*This post was updated on Friday 9/17. An earlier version said FedEx was cutting "as many as 17,000 positions" when it should have said "as many as 1700 positions."
In an attempt to determine the market’s next big move, the desk has discovered two signs that seem decidedly bearish.
#1 - FedEx Disappoints Street
Guy Adami finds the latest forecast from FedEx troublesome, to say the least. Specifically he’s bothered by three things.
- Earnings came in short of Street projections (though profits more than doubled)
- CEO Fred Smith said he expects the pace of the world's economic recovery to slow in the months ahead.
- FedEx is cutting jobs -- as many as 1700 positions.
These developments may be telling us that things aren’t so rosy going forward, Adami says.
Especially if they’re firing people, adds Karen Finerman. It says they’re just not sure what the future holds and they need to play it safe, she muses.
Negative developments from FedEx carry a little more weight than most other firms because their planes and trucks ship a variety of merchandise made by companies from all different sectors.
#2 - Technical Action
Meanwhile, Steve Cortes has spotted some problematic trends in staffing firms.
Since the S&P bottomed in early July staffing firms such as Robert Half, Manpower and Monster have lagged.
If you compare the chart of Monster against the Retail SPDR you see that Manpower is nowhere near August highs while the XRT is well above its August highs. I think this is a foreboding sign, says Cortes.
I think it shows we have structural unemployment – not cyclical unemployment that we’ll quickly bounce out of. If my thesis is correct ongoing unemployment around 10% will weigh on banks and retailers. My trade is short both sectors.
Companies have no reason to hire right now and that can’t be a good thing for the market going forward, adds Adami.
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Trader disclosure: On Sept. 16th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (MA), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SWN), (SU), (SPLS), (RIG), (UPL), (VRTS); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman’s firm is short (ANF); Finerman & Finerman’s firm own (CFN); Finerman & Finerman’s firm own (HPQ); Finerman owns (ORCL); Finerman owns (WMT); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Pete Najarian owns (F) bonds; Pete Najarian owns (POT) call spreads; Pete Najarian owns (RIMM) call spreads; Pete Najarian owns (DD) call spreads; Pete Najarian owns (GDXJ) call spreads
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