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Who Needs Global Trade Anyway: FedEx Shipments Imply Subzero GDP

Tyler Durden's picture




 

With the entire "market" a synthetic algo-traded derivative (and facilitated by the fat pipe between Liberty 33 and Citadel) reflecting merely where the ES and VIX trades, and completely ignoring such trivial things as underlying corporate cash flows (see next post on market performance vs earnings) or GDP, concerns about fundamentals have become a total joke. This is obviously exacerbated by such "extenuating" circumstances as tropical storms which are designed to make any negative data irrelevant. Of course, for those still curious about such old school metrics as actual economic performance, untainted by Fed intervention (such as $85 billion in offsetting flow per month), here is one chart, showing the correlation between total FedEx package shipments and Real GDP. And no, sorry, you can't blame this one on Sandy, on the Cliff, or any of the other spin talking points. From Bloomberg: "The level of FedEx package shipments began to slump as early as the first quarter of 2012 and now appears to be signaling weaker economic conditions for 2013. In late March, FedEx made mention of cooling conditions, with CFO Alan Graf noting the economy was not as strong as  the company hoped it would be a year earlier. According to Fred Smith, FedEx CEO, “Fundamentally, what’s happening is that exports around the world have contracted and the policy choices in Europe and the United States and China are having an effect on global trade."

 

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Tue, 12/18/2012 - 09:52 | 3074366 LawsofPhysics
LawsofPhysics's picture

Correct, you don't even need a real pricing mechanism, or a market, or a real economy once you start monetizing everything.  FAIL.

 

End the fucking Fed already.

Tue, 12/18/2012 - 09:56 | 3074389 economics9698
economics9698's picture

Fuck it pass Smoot-Hawley again. /sarc 

Tue, 12/18/2012 - 10:13 | 3074402 Popo
Popo's picture

Hmm.   Not sure I agree with the correlation in this post.   In 2002 FedEx shipments dropped significantly lower and GDP remained in positive territory.  FedEx shipments are clearly an interesting metric -- but the correlation isn't quite as clear as this post implies... 

Also, in the past the drop in GDP has lead the drop in shipments, not vice versa.  This post implies an inverse correlation may be indicated by current drop in FedEx shipments.  There isn't historic support for an inverse correlation indicated in the graph above.  As is plainly visible, GDP typically leads shipments.  

Based solely on the chart above (which isn't sufficient of course) one would more logically conclude that FedEx is a Strong Buy.  (I'm not saying it is btw... just saying what the chart above says.  Tyler, hate to say it but you're definitely reaching with your assessment here).

Tue, 12/18/2012 - 10:18 | 3074455 economics9698
economics9698's picture

It alternates between lagging indicator and leading, mostly lagging.  You never know if I was to guess I would say it’s a leading indicator now.

Tue, 12/18/2012 - 10:50 | 3074543 MachoMan
MachoMan's picture

Right, but the issue is that the common figures of GDP, et al, are manipulated to shit and, practically speaking, are meaningless (aside from measuring the effects of government intervention)...  What we're forced to do, to arrive at the same position, is to find anecdotal indicators...  and compile them and see where they point.  Whether it is a leading indicator or a lagging indicator is largely irrelevant...  from a fundamentals perspective...

Tue, 12/18/2012 - 11:48 | 3074743 GMadScientist
GMadScientist's picture

Better to find a real litmus test...like corporate cap ex in the previous year, to see where you're "gonna be" in terms of production.

http://www.zerohedge.com/news/2012-11-19/us-corporate-capital-spending-plummets-recession-levels

 

Tue, 12/18/2012 - 15:52 | 3075703 smiler03
smiler03's picture

It's time for a new chart...

GDP vs Sex Toy Sales vs Sales of Asparagus

I'm sure there will be a trend.

Tue, 12/18/2012 - 10:48 | 3074556 johngoes
johngoes's picture

It may be that the correlation has been broken by Fed activities to goose the GDP pump. It would be nice to know how much of the GDP is affected by the rather odd rise in equities, given companies continually revising targets down, and how much of the GDP relates to Financial machination of banks who receive the largess from the Fed money pump. As long as TBTF companies don't have to mark to market, GDP is inflated by any measure.

