FedEx (FDX) posted results after the close last night, coming in short of Wall Street consensus and offering lower full-year guidance. The shares immediately got smacked, and will surely weigh on the market today, especially the transportation segment.

FedEx blamed the strong dollar and negative effects of trade battles, which hurt the company’s international business.

Last year, transportation stocks peaked long before the major indices and took a substantial drubbing.  There are so many reasons. The index must participate in a rally, as it’s an economic proxy for the United States and the rest of the world.

On that note, FedEx has had its share of problems for some time, and they extend well beyond the trade tiff. Moreover, Amazon (AMZN) plans to deploy its own delivery service that will not only serve Amazon but also all the current FedEx customers. One of my biggest business heroes, Fred Smith of Fred Smith Company, has to figure a few things out quickly.

Here Comes Amazon

After releasing its results, shares of FDX were slammed more than 5.0%. Unfortunately, long-term investors in the stock have become accustomed to getting hammered after earnings releases. The stock hit $247 a share last January, and it’s been an unmitigated disaster since.

The prior four earnings reports let investors down (two of the last three were outright misses). That triggered significant selling over the next week after the earnings. 

• -17.3%: Dec 18, 2018
• -8.3%: Sep 17, 2018
• -4.7%: Jun 19, 2018
• -7.1%: Mar 20, 2018

Transportation Out of Gear

Yesterday, the Dow Jones Transportation (DJT) Index finished lower after five components suffered losses in excess of 2%.

• Norfolk Southern (NSC): -2.05%
• Ryder System (R): -2.57%
• Union Pacific Corporation (UNP): -3.30%
• Landstar System (LSTR): -3.45%
• J.B. Hunt (JBHT): -3.49%

I will be watching this index closely, and it will inform us of exiting decisions on names beyond transportation.

Dow Jones Transportation Index

Federal Reserve

Beyond FedEx, it’s going to be about the Federal Reserve, as Powell & Co might change the rules in the most profound ways.

Today, it’s all about the Federal Reserve and their decision on rates. The conference call is going to be critical. There may be new realities for the central bank that could break the rally or establish a new paradigm.

Portfolio Approach

We added to Industrials yesterday. As a result, cash is as low as we’ve allowed it to get, which isn’t very comfortable. So, we might ring the register on something.

Communication Services 1	Consumer Discretionary 4	Consumer Staples 1
Energy 1	Financials 1	Healthcare 2
Industrial 4	Materials 3	Real Estate 0
Technology 2	Utilities 0	Cash 1

Today’s Session

All eyes are on the Federal Reserve and what will happen to quantitative tightening.  I should note that the BAML Survey shows the greatest risks concerns have shifted. 

• 30% China’s economy
• 19% Trade war
• 10% Corporate credit crunch

I would put the US dollar as number one and keep the rest of the order assuming the Federal Reserve is going to play ball.

 

Comments

I work for one of the largest port container drayage transport firms. There has not been any slow down in import containers since mid 2018. That is a LAME excuse by FedEx who is a great trucking firm. We could not find enough truck power to move the record volume of containers shipped through the Ports of Long Beach and Los Angeles. I have been doing this with the firm for 50 year. Business is booming on international transport. Some 16 million TEU's. Contact the marketing departments of the two Ports who receive 40+% of all containers entering and exiting the USA. Jim Gill on 3/20/2019 2:09:40 PM

Charles, we wonder why the Indonesian plane crash, was safely taken off AUTOPILOT by a trained pilot the day BEFORE the crash but NO ONE REPORTED ON IT. ALSO the Ethiopian airlines had the MAX SIMULATOR, BUT THE PILOT NEVER EVEN TRAINED OR USED IT. Why is BA being subjected to this, when BOTH crashes have a FULLY accurate record of why they both crashed. Cutting costs on pilot training SKILLS sets,& methods , training memory ABILITIES, should NEVER be used By any airline or country. The fact both have OMITTED their pilots actions due to company management cost cutting thru training . It is NOT acceptable after the first crash , ETHIOPIA should have put their pilots on the MAX SIMULATOR as they were one of the first to receive one. Ba long, but what is your opinion , or thought on these avoidable linked factors of deaths? Please Charles PAYNE investigate this information, or reply on your show. We mourn for those who lost their lives and wonder why &how many omitted their pilots from their training. Thank you Charles PAYNE & FBN. ALSO we support judge JEANINE show, dont let them do what they are trying to shut down Tucker, and All of Fox & FBN. WE MUST STOP THE DEM propaganda media machine from taking our ONLY TRUE , FACT BASED, INVESTIGATED news. Thank you president Trump, we know the Dems are trying EVERYTHING, to stop USA SUCCESS, and USA HISTORY from being about freedom, PRIDE, INSPIRING CONFIDENCE in ouselfs and each other in the USA. Ed on 3/21/2019 2:21:13 AM

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