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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

FedEx Says Economy Is Worsening, Cuts Outlook

Posted by WARREN MOSLER on September 18th, 2012

Not a bad indicator. Might be we’re already starting to go over the fiscal cliff. Probably a lot of contracts delayed pending congressional approval. And the anticipation of higher taxes and lower demand doesn’t help either.

Fortunately for Obama, Romney’s moved the debate away from the economy.

Good news down here is our highly informal polling shows me at 50%+ in my Congressional race! Looking forward to straightening them all out in DC!
;)

FedEx Says Economy Is Worsening, Cuts Outlook

September 18 (Reuters) — FedEx lowered its fiscal 2013 profit target on Tuesday, saying earnings could slide as much as 6 percent for the year, as a weakening world economy prompts customers to shift toward lower-priced and slower shipping options.

The world’s second-largest package delivery company said it now expects profit for its fiscal year, which ends in May, to come to $6.20 to $6.60 per share, below its prior forecast of $6.90 to $7.40 a share.

Wall Street had expected a full-year profit of $7.03 per share.

FedEx’s shares fell 2 percent in premarket trading from Monday’s close on the New York Stock Exchange.

“Weak global economic conditions dampened revenue growth (and) drove a shift by our customers to our deferred services,” Chief Financial Officer Alan Graf said in a statement.

49 Responses to “FedEx Says Economy Is Worsening, Cuts Outlook”

  1. Charles Hayden Says:

    Folks down here at Occupy Dallas are rooting for you.

    Reply

  2. chewitup Says:

    May be they can get a temporary bump delivering a few million iPhone 5s in the next 2 Qs.

    All the best in the campaign!

    Reply

  3. RyanVMarkov Says:

    Go Warren and good luck!

    Reply

  4. Unforgiven Says:

    “Looking forward to straightening them all out in DC!”

    Godspeed, Warren!!!

    Reply

  5. Cesar Says:

    Congrat’s Warren – we’re all rooting for you!

    Reply

  6. roger erickson Says:

    It’s true, there are claims that many Federal agencies are already reducing spending (esp DoD) even before next year’s fiscal cliff. They may all be reading Pete Peterson’s DT fiscal cliff notes.
    http://www.military.com/daily-news/2012/09/18/gates-slams-congress-for-managerial-cowardice.html?comp=700001075741&rank=1

    Yet, with enough hoarding, we can all aspire to go out awash in gold.
    http://www.foxnews.com/us/2012/09/17/nevada-man-dies-with-200-in-bank-7m-in-gold-hidden-inside-home/?intcmp=trending

    Reply

    Djp Reply:

    @roger erickson,

    Yes, now there was a very charitable man. He produced, but didn’t consume.

    Reply

  7. Dan Lynch Says:

    If you get elected, at least you’d be able to rub shoulders with the powers that be and maybe that would help get your ideas accepted ?

    Definitely rooting for you. :-)

    Reply

  8. Clonal Antibody Says:

    We will keep our fingers crossed that this time you do get to beat Donna Christianson. You have increased your visibility a lot since 2010

    Reply

    Walid M Reply:

    @Clonal Antibody,
    best of luck in your race ..

    Reply

  9. Dan Kervick Says:

    As goes the Virgin Islands, so goes America!

    Reply

  10. Vincent Says:

    http://www.ft.com/intl/cms/s/0/ecb6d1dc-01a0-11e2-8aaa-00144feabdc0.html#axzz26qhqcEIC

    here’s one for you, warren. they’re really trying ;)

    Reply

  11. Ryan Says:

    Congrats on the polls. Uncle SAM needs you. Soon.

    Reply

  12. lula Says:

    Congrats, Warren!

    Reply

  13. Tom Fleming Says:

    What if FedEx shipments are no longer a good economic barometer? I can’t remember the last time I got a FedEx package. They are a premium service and people are finding less expensive alternatives. I wouldn’t bet the financial markets on FedEx projections. They are a one trick pony, and the trick is getting old.

    Reply

    WARREN MOSLER Reply:

    that is always possible.

