So, as we add FedEx to the list of company preannouncements, they won’t be the last. “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the US” said the new CEO Raj Subramaniam in the press release. On CNBC last night he said “we’re seeing volume declines in every segment of the world…the weekly numbers are not looking so good, so we just assume at this point that the economic conditions are not going to be good.” Cost management mode is what follows. To the question, “are we going into a worldwide recession?,” the answer from the CEO was “I think so.”
Noteworthy today, and again, long end bonds are no flight to safety with the clear economic global downturn as all the rate hikes are raising the bar across the yield curve, notwithstanding the inversions.
Part of the weakness in FedEx’s business is definitely the China slowdown as they have a huge Asia-Pac presence. China reported its August retail sales, IP and fixed asset investment data that all exceeded subdued expectations. The closures and reopenings, along with trouble in residential real estate, are creating huge disruptions on the ground but also with these monthly data points bouncing up and down month to month.
Singapore said its August non-oil domestic exports fell by 3.9% m/o/m, more than the forecast of down 3%. Shipments to China fell as they did for pharma and electronic products. Asian stock markets were red across the board.
Weighed down by falling real wages, UK retail sales ex fuel oil in August fell by 1.6% m/o/m, worse than the estimate of down .7%. They are down 5% y/o/y. The ONS said “All main sectors (food stores, non-food stores, non-store retailing and fuel) fell over the month.” In response, along with broader dollar strength, the pound is now at around $1.14. We are now seeing shockingly the weakest level since 1985. Gilt yields are little changed and the FTSE 100 is up because of that weak pound. This comes before next week’s BoE meeting where they will debate a hike of 50 or 75 bps.