US stocks are looking to start the day higher but given the inability of the market to hold onto gains in recent days, no rally, not even in December, is safe these days.  Obviously, the main draw for today will be the FOMC rate decision early this afternoon.  Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary:

Bespoke Morning Lineup – 12/19/18

In the past, we have referred to Fed Ex as a bellwether for the state of the US and global economy, so it was only fitting that the day before the “most important” Fed decision of the year, the company reported Q3 earnings.  Unfortunately, the stock is trading down sharply on the results, and if it finishes today where it is trading in the pre-market, it will be FDX’s worst earnings reaction day in over five years based on the data from our Earnings Screener.

After listening to the company’s conference call last night, FDX’s view on the state of the global economy is not particularly positive and should give pause to anyone who thinks the global economy is just humming along fine.  Below we have included a number of key quotes from the call.  Reading through the commentary, it’s clear that while the US economy remains solid, global trends are weakening at an increasing state.  The key quote is the last one, where FDX management pins the blame for economic weakness on “bad political choices.”  Not just in the US, but around the world.  The question Fed policymakers must contend with is, how long the US can continue to keep itself insulated from global trends.

“Some of the largest economies in Europe are experiencing weakness.”

“World trade slowed in Q3 to just 3.5% compared to 5.3% in Q3 2017. Leading indicators point to positive, but even slower trade growth near-term.”

“Economic growth in the UK has slowed sharply since July.”

“The peak for global economic growth now appears to be behind us.”

“China’s economy has weakened due, in part, to trade disputes.”

“Our international business, especially in Europe, weakened significantly”

“FedEx is experiencing strong growth in the US, where the economy remains solid.”trade will continue to grow.”

“I’ll just conclude by saying most of the issues that we’re dealing with today are induced by bad political choices, making a bad decision about a new tax, creating a tremendously difficult situation with Brexit, the immigration crisis in Germany, the mercantilism and state-owned enterprise initiatives in China, the tariffs that the United States put in unilaterally. So, you just go down the list, and they’re all things that have created macroeconomic slowdowns. The good news is, with a change in policy, they could turn it around pretty quick, too.  So fundamentally, we think trade will continue to grow.”

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