So, which is it, Larry Fink (Blackrock), “I’m hyperbullish on the US economy” or Federal Express?

I don’t think they can both be right.

Mr. Fink, for his part, is conforming to the sell side script.  FDX, for its part, is conforming to the monetarist script – lower earnings, reduce capex, reduce headcount, increase stock buyback.

For the record, the script for a “hyperbullish” economy used to be increasing earnings, expanding capex, cautious but firm hiring and little interest in “financial” investment.  Far more companies than not have been showing FedEx proclivities than the “hyperbullish” scenario.

 

 

 

 

 

 

 

Commenting on the paltry third quarter, FedEx Chairman, President and CEO Frederick W. Smith stated, “The third quarter was very challenging due to continued weakness in international air freight markets, pressure on yields due to industry overcapacity and customers selecting less expensive and slower-transit services. In response, beginning April 1, FedEx Express will decrease capacity to and from Asia and will aggressively manage traffic flows to place low yielding traffic in lower-cost networks. We are currently assessing how these actions may allow FedEx Express to retire more of its older, less-efficient aircraft…” [emphasis added]

Read more: http://www.benzinga.com/news/earnings/13/03/3432026/fedex-fails-to-deliver-on-earnings-and-guidance#ixzz2O6fvH7Zj

No doubt this will be spun as an Asian-driven story, with weak international business as the headline.  However, domestic revenue and results show that this is not just an overseas problem.  Domestic revenue per package and average daily package volume only grew 1% each.  Hardly a sign of robust domestic demand (and it’s not as if customers are simply choosing to use the Post Office).

On the other end of the debate, from Bloomberg TV:

FINK: We are definitely in a pause. Inflows have flattened and most of that money came in from cash – not a rotation from bonds. It was really people putting money to work and now some people are taking them money off…

 …but by year end equity markets will be a lot higher with a potentiality for global markets to be up over 20% by year end…. markets are improving, economic conditions are improving, the changes in Japan is a net positive, China is not as weak as we feared, and the US is going from strength to strength to strength – and that is the dominant story in 2013.

Mr. Fink sees strength everywhere, FedEx sees the opposite.  Only one can be right.