WEBVTT - Bloomberg Markets: E-Commerce Stokes FedEx Growth

0:00:02.240 --> 0:00:06.279
<v Speaker 1>Broadcasting live to New York Bloomberg Elimon Frio to Washington,

0:00:06.360 --> 0:00:11.200
<v Speaker 1>d C. Bloomberg to Boston, Bloomberg twelve hundred does San Francisco,

0:00:11.240 --> 0:00:14.720
<v Speaker 1>Bloomberg nine sixty to the country, Serious XM CHADO one

0:00:14.800 --> 0:00:17.840
<v Speaker 1>nineteen and around the globe the Bloomberg Radio Plus app

0:00:17.880 --> 0:00:22.560
<v Speaker 1>and Bloomberg dot Com. This is Bloomberg Markets, isn't Bloomer

0:00:22.560 --> 0:00:25.320
<v Speaker 1>Marcus Corey Johnson here out over the San Francisco Bay

0:00:25.320 --> 0:00:27.360
<v Speaker 1>and r AM nine sixties studios. Carol Master back on

0:00:27.400 --> 0:00:30.760
<v Speaker 1>the world headquarters in Midtown Manhattan. Yep. Yes, indeed, and

0:00:30.760 --> 0:00:32.800
<v Speaker 1>we're gonna talk a little about FedEx because they did

0:00:32.800 --> 0:00:35.280
<v Speaker 1>come out with their results just moments ago. We do

0:00:35.400 --> 0:00:37.560
<v Speaker 1>see the stock moving in the after hours. In fact,

0:00:37.560 --> 0:00:39.120
<v Speaker 1>it's up about one and a half percent. So we'll

0:00:39.120 --> 0:00:41.279
<v Speaker 1>break down the quarter, uh and see what it tells

0:00:41.360 --> 0:00:43.959
<v Speaker 1>us about fed X and potentially about the economy as

0:00:44.000 --> 0:00:47.040
<v Speaker 1>FedEx moves so much stuff around. First up, though, back

0:00:47.080 --> 0:00:49.160
<v Speaker 1>to your top as his stores and other news out

0:00:49.159 --> 0:00:51.360
<v Speaker 1>after the closing bell here is Hill. All right, I

0:00:51.520 --> 0:00:53.199
<v Speaker 1>thank you very much, Carol Master. I do want to

0:00:53.200 --> 0:00:54.840
<v Speaker 1>begin with FedEx, and I know you'll have a little

0:00:54.840 --> 0:00:56.560
<v Speaker 1>bit more on this story. A lot more coming up

0:00:56.640 --> 0:01:00.240
<v Speaker 1>right here on Bloomberg Radio. But FedEx is forecasting full

0:01:00.320 --> 0:01:03.200
<v Speaker 1>year profit in line with analyst estimates. It says earnings

0:01:03.240 --> 0:01:06.400
<v Speaker 1>will be thirteen twenty to fourteen dollars a share for

0:01:06.600 --> 0:01:10.600
<v Speaker 1>the fiscal year through next May. Analysts hand predicted thirteen

0:01:10.880 --> 0:01:14.920
<v Speaker 1>sixty one. Also out after the closing bell, Adobe Systems

0:01:15.000 --> 0:01:18.440
<v Speaker 1>racking up another quarterly report that beat analysts estimates for

0:01:18.520 --> 0:01:22.319
<v Speaker 1>sales and profit, proving again that a bet on switching

0:01:22.360 --> 0:01:25.679
<v Speaker 1>to a cloud based subscription model for its digital media

0:01:25.920 --> 0:01:30.920
<v Speaker 1>and marketing software is paying off. Stocks lower today, falling

0:01:30.959 --> 0:01:33.839
<v Speaker 1>the most in a month, retreating from records as crude

0:01:33.840 --> 0:01:36.760
<v Speaker 1>oil slid into a bear market on concern the global

0:01:36.800 --> 0:01:40.920
<v Speaker 1>supply glut will persist. Also today we had West Texas

0:01:40.959 --> 0:01:44.560
<v Speaker 1>Intermediate down two point two percent to three dollars twenty

0:01:44.640 --> 0:01:48.040
<v Speaker 1>three cents, down ninety seven cents. The dollar rose as

0:01:48.160 --> 0:01:53.160
<v Speaker 1>fedeficials continued to reiterate a moderately hawkish stance on monetary policy.

