• Jeff Matthews

Pay Attention to FedEx, not the Fed

The most important data of the month—perhaps of the year—will be released this week.

The data will provide not only the most realistic fundamental snapshot of the U.S. economy at the moment, but a view of trends around the world.

The data are not, however, courtesy of the Federal Reserve or the Treasury Department. The data are courtesy of Federal Express (now FedEx, officially speaking), and consists of that company’s first fiscal quarter earnings and its outlook for the back half of this calendar year.

As we have pointed out in these virtual pages (see “No Haircut to the CPI Here,” from December 2005), the correlation of U.S. GDP to the index of air cargo activity is 70%.

Last week FedEx kindly provided a preview of things to come when the company pre-announced a shockingly good quarter—almost double prevailing estimates—“thanks to better-than-expected international priority volume” and cost controls.

At least one other company worth watching, Lubrizol, maker of fuel-additives—another highly economically sensitive business—joined the fray last night, raising 2009 earnings guidance thanks to “improving volume trends in the current quarter” and the ubiquitous cost controls.

Not for nothing, Lubrizol’s new earnings will be an all-time record high, and more than 50% above 2007’s previous high.

Coming after better news even from lowly homebuilders, we think there’s a trend—and that the trend is up-and-to-the-right.

Now, San Francisco Fed President Janet Yellen is not convinced: just yesterday she said the economic recovery would be—as nearly every economist in America is also expecting—“tepid.”

You may disagree with Yellen, as we do. Or you may disagree with us, as many, many investors, and most economists, do.

But whoever you disagree with, be sure to listen to FedEx: they know a lot more about the real world than we here at NotMakingThisUp, and they probably know a bit more than Ms. Yellen.

After all, along with their counterparts in Atlanta, they basically help make the economy run, whether it’s on the downswing or the upswing.

To hear which way things are swinging, and how tepidly they may iu fact be swinging, dial in at 8:30 a.m., Eastern Standard Time, Thursday morning.

Jeff Matthews I Am Not Making This Up © 2009 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

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The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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