Two news stories capturing the state of the economy – The Average Joe

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    Two news stories capturing the state of the economy

    victorlei

    September 20, 2022

    Two major news stories in recent weeks should have sent shivers down investors’ spines. But with all of the bad news we’ve been throwing your way, you’re probably already desensitized.

    1/ Major retailers cancel billions of dollars in orders ahead of the holiday season.

    The list of names includes Walmart, Target, Kohl’s and Under Armour. But wait, aren’t they simply ordering less to get through all that excess inventory?

    That might be the case, but if they’re reducing purchases and expecting consumers to spend less — that would be a warning for what’s to come in the economy.

    2/ FedEx’s CEO sees a global recession coming.

    Last week, FedEx reduced its sales forecast by $800M and lowered earnings expectations to $3.44 per share (33% below estimates) — blaming Asia and Europe for weak results.

    Deutsche bank analysts said it was the “weakest set of results” they’ve seen in ~20 years — expecting this to be “the first in a series of warnings” to come (BBG).

    It’s uncertain whether the issues are unique to FedEx. Rival UPS (NYSE:UPS) reaffirmed its full-year outlook and said it would hire 100,000 workers for the holiday season.

    Looking forward: Economists have been debating over the technicalities of whether we’re in a recession or not — while consumers are feeling the pain of inflation.

    Per Brandon Smith (ZeroHedge), an economic decline is “like an avalanche that builds over time, then breaks and quickly escalates as it flows down the mountain.”

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