Two revealing macro quotes from the FedEx earnings call

FedEx reported earnings this week and it’s a company worth watching because freight demand is a great proxy for economic activity. Here is Brie Carere, EVP & Chief Customer Officer:“I was concerned a quarter ago that we maybe would see some demand destruction. That has not at all been the case.”Raj Subramaniam, President & CEO“We are growing revenue in the most premium segments of the global economy.”Combined, these two quotes highlight what is going on in the global economy and particularly in the US. Growth is surprisingly resilient to shocks like Trump’s tariffs and the Iran war. That’s a very good thing. Secondly, the upper end of the economy is doing very well. I would no longer call it a K-shaped economy because the lower part isn’t going down. It’s either going sideways or up only slightly.I think that’s a good baseline for investing right now and the durability of the economies in Europe and elsewhere despite these shocks points to upside growth risks. “There’s a little bit of inventory buildup and restocking going on,” Carere said. Another line from her is that “we are seeing these initial time-critical shipments convert quickly into larger repeatable revenue streams,” which points to a growth in customer spending, business and confidence.Finally, since AI is driving everything right now, it’s highlighting is that even FedEx is a beneficiary of the AI capex boom as Carere said this:“The AI and data center space is an emerging and rapidly scaling growth engine for us, delivering double-digit revenue growth, Carere said.This is a sign that the AI capex spend is broadening out. In the quarters ahead, I expect an intense focus to remain on earnings from hyperscalers and chip names because that’s the battleground right now but there is an edge to be gained from investigating how the spending is trickling down through the economy.



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