0:01:53.560 --> 0:01:57.480
<v Speaker 1>Drew Mattis is chief market strategist at MetLife. Continuing to

0:01:57.560 --> 0:01:59.480
<v Speaker 1>high rates. I think if you look at most of

0:01:59.560 --> 0:02:02.080
<v Speaker 1>people on the ft, they've been around the block. They've

0:02:02.120 --> 0:02:04.480
<v Speaker 1>seen inflation pick up when no one expected it too,

0:02:04.680 --> 0:02:08.120
<v Speaker 1>and they're responding in the way that their life experience dictates,

0:02:08.880 --> 0:02:11.280
<v Speaker 1>Whereas I think a lot of the people perhaps trading

0:02:11.360 --> 0:02:14.200
<v Speaker 1>tips and a nominals maybe haven't seen high levels of

0:02:14.240 --> 0:02:19.760
<v Speaker 1>inflation in their lifetime. Five Index down sixteen, four thirty

0:02:19.840 --> 0:02:22.600
<v Speaker 1>seven down seven tenths of one percent. Now as stack

0:02:22.639 --> 0:02:25.600
<v Speaker 1>down fifty one down eight tenths of one percent down,

0:02:25.680 --> 0:02:29.760
<v Speaker 1>Industrials down sixty one down three tenths of one percent.

0:02:30.120 --> 0:02:32.320
<v Speaker 1>The ten you up nine thirty seconds, zeal there two

0:02:32.360 --> 0:02:35.960
<v Speaker 1>point one five percent. I'm Charlie Pellaton. That's a Bloomberg

0:02:36.000 --> 0:02:39.120
<v Speaker 1>business slash. Thank you very much, Charlie Pelly. You listen

0:02:39.120 --> 0:02:49.280
<v Speaker 1>to Bloomberg Markets on Bloomberg Radio oh X one. They're

0:02:49.280 --> 0:02:53.760
<v Speaker 1>want to bring everything to everyone, um, and we got

0:02:53.880 --> 0:02:56.840
<v Speaker 1>to check on how they're doing at that mission. The

0:02:57.080 --> 0:02:59.680
<v Speaker 1>company out with its latest quarterly results. Stock is up

0:02:59.760 --> 0:03:03.079
<v Speaker 1>one and three quarters percent in the after hours. Let's

0:03:03.080 --> 0:03:05.720
<v Speaker 1>talk a little about the quarter. Athtic Lee class Cow

0:03:06.160 --> 0:03:09.040
<v Speaker 1>is with us. He is senior Transport Logistics and Shipping

0:03:09.040 --> 0:03:11.680
<v Speaker 1>Analyice at Bloomberg Intelligence are in house group of Alice

0:03:12.200 --> 0:03:15.680
<v Speaker 1>and Lee joins us from Bloomberg headquarters in Princeton, New Jersey. Lee,

0:03:15.840 --> 0:03:19.079
<v Speaker 1>nice to have you here. Hi, tell us a little

0:03:19.120 --> 0:03:21.400
<v Speaker 1>about the quarter because investors seem to like what they

0:03:21.440 --> 0:03:24.560
<v Speaker 1>got based on the after hours tree. But what pops

0:03:24.600 --> 0:03:27.200
<v Speaker 1>out for you? Yeah, I guess there was no huge

0:03:27.200 --> 0:03:30.680
<v Speaker 1>surprise here. There's a lot of volatility and uncertainty surrounded

0:03:30.760 --> 0:03:33.880
<v Speaker 1>the mark to market pension accounting adjustment. So when you

0:03:33.960 --> 0:03:36.560
<v Speaker 1>exclude that and some one time cost related to their

0:03:36.640 --> 0:03:41.680
<v Speaker 1>T and T acquisition earnings, who were above expectations um

0:03:42.120 --> 0:03:44.000
<v Speaker 1>for the quarter. They came out about four and a

0:03:44.120 --> 0:03:48.520
<v Speaker 1>quarter versus uh three uh and three three dollars eight

0:03:48.520 --> 0:03:51.440
<v Speaker 1>eight cents um, and that was kind of on better

0:03:51.600 --> 0:03:54.080
<v Speaker 1>better than expected top line growth by about a hundred

0:03:54.080 --> 0:03:56.400
<v Speaker 1>and sixty million dollars, So that's the good news. And

0:03:56.480 --> 0:03:59.280
<v Speaker 1>also they guided for the full year, excluding a bunch

0:03:59.320 --> 0:04:02.160
<v Speaker 1>of one time I them mostly in line where consensus is,

0:04:02.280 --> 0:04:05.160
<v Speaker 1>so uh, no big surprises, and I think the market

0:04:05.280 --> 0:04:08.880
<v Speaker 1>that happens to like no big surprises, And I guess

0:04:09.040 --> 0:04:11.320
<v Speaker 1>the you know. And some of the good news in

0:04:11.520 --> 0:04:14.320
<v Speaker 1>terms of the quarter are yields growth and their express

0:04:14.360 --> 0:04:17.839
<v Speaker 1>and ground businesses seem to be accelerating the growth Express

0:04:18.120 --> 0:04:21.520
<v Speaker 1>increased yields by five percent and ground by seven percent.

