A feeling of calm and optimism is pervasive in the market right now. The economy seems to be rebounding, and there are few near-term event risks.
As such the market has been drifting higher of late — not in dramatic fashion — but it has been with ease.
The week ahead will give us some new housing numbers, as well as a new FOMC statement on Tuesday (it will likely be behind), so the biggest story is coming Thursday, when FedEx (FDX) reports earnings.
FedEx, as you know, is considered to be one of the best proxies on the global economy, and it’s managers are supposed to have an unrivalled, real-time look at what’s going on right now.
Last year, in this quarter, during the depths of the recession, FedEx earnings $.31/share on revenue of $8.14 billion.
This year, the company is expected to earn $.72/share on revenue of $8.33 billion.
During FedEx’s last conference call, management spoke to the global rebound (via SeekingAlpha):
We believe the U.S. economy reached a turning point year over year during our second fiscal quarter with the one year anniversary of the financial collapse. Several economic indicators related to industrial demand turned positive compared to the same time last year.
Other forward-looking indicators point to near-term improvement. Manufacturers of capital goods say many of their customers are buying again, as opposed to drawing down inventories, signaling an up-tick in capital spending. We believe the process of inventory clearance has bottomed and subsequent restocking is driving growth.
And yet just days ago, CEO Fred Smith said the company wasn’t quite yet sold on the recovery.
So, this is the story. Investors will be pouring over results and the call quite closely.
One more thing: as you can see, the stock has had a nice run over the last year (not surprisingly) though it’s still behind its highs seen during Christmas, and below its pre-Jan 19th highs. In fact, lately it’s showing some nascent signs of weakness.