaniam said. "We are swiftly
addressing these headwinds, but given the speed at which conditions
shifted, first-quarter results are below our expectations." The challenges in Europe & Asia led to a roughly $500M revenue shortfall. Revenue, meanwhile, came in about $300M below the company's forecasts. The company will cut costs by closing over 90 FedEx Office locations & 5 corp offices, deferring new hires & operating fewer flights. The company scrapped its forecast for its earnings in its current fiscal year that it had issued less than 3 months ago. FDX now projects adjusted EPS
of $3.44 & $23.2B in revenue. That's below the consensus
forecast of $5.14 adjusted EPS & $23.6B in
revenue. Subramaniam noted that he remains confident FDX will achieve its fiscal year 2025 financial targets. For the current qtr, which ends in Nov, FDX expects
revenue of $23.5-24B & adjusted EPS of at least $2.75. Analysts had expected adjusted EPS of $5.48 & $24.5B. The stock nosedived 47 (23%).
If you would like to learn more about FDX, click on this link:
club.ino.com/trend/analysis/stock/FDX?a_aid=CD3289&a_bid=6ae5b6f7
FedEx closing stores, offices, delaying hires, pulls forecast
Short-term Treasury yields rose as investors anticipated further interest rate hikes to curb inflation. The yield on the 2-year Treasury bond climbed above 3.9%, a level it had not seen since 2007 & is currently up 3 basis points to 3.903%. The 2-year Treasury is highly sensitive to policy decisions as it is widely recognized as in indicator of how investors think central bank policy will develop in the near future. The yield on the 10-year Treasury was little changed at 3.455% & the yield on the 30-year Treasury ticked up 1 basis point to 3.489%. Yields move opposite to prices. One basis point is equivalent to 0.01%. The yield curve has jumped up across the board this week after a hotter-than-expected inflation report on Tues. The persistent price increases have led investors to expect the Federal Reserve to hike rates higher & hold them there until inflation falls.
2-year Treasury note tops 3.9%, hitting highest level in nearly 15 years
An oil subsidiary in Germany previously controlled by a Russian oil giant is now under the control of the German gov. The German gov took control of Rosneft Deutschland GmbH & RN Refining & Marketing GmbH, 2 companies owned up until now by multinational oil & gas company Rosneft. The gov said the move would ensure continued oil production as the intl community looks to cut its oil dependence on Russia. German's Economy Ministry said the companies will be put under the control of the Federal Network Agency. The ministry also said the agency will assume control of the companies’ shares in 3 refineries: PCK Schwedt, MiRo & Bayernoil. The ministry said the acquisition will last for 6 months. The Schwedt refinery supplies about 90% of Berlin's fuel & Rosneft Deutschland is one of the largest oil processing companies in the country, accounting for 12% of Germany's oilrefining capacity. The move comes amid a larger package by the German gov to seek alternatives to Russian oil, which it intends to announce later today. Rosneft previously said it had no intention to stop the import of Russian oil. An EU embargo on Russian oil is set to be enacted on Jan1, 2023.
Germany seizes control of 3 Russian-owned oil refineries ahead of EU deadline
As said before, the economy is out of control. Nobody knows where it is going. Investors understand that & have given up investing in risky investments (i.e. stocks). The outlook remains grim.
Dow Jones Industrials
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