0:04:22.040 --> 0:04:24.560
<v Speaker 1>And also they're less in trucklet business, which is under

0:04:24.600 --> 0:04:29.120
<v Speaker 1>their freight heading. Yields increased seven percent year of year. Uh.

0:04:29.400 --> 0:04:31.440
<v Speaker 1>And that that is that's the good showing. That means

0:04:31.520 --> 0:04:34.720
<v Speaker 1>they're they're getting thing that they need. Well, what's that about?

0:04:34.839 --> 0:04:37.160
<v Speaker 1>Is that is that about fuel costs coming down? Is

0:04:37.200 --> 0:04:41.320
<v Speaker 1>that about um just being a more aggressive pricing? Yeah?

0:04:41.400 --> 0:04:43.240
<v Speaker 1>I think, you know, so much of what we saw

0:04:43.320 --> 0:04:46.240
<v Speaker 1>with GPS the other day with their rate increases in

0:04:46.279 --> 0:04:49.720
<v Speaker 1>search charges. You know. Uh, the integrated logistics providers that

0:04:49.800 --> 0:04:52.840
<v Speaker 1>provide parcel deliveries, are you know, want to get paid

0:04:52.960 --> 0:04:56.640
<v Speaker 1>for expanding their networks, improving their networks to be more

0:04:56.720 --> 0:05:00.680
<v Speaker 1>accommodating for e commerce and and and there. Um kind

0:05:00.720 --> 0:05:03.000
<v Speaker 1>of I guess toeing the line in terms of being

0:05:03.160 --> 0:05:08.000
<v Speaker 1>very rational with their pricing. You know what's interesting is

0:05:08.080 --> 0:05:12.560
<v Speaker 1>I've always thought that the pure Internet play is something

0:05:12.640 --> 0:05:16.800
<v Speaker 1>like a FedEx or a UPS because someone's got to

0:05:16.880 --> 0:05:20.160
<v Speaker 1>deliver all this stuff. Uh. And we see, you know,

0:05:20.279 --> 0:05:23.320
<v Speaker 1>we're getting used to getting everything and anything delivered to us.

0:05:23.920 --> 0:05:27.720
<v Speaker 1>Um is that going to be the case? Are you know, Amazon,

0:05:27.839 --> 0:05:31.080
<v Speaker 1>we see buying planes. I mean, does FedEx and ups

0:05:31.120 --> 0:05:33.719
<v Speaker 1>have to be worried. Um. I don't know if they

0:05:33.800 --> 0:05:36.280
<v Speaker 1>have necessarily be worried, but they definitely have to be

0:05:36.440 --> 0:05:40.280
<v Speaker 1>less reliant on some large players like an Amazon. Um

0:05:40.480 --> 0:05:46.080
<v Speaker 1>ups is more exposed than than FedEx. Um ups uh

0:05:46.560 --> 0:05:51.040
<v Speaker 1>gets around two to three times more revenue from Amazon

0:05:51.200 --> 0:05:53.520
<v Speaker 1>than a fed X does. But you know what, what

0:05:53.640 --> 0:05:55.360
<v Speaker 1>Amazon is doing what a lot of people like to

0:05:55.400 --> 0:05:58.159
<v Speaker 1>talk about is, you know, with whether they're acquiring whole

0:05:58.200 --> 0:06:00.799
<v Speaker 1>foods or buying planes, or become like a freight forward,

0:06:00.880 --> 0:06:03.360
<v Speaker 1>or they're just controlling more of their supply chains. Is

0:06:03.600 --> 0:06:05.960
<v Speaker 1>very similar to what Walmart has done over the years.

0:06:06.160 --> 0:06:09.160
<v Speaker 1>Walmart has one of the largest trucking fleets in the US,

0:06:09.520 --> 0:06:12.280
<v Speaker 1>but they still buy a lot of purchase transportation. UM.