    Reply

    Vincent Reply:

    @Tom Fleming,
    OK, but UPS also cut its outlook.

    Reply

    Adam2 Reply:

    @Vincent,

    What about ONTRAC?

    I think it is taking over a lot of West Coast deliveries through Amazon that were once done by FedEx and UPS.

    They just opened a hub in Freemont, California with 5 times the capacity of their old one.

    Amazon will also open up facilities in CA after the tax law comes into affect.

    Reply

  14. chuck martel Says:

    Wall Street had expected a full-year profit of $7.03 per share.

    How does “Wall Street” arrive at their expectations? Is it like sports writers expecting the Tigers to win the central division of the American League? Or me expecting a pretty decent crop of tomatoes after scattering horse manure over the garden? Or the neighbor expecting that his not-so-bright daughter will get admitted to Sweet Briar?

    Reply

    Djp Reply:

    @chuck martel,

    If you think they’re wrong, you can easily wager against them.
    FDX down 3% on the news, so if you think the estimates are meaningless it’s a good buy.

    Reply

    chuck martel Reply:

    @Djp

    How would I know if they’re wrong? What I want to know is what their expectations are based upon. Do they get a rundown on the upcoming fiscal year from company management? Does management give them anticipated sales figures against expenses? If they formulate the earnings independently, how can they possibly know the details? Are the projected earnings the product of one dedicated analyst or the average of a group of different analysts? It seems like BS to me.

    Reply

  15. jcmccutcheon Says:

    Great News Warren. If you get in, how hard will it be for you to get an influential role on the finance committee or which ever committee deals with deficits, the fed, and financial regulation? Get goose bumps imagining Warren grilling Bernanke in front of the cameras.

    Reply

  16. Adam (ak) Says:

    Off topic. It looks that years of Western propaganda work start bringing effects in China – or is it all AEP’s misinterpretation and the Chinese still know that “bond vigilantes” only exist in the imagination of some Western economists, propagandists and politicians?

    This would not mean that the argument “ad bond vigilantem” could not be used on Japs – as long as it sticks.

    http://www.telegraph.co.uk/finance/china-business/9551727/Beijing-hints-at-bond-attack-on-Japan.html

    http://www.chinadailyapac.com/article/consider-sanctions-japan

    The original article does not contain anything outright silly to me.

    “according to the Japanese Ministry of Finance and the Bank of Japan, China held short-term and long-term Japanese government bonds worth 18 trillion yen ($230 billion) by the end of 2011, an increase of 71 percent year-on-year. China became the largest creditor of Japan in 2010. Given these facts, Japan should reconsider its financial health. In other words, with Japan’s national debt at stake, the proverbial straw that can save the Japanese economy seems to be in the hands of China. And China can use it to find ways to impose sanctions on Japan in the most effective manner.”

    Regarding the elections I would fix the website and removed all the references to 2006. Hiring a professional graphic designer would also help stimulating the economy…

    Reply

    Tristan Lanfrey Reply:

    @Adam (ak),

    I am not a native English speaker, and I’m not usually politically correct for the sake of it, but the word “Japs” sounded a bit wrong to me, so I checked and it seems it is indeed derogatory in the US and a colleague confirms that in Britain it is also regarded as derogatory.

    http://en.wikipedia.org/wiki/Jap

    Although the article says it is fine in a handful of other countries. Just an FYI, as I’m not sure the slur was intended or not.

    Regards,

    Reply

    Neil Wilson Reply:

    @Tristan Lanfrey,

    It’s not derogatory in the UK for anybody under the age of about 70. It’s just short hand for the Japanese people.

    Exactly the same as ‘Brits’ or ”Aussies’

    Reply

    Tristan Lanfrey Reply:

    @Neil Wilson,

    I see, I stand corrected (but my colleague doesn’t :))

    Thanks Neil!

    ESM Reply:

    @Neil Wilson,

    Hearing the word in the US would make me absolutely cringe, and I think it’s as bad as any ethnic slur for the Japanese in the US that I can think of. That being said, because it’s a natural abbreviation, I do hear it far more often than any other ethnic slur, and I tend to cut people slack if they use it in a blog post, email, or text message.

