Greece starts this week with the same anxiety Damocles must have felt as the sword dangled over his head. No wonder he decided to give up the King’s life in exchange for less anxiety. The question is: Will the Greek Parliament follow in the path of Damocles and move out from under the dangling sword? Granted, moving from under the sword does not remove the reality of deep cuts, but it does remove the immediate anxiety about something worse – a default on its debt. We will know on Wednesday, but as of this morning, the market seems to feel that Greece will decide to give up the King’s life and vote for severe austerity measures that open the door for a longer-term bailout from the financial powers that be …
The question below calls for deep discussion (remember the bond-price question the other day). The difference, though, is that I can more sharply define a shallow answer for this question.
Thank you for your very good analysis of FedEx – a good update of Dow Theory! Reflecting on it – isn’t FedEx benefiting from structural change in retailing, an increasing volume of on-line purchasing? This can generate many more parcels in the post. How do we then separate out the growth increase from this structural change from measures on the US economy’s real growth?
Simply, the issue for the U.S. economy is a structural deficit in consumer spending. The recession of 2007 and the financial collapse of 2008 created a huge whole in the economy because the consumer stopped spending. The issue, then, is consumer spending, no matter whether it is online or in the traditional brick and mortar setup. True, certain retail/service jobs are lost as commerce moves more into the ether, but the yang of that is that the ether creates service jobs to replace those lost jobs. More importantly, though, since FedEx lives or dies on moving goods, not services, its health speaks to the manufacturing sector of the U.S. economy. If products are moving, it means someone is manufacturing the products.
Now, having said that, understand that manufacturing comprises a mere 11% of our economy these days. Although not healthy, this is reality. So, going back to what I said a moment ago, as service jobs are lost in the traditional economy, many of those jobs, and some new ones as well, are created in online commerce, which means no matter how you cut it, if FedEx is moving goods, this is a positive for the economy. Ultimately, it is all about jobs and consumer spending.
The above is a shallow answer to a question with much deeper roots because the truth is that the global economy is transforming to reflect the realities of the evolving Internet commercial world. This implies economic, structural changes that are becoming more apparent every day. The reader touches upon one major change, the transformation of retail from servicing walk-in buyers to servicing online buyers, but other, more subtle, changes are occurring as well. These changes will eventually come to change the reality of FedEx as a transporter of goods. Sooner than some imagine, the global economy will create more and ship less. This coming reality has everything to do with the transformation of the traditional distribution model of manufacturing here and shipping there, a model we have relied upon, well, forever. I told you the issue is deep …
Trade in the day – Invest in your life …