0:06:12.520 --> 0:06:14.720
<v Speaker 1>So you know, Amazon is trying to control as much

0:06:14.720 --> 0:06:17.960
<v Speaker 1>as they possibly can. Um So. You know, but with

0:06:18.120 --> 0:06:20.760
<v Speaker 1>the growth of e commerce, that's going to benefit everybody,

0:06:20.920 --> 0:06:24.400
<v Speaker 1>is going to benefit fed X, GPS, truckload providers and

0:06:24.520 --> 0:06:27.680
<v Speaker 1>less than truckload providers as well. Do you think that

0:06:27.760 --> 0:06:30.240
<v Speaker 1>the impact when you look at the shippers of of

0:06:30.400 --> 0:06:33.320
<v Speaker 1>this whole foodsteal with Amazon? I mean, are you you

0:06:33.520 --> 0:06:35.359
<v Speaker 1>surely are trying to imagine what their business is going

0:06:35.400 --> 0:06:37.680
<v Speaker 1>to look like. Amazon's business is gonna look like after

0:06:37.760 --> 0:06:41.640
<v Speaker 1>the deal. Yeah, you know, from a supply chain standpoint,

0:06:41.680 --> 0:06:45.720
<v Speaker 1>I mean, you know, they're getting closer to affluent customers. So, um,

0:06:45.920 --> 0:06:49.400
<v Speaker 1>you know, whether they're going to use their Whole Foods

0:06:49.440 --> 0:06:52.719
<v Speaker 1>current distribution network or whether they're going to use parts

0:06:52.760 --> 0:06:56.640
<v Speaker 1>of their retail stores um as a as an area

0:06:56.680 --> 0:06:59.400
<v Speaker 1>where people can come pick up their stuff to lower

0:06:59.480 --> 0:07:02.920
<v Speaker 1>their costs for transportation and offer maybe discounts if you do,

0:07:03.000 --> 0:07:04.720
<v Speaker 1>and sort of pick up like like a Walmart is

0:07:04.760 --> 0:07:07.200
<v Speaker 1>doing right now. UM. So that that is just a

0:07:07.279 --> 0:07:10.080
<v Speaker 1>way in which they can leverage you know, Whole Foods

0:07:10.280 --> 0:07:14.360
<v Speaker 1>um um network of stores and distribution centers. So what's

0:07:14.600 --> 0:07:18.800
<v Speaker 1>what's the one concern when you look at the FedEx story. Well,

0:07:19.480 --> 0:07:23.920
<v Speaker 1>you know, the one I guess concern is that e

0:07:24.040 --> 0:07:26.640
<v Speaker 1>commerce and global trade stops. Um. You know, I don't

0:07:26.640 --> 0:07:29.200
<v Speaker 1>think e commerce growth is going to stop. If you know,

0:07:29.320 --> 0:07:31.720
<v Speaker 1>you look at most expectations, it's going to be you know,

0:07:31.840 --> 0:07:35.120
<v Speaker 1>something like four trillion dollars globally in a couple of years, um.

0:07:35.480 --> 0:07:37.680
<v Speaker 1>And and that's going to benefit the FedEx is and

0:07:37.720 --> 0:07:39.160
<v Speaker 1>the U b s is of the world. You know,

0:07:39.320 --> 0:07:42.520
<v Speaker 1>if you see increased protectionists uh in terms of government

0:07:42.600 --> 0:07:46.240
<v Speaker 1>stances with with global trade, that is obviously a bad

0:07:46.320 --> 0:07:48.400
<v Speaker 1>thing for the FedEx is and ups as the worlds.

0:07:48.400 --> 0:07:50.800
<v Speaker 1>Not only are they delivering stuff locally to us, but

0:07:50.880 --> 0:07:54.400
<v Speaker 1>they're also connecting countries, um, you know, in continence, and

0:07:54.520 --> 0:07:58.080
<v Speaker 1>that's extremely important to their growth strategy, especially you know

0:07:58.520 --> 0:08:02.520
<v Speaker 1>when you know FedEx t NT, which hopes to build

0:08:02.600 --> 0:08:05.400
<v Speaker 1>out the the European platform and be stronger not only

0:08:05.520 --> 0:08:08.680
<v Speaker 1>intra Europe, but you know North America to Europe, Europe

0:08:08.680 --> 0:08:12.800
<v Speaker 1>to Asia. Uh, and with protectionism that would not bode

0:08:12.840 --> 0:08:17.040
<v Speaker 1>well for freight flows and trade in general. Um. Interesting stuff,

0:08:17.080 --> 0:08:20.080
<v Speaker 1>interesting quarter from FedEx, Eily, thank you. Watch Glasgow is

0:08:20.080 --> 0:08:23.120
<v Speaker 1>a Bloomber Intelligence senior transportation analysts helping us out with

0:08:23.200 --> 0:08:25.200
<v Speaker 1>FedEx and just want to mention the MSc I will

0:08:25.240 --> 0:08:28.600
<v Speaker 1>include China A shares in its Emerging Markets index. This

0:08:28.920 --> 0:08:33.120
<v Speaker 1>is Bloomberg Radio. Let's get some world of national news

0:08:33.200 --> 0:08:35.680
<v Speaker 1>headlines with Adrian Mitchell. She's in our ninety n one

0:08:35.760 --> 0:08:39.400
<v Speaker 1>studios in Washington. D C. Corey and Carol Belgian soldiers

0:08:39.480 --> 0:08:43.400
<v Speaker 1>have neutralized as suspect following a small explosion inside the

0:08:43.440 --> 0:08:47.280
<v Speaker 1>Central train station in Brussels. The prosecutor's office there says

0:08:47.360 --> 0:08:49.240
<v Speaker 1>it is too early to say whether this was a

0:08:49.400 --> 0:08:52.800
<v Speaker 1>terrorist incident. There is no word of other deaths or injuries.

0:08:52.880 --> 0:08:55.920
<v Speaker 1>Media reports from Brussels say a man inside the station

0:08:56.320 --> 0:09:00.160
<v Speaker 1>was wearing an explosives belt. Republicans are trying to get

0:09:00.160 --> 0:09:03.120
<v Speaker 1>a healthcare measure ready for a vote, as Democrats, led

0:09:03.200 --> 0:09:06.559
<v Speaker 1>by Senator Chunk Schumer, slam GOP leaders for keeping their

0:09:06.600 --> 0:09:09.719
<v Speaker 1>colleagues in the dark. It boggles the mind that the

0:09:09.800 --> 0:09:14.160
<v Speaker 1>Republican leader is moving forward this way without letting anyone

0:09:14.280 --> 0:09:17.080
<v Speaker 1>but members of the Republican Senate Caucus see the bill,

0:09:17.920 --> 0:09:21.599
<v Speaker 1>and even many of them have said they haven't seen it.

0:09:21.840 --> 0:09:25.199
<v Speaker 1>Senate Majority leader Mitch McConnell says Republicans are responding to

0:09:25.280 --> 0:09:29.360
<v Speaker 1>their constituents. We've heard so many distress stories from constituents

0:09:29.600 --> 0:09:32.679
<v Speaker 1>have been hurt. Thankfully, the Senate will soon have a

0:09:32.760 --> 0:09:36.240
<v Speaker 1>chance to turn the page on this failed law. McConnell

0:09:36.280 --> 0:09:38.880
<v Speaker 1>says a vote to repeal Obamacare could come as early

0:09:38.960 --> 0:09:42.200
<v Speaker 1>as next week. Ford says it will save a billion

0:09:42.320 --> 0:09:45.760
<v Speaker 1>dollars by moving production of its Focus models from Mexico

0:09:45.960 --> 0:09:48.360
<v Speaker 1>to China. There had always been a debate within for

0:09:48.760 --> 0:09:51.040
<v Speaker 1>whether they should be spending more money on new production

0:09:51.120 --> 0:09:52.840
<v Speaker 1>for a car that doesn't really make much money, if

0:09:52.920 --> 0:09:55.439
<v Speaker 1>if anything at all, And when the new CEO came in,

0:09:55.520 --> 0:09:56.760
<v Speaker 1>he said, no, we're not going to do that. We're

0:09:56.760 --> 0:09:58.880
<v Speaker 1>just going to make them at an existing factory in China,

0:09:59.000 --> 0:10:02.319
<v Speaker 1>and we can import them from China. Bloomberg News Detroit

0:10:02.400 --> 0:10:05.880
<v Speaker 1>bureau chief David Welch spoke with Corey and Carol Global

0:10:05.920 --> 0:10:08.280
<v Speaker 1>News twenty four hours a day, powered by more than

0:10:08.360 --> 0:10:11.040
<v Speaker 1>twenty seven hundred journalists in analysts in more than a

0:10:11.160 --> 0:10:13.920
<v Speaker 1>hundred twenty countries. I'm Adrian Mitchell.