    Neil Wilson Reply:

    @ESM,

    Another one of those ‘jelly’ and ‘squash’ things proving that we are divided by a common language. :)

    Banning words doesn’t alter the underlying feeling. All that happens is that another word takes its place.

    And as we’ve seen the feeling is expressed in different ways around the world.

    Ed Rombach Reply:

    @Neil Wilson,

    Or Yanks? During WWII Americans and I reckon Brits and Aussies referred to Japanese as Japs but back then it was not said in terms of endearment. However, Yanks and Brits and Aussie’s still refer to each other as such with no hostility intended.

    chewitup Reply:

    @Tristan Lanfrey,
    In the USA a jap is a jewish american princess. American japs spend freely. That may or may not be a good thing, depending on your perspective. ;- )

    Reply

    Adam (ak) Reply:

    @Tristan Lanfrey,
    I don’t live in the US. The term is not considered to be derogatory or racist in Australia.

    I haven’t quoted my Chinese friend on this issue as this would really have been removed. He usually doesn’t swear but his rant from yesterday was very juicy. Probably close to 1.3 billion people think in a similar way. They would not feel offended at all by using the term “Japs” in this context.

    Since the Japanese as a state and as a society did absolutely nothing to repent for the crimes against humanity committed during WW2 in China, the level of indignation especially in Continental China is extremely high. The war criminals weren’t punished because this would have undermined the containment of the communists right after the war, etc.

    The issue is also used by members of CCP leadership to play their own politics. My own view is that the Chinese will prevail.

    The Japanese are being used as a bait in the process of Chinese containment. Nothing good will come out of this – the Chinese can win in this case unless a full-scale military re-occupation of the islands possibly by the Americans happens – but this won’t happen under the current president. So stay tuned.

    Instead of “baiting” the competition between the old and new superpowers should be moved to technological space. Nothing stops the US and Japan from investing in research into new technologies which would render natural gas extraction (the real subject of the conflict), obsolete.

    Reply

    John Horkin Reply:

    @Adam (ak), Japanese as a state and as a society did absolutely nothing to repent for the crimes against humanity committed during WW2 in China.

    I was born in 1965. I am not going to repent for any of my actions during the egyptian enslavement of jews, the roman enslavement of europe, the african enslavelment by the USA or the Chinese enslavement by the Japs. I have all thier DNA in me though.

    You see I wasn’t alive then, and any idiot that wants me to apologize for something I didn’t do can stuff it and go waste someone elses time with thier drama, my life is too short to waste on all these “causes”

  17. Chris Says:

    Good luck man! The country needs you!

    Reply

  18. Ed Rombach Says:

    Warren – Since you are running for Congress again from the Virgin Islands, allow me to put on my policy wonk hat for a moment. You often say, “For the size government we have, we are grossly over taxed.” Of course I agree with you and let me suggest a reform to the tax code that both simplifies and reduces taxes aggressively. I call it the 10% solution. All forms of income would be taxed at a flat 10%, including earned income, interest income, dividend income, capital gains, corporate income and social security with 5% paid by employees and 5% paid by employers, while eliminating the income ceiling.

    Most current deductions would be eliminated and replaced by a generous standard deduction such that a family of four earning $50K would not have to pay any income tax. This means that even though this tax structure appears flat, it is nevertheless quite progressive especially when taking into account the elimination of the social security tax, which under current law is the most regressive tax borne disproportionately by the middle calls and working poor.

    Under this plan, if you do the math you will see that regardless of the source of one’s income the total effective tax rate never exceeds 15%. Moreover, 10% is a simple number to remember and reminiscent of the Biblical Tithe which could appeal to religious folks. This approach overcomes the objection often raised by the left about the Armey/Forbes flat flat tax which did not tax capital gains, interest income or dividends. Makes sense too, because it doesn’t seem fair that some rich guy who derives all his income from coupon payments on Treasury securities wouldn’t have to pay any tax. At the same time, the 1% would probably be salivating over a combined effective tax rate of 15%, which is almost as low as Romney pays, without having to pay an army of tax accountants and lawyers to exploit every available loophole the way Romney does.

