The Fed Freaks Out the Markets, While FedEx Plays the Blame Game

Good evening, good lookin'. Here are the two things you need to know on March 20.

Mar 19, 2014 at 11:00PM

Just like Seinfeld or milkshakes from Shake Shack, all good things must come to an end. And after jumping more than 270 points to start the week, the Dow Jones Industrial Average (DJINDICES:^DJI) dropped 114 points Wednesday on some market-movin' fightin' words from the Federal Reserve.

1. Yellen announces her first big stimulus cut
We haven't heard of any hazing stories ... yet. But the Federal Reserve's two-day, eight-times-per-year policy-setting meeting ended Wednesday -- and the culmination was new Chairwoman Janet Yellen's first major policy speech to the press, which featured some serious stimulus news.
 
Keep in mind that the stimulus juice Yellen's referring to is the Fed's third round of "quantitative easing" (aka "QE3"), a policy in which the nation's central bank purchases billions of bucks' worth of long-term bonds monthly, which drives down interest rates. Lower interest rates encourage consumers to borrow to spend money on economy-boosting goods, like shakeweights.
 
But stimulus' days are numbered. Just a few months ago, in December, after data showed the economy had improved throughout the year, then-Fed Chairman Ben "Gray Beard" Bernanke slowed QE by cutting monthly bond purchases from $85 billion to $75 billion. Then in January, it went from $75 billion to $65 billion. Now Yellen is in on the stimulus-cutting party, announcing Wednesday a drop in QE to $55 billion in purchases.
 
The takeaway is that, according to Yellen, although winter gave America's home and manufacturing sectors some frostbite last month, the economy's fundamentals are still improving and stimulus hasn't caused significant enough inflation (aka causing the dollar to lose value because so many more dollars are in the economy) to be concerned. Investors, though, love the economy-boosting protein shake that is QE3 and were sad to see the $10 billion cut.

2. FedEx blames bad earnings on weather and e-retailers
Global shipping company FedEx (NYSE:FDX) announced earnings from the important December-February three-month period that were way off from what Wall Street hoped. CEO (and former Marine) Fred Smith ripped into the weather and online retail companies for the rough performance. The $1.23 profit per share missed analysts' expectations for $1.46 per share, and the stock ended up down only 0.1%, probably because investors were afraid of the tough-talking CEO.
 
On FedEx's fiscal calendar, the third quarter straddles the important holiday shopping season and the funky post-holiday return/exchange season. Both periods are huge for shipping companies like FedEx (Newman considered retiring from the Postal Service after this brutal season). Unseasonably severe winter weather caused $125 million in extra costs for FedEx. It also took a toll on its reputation. The on-time rate for Christmas Eve deliveries (aka the "Merry Xmas" rate) dropped to 90% from 98% the year before. It's still better than UPS's horrible 83%, but the drop didn't help consumer trust. 
 
But it's those hippies on the West Coast who really ruined your Christmas. The former Marine lectured e-retailers for overall sloppiness with their shipping habits during this holiday season. Smith criticized e-retailers' packaging habits, called out the way they label, and even judged online retailers for promising Christmas delivery when it wasn't going to happen.
 
The takeaway is that investors seemed satisfied despite the disappointing profits. The stock actually rose after the news before falling with the markets the rest of the day and ending slightly down. Overall sales were up 3% versus last year to $11.3 billion, which is a positive trend and was in line with analysts' hopes. It also emphasized that the future growth plans are stable (barring another polar-vortex plagued holiday season).
 
Thursday:
  • Existing-home sales
  • Fourth-quarter earnings: Nike, Swatch
 
As originally published on MarketSnacks.com
 

Financial advisors hate this man
Believe it or not, even some of the wealthiest individuals in America fall prey to these elaborate decades-old schemes. These five simple questions will reveal whether your financial advisor is using them as well.

Can you answer "yes" to these five questions?

Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends FedEx, Nike, and UPS and owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers