This plays right into Ben Bernanke's playbook, since Mr. Bernanke has been insisting that inflation headwinds are likely to be transient.
Of course, if cost headwinds (like commodities) are subsiding because the global economy is cooling enough, that is hardly good news, but FedEx does not seem to be saying that.
FY guidance of $6.35-$6.85 is in the middle of the $6.49 analyst consensus. Trading up 2 percent pre-open.
They expect 3 percent GDP growth in 2012 in the U.S., up from 2.5 percent in 2011.
1) The Fed will affirm they are ending their QE2, but the bigger issue is whether they will downgrade the outlook for the economy. Mr. Bernanke will likely stick with his line that inflation pressures are transitory.
2) The Greek government survived, and while European markets and U.S. futures are flat to down, there is little selling pressure. The vote was entirely along party lines: all 155 MPs of the ruling party voted in favor, the opposition voted unanimously against.
Parliament will begin debate on a new austerity package on June 28 with a vote shortly after. The Eurogroup is meeting July 3rd to approve the next tranche of aid (12 billion euros).
This is all theater: everyone knows Greece cannot repay all its debts, but it's necessary theater.
The bottom line: Europe is pursuing the only real option currently available — buying time on the hope that a restructuring will occur in the future when banks are in better shape and other countries have had a chance to improve their own situations to reduce contagion.
3) Dutch lighting giant Philips Electronics down 13 percent pre-open, they warned of a drop in profit at its lighting and consumer lifestyle divisions...they cite weak consumer demand and weak construction activity in Europe. Stock will likely open at a 52-week low when it opens in the U.S.
4) Despite unemployment and gas prices remaining high, CarMax handily beat estimates ($0.55 vs. $0.47 consensus) and the stock is jumping 8 percent pre-open. Higher traffic drove a 6 percent rise comps, while the auto dealer realized higher selling prices that boosted its margin per used car sold.
5) Jabil rises 2 percent after beating Q3 estimates by a penny as sales grew more than expected. But the circuit board maker's current quarter guidance of $0.52-$0.60 falls mostly below estimates of $0.60 on a disappointing sales forecast.
6) Illinois Tool Works rises 1 percent after the diversified industrial product maker reported a solid 8 percent rise in organic sales over the past 3 months. The company noted that many "worldwide end markets continued to show solid demand levels," but it guides Q2 earnings to $0.99-$1.05 vs. $1.04 consensus.
7) IPO postponed: Stewart and Stevenson, a manufacturer of oil and gasindustry equipment, postponed its IPO indefinitely due to market conditions.
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