    In other words, I believe the 10% solution for tax reduction and reform would garner support from liberal progressives on the left as well as Supply Siders and Austrians on the right who want to cut taxes.

    Reply

    WARREN MOSLER Reply:

    seems at least for now with spending at maybe 25% of gdp taxing would have to be maybe 16% of gdp?

    and, of course, I still don’t like transactions taxes
    ;)

    Reply

    Ed Rombach Reply:

    @WARREN MOSLER,

    Or… Bring government spending down from 25% of GDP to a level that would not be inflationary relative to an across the board 10% tax. Why not start with an immediate orderly withdrawal from Afghanistan and closing down some of the 190+ U.S. military bases around the world? Does it make sense for us to have 30K troops deployed in Germany? Who are protecting Germany from? Poland? Same thing goes for Japan and South Korea.

    Reply

    Clonal Antibody Reply:

    @Ed Rombach,

    Ed a flat income tax is a sure fire recipe for exacerbating income and wealth inequality. In other words, not a good idea at all!

    You have to remove taxes at the bottom tiers, and impose taxes at the higher tiers — a progressive tax structure.

    The reason for that lies in the nature of markets. Extensive papers have been written on it. In the bottom 99%, the wealth transfer is through a Boltzmann Gibbs type effect, and for the top 1% by the Pareto mechanism. The net effect is that wealth and income will always concentrate in a market based system, with a ratchet like effect. Thus one of the purposes of taxation is to take care of this effect. It should be realized, that these effects come from purely random causes, and in spite of appearances to the contrary, are not based on ability of the individuals.

    Reply

    Ed Rombach Reply:

    @Clonal Antibody,

    Go back and re-read my proposal. It is progressive. I don’t have the vaguest idea of what you are talking about with regard to the Boltzmann Gibbs type effect and the Pareto mechanism and frankly I don’t have enough time on my hands to research it. So, you will have to try and articulate your case in simple and concise enough terms for me to get it. That said, I’m sure there are counter arguments, but I’m open minded and always willing question my own preconceived notions.

    Reply

    Clonal Antibody Reply:

    @Ed Rombach, Ed, If you look at the article “Why it is hard to share the wealth” published in 2005. talks about what I am referring to. The welath and income distribution in the US follows this type of distribution to the “t”

    ESM Reply:

    @Ed Rombach,

    @Clonal:

    Funny article. Sort of what you might expect when you combine physicists who don’t understand economics with economists who don’t understand physics, and they just talk past each other.

    First, there is the problem that the article conflates income and wealth. In fact, given where the data probably comes from, the article is likely conflating reported taxable income and wealth.

    Second, there is this: “…econophysicists argue that in large systems the behaviour of each individual is influenced by so many factors that the net result is random, so it makes sense to treat people like atoms in a gas.”

    This is nonsense. There may be randomness, but there is also a bias. Smarter, thriftier, harder-working people of course are going to be more successful at acquiring wealth. A better model is a thermalized gas of atoms of different masses. The lighter atoms will have a Boltzmann distribution, but with a higher mean velocity than the heavier atoms.

    Better yet, put the container of gas in a gravitational field, and then the lighter atoms will be mostly concentrated at the top, with the heavier ones at the bottom.

    Third: “The analogy also holds because money is like energy, in that it has to be conserved.”

    Well, we know this is nonsense. If A builds a house, and B buys it, is B now poorer and A richer? If A sells his stock to B and realizes a taxable capital gain, A now has taxable income AND has to pay tax. Did A get richer from the transaction and B poorer, or is it A who really got poorer?

    Finally (although it came first in the article): “‘People on the whole have normally distributed attributes, talents and motivations, yet we finish up with wealth distributions that are much more unequal than that,…’”

    More nonsense. If income or wealth is a nonlinear function of normally distributed talent or motivation, you shouldn’t expect to see it distributed normally. Nonlinearity exists in almost all human endeavor. Sports competition provides a particularly poignant example. The difference in physical characteristics between champions and also-rans is often completely imperceptible. Yet nobody wants to pay money to see the 17th best runner or swimmer in the world.

    Ed Rombach Reply:

    @Clonal Antibody,
    The title of the article, “Why it is Hard to Share Wealth” gets to the point far more effectively than the physics and math theories presented in it. My take on why it is hard to share wealth is because after working for a paycheck and deferring some consumption to save and/or invest it, it seems understandable to me why some people would be reluctant to hand over what they might think is too much of the product of their labor to government bureaucrats who despite the best of intentions will never be able to spend it as wisely as the people who earned it.

    From the gas analogy section of the article, the following statement is patently absurd.

    “The analogy also holds because money is like energy, in that it has to be conserved. “It’s like a fluid that flows in interactions, it’s not created or destroyed, only redistributed,” says Yakovenko.”

    In the MMT paradigm bank money is created all the time with the origination of loans and it is also extinguished as loans are paid down and or go into default. And, reserves are created as government fiscal policy spends it into existence to provision the government with goods and services that are produced and provided for by the private sector. Even the Austrians don’t believe that money is static and can neither be created nor destroyed. They just link money to gold which constrains its expansion to 1.5% to 2% per annum, which interestingly enough is more or less in line with human population growth on average.

    Reply

    Ed Rombach Reply:

    @Ed Rombach,

    Correction in second paragraph: “This means that even though this tax structure appears flat, it is nevertheless quite progressive especially when taking into account the elimination of the social security tax”

    Change to: “This means that even though this tax structure appears flat, it is nevertheless quite progressive especially when taking into account the elimination of the INCOME CEILING ON THE social security tax”

    Reply

  19. Monica Smith Says:

    Surely you can spring for a web site that lands at the head of google and doesn’t show up as Nation Milk Producer’s Federation in the tab.
    Also, deep six the misery touting radio ads. Audio is good, but the people on the island presumably already know conditions are miserable. The cheerful music at the end does not erase the downer occasioned by the “grieving.”
    Also, nobody cares how long it’s been since you were a candidate. Presumably you got good experience running. Show it; don’t bother to tell.
    As an unaffilitated person, a House member will have no clout and no choice as to committee assignments.
    A Connecticut Yankee in the Virgin Islands might have a significant role, but you’re going to have to invent it.
    If you go on daily Kos and solicit someone to construct a lively web site, you’re sure to get some help. All kinds of talented people hang out there, looking for work to turn up.

    Reply

  20. JK Says:

    Warren,

    How about you team up with Elizabeth Warren for a 2016 presidential run? Her growing star power and practicality, combined with your knowledge base, is a sure winner. Get it done!

    Reply

    chuck martel Reply:

    @JK

    Is Warren Mosler 1/32 Kickapoo or some other native American tribe? Is there a tradition in his family that grandma lived in a teepee? Does he write recipes for native American cookbooks?

    Reply

    ESM Reply:

    @chuck martel,

    I’m pretty sure (our) Warren is 100% European descent, so he’s well on his way to star status up here in New England.

    Now all he has to do is claim native American ancestry, and use it to get tenure at Harvard Law School despite graduating from a crappy school. If he throws in a Kickapoo recipe that he cribbed from a fancy French restaurant in NY City, he’ll be golden.

    Reply

    Vincent Reply:

    @JK,

    Oh my. Elizabeth Warren is a know-nothing hack. Who in their right mind, let along Warren, would want to be associated with her. Warren and Elizabeth Warren are in different galaxies.

    Reply

    JK Reply:

    @Vincent,

    I don’t disagree about her not being “in paradigm” … but why do you call her a hack? Can you direct me to some information?

    She seems like one of the more practical and least corrupt of the rising stars in politics. If you think MMT is going to get traction anytime soon, without someone in the mainstream.. I think you’re being naive.

    Have a better suggestion than Elizabeth Warren?

    Reply

    WARREN MOSLER Reply:

    i can’t even get a meeting with her

    Reply

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