I would trust the market visibility of Fex Ex shipment declines as a better indicator of economic conditions over any Government produced statistic today. (See for instance - Fiscal Cliff compromise - another inflation hiding re-jigger of CPI statistics.)

 

Tue, 12/18/2012 - 10:51 | 3074567 adr
adr's picture

Considering GDP includes government spending and 2001 marked one of the biggest increase in defense spending in years, I would say your assesment is off.

Fed Ex tracks shipments in the real economy, not the massaged data bullshit extrapolated government bloat supporting GDP figure.

The real economy has fallen off a cliff. I know because I work in the support structure for it, ie I produce and sell products to nearly every major retailer. Fed Ex tracks sample deliveries, shipments of displays, catalogs, and airshipped products. If shipments go down it means there is less economic activity on the supply side. Which is the best leading indicator of them all. You can't have growth if less is being bought by the first link of the chain.

Somehow this fact has been made irrelevant by the central banks and the CFOs who have no fear of commiting accounting fraud.

Tue, 12/18/2012 - 13:50 | 3075228 SmallerGovNow2
SmallerGovNow2's picture

Combine the Fedex data with the BDI falling off a cliff as of late and there is a lot more to this than the Fedex data alone would suggest...

Tue, 12/18/2012 - 11:52 | 3074761 Brokenbroker
Brokenbroker's picture

First let me say that i think it is important to be objective about tyler's analysis so i appreciate the critique but i would alao remember that gdp data is subject to large revisions especially around turning points ...
The first and 2nd quarters of 2008 were positive at first and greenspan wasnt sure if we would go into a recession right befrw lehman failed. Of course a year after the fact gdp was revised like 2% lower and more for the first quarters of 2008 and the start of the recession was december 2007. Took a year to lower the revisions to negatuve as they were at first revised up and it most people including greenspan didnt wven know we were in a recession 9 minths after it started. So that chart will change in 8 months and probably prove to be morw correlated and the fedex chart will be a leading indicator in that it will let u know when gdp data needs to be revised lower. We will see that next year but u cant wait for that. Market falls way before the recession will be agreed upon and gdp revised negative. We are in a recession now. No doubt about it and it is scary because nearly wvery recession has been triggered by tightening money and so the answer was easy. Stip tightenening and loosen. Lower rates. When u enter a recession at the zero bound then other than experimental voodoo there is nothing that can be done or t leaat nothing obviously effective. Welcome to the vortex of too much debt. The singularity blach hole of debt that mauldin brought up. And look at ecri and hussman for gdp reviosions around turning points if u havent red already

Tue, 12/18/2012 - 13:01 | 3075075 ejmoosa
ejmoosa's picture

You nailed it...and the worst part is no one cares about the revisions, because they are so focused on the current quarter. 

It's become a propaganda tool.

Tue, 12/18/2012 - 13:58 | 3075248 Nehweh Gahnin
Nehweh Gahnin's picture

OTOH, the shipments chart correlates fairly well over the past 5 y/y with the Baltic Dry Index.  http://www.bloomberg.com/quote/BDIY:IND/chart/

This supports Tyler on this, and as other commentators noted, the GDP figures are rigged.  No suprise that the shipments line leads, because the BS MSM drumbeat can only obscure the reality on the ground for so long.

Tue, 12/18/2012 - 10:04 | 3074419 madcows
madcows's picture

Which, exacerbated the great depression, right.  So, my initial thought is I'd rather pass a kidney stone.  But, in the end, the debt needs to be cleared.  Fuck it.  Pass Smoot and get it over with.  I'm tired of this monetization crap.  It just prolongs the inevitable.

Go Iceland.  You are a beacon of righteousness.

Tue, 12/18/2012 - 10:19 | 3074462 economics9698
economics9698's picture

Yep.

Tue, 12/18/2012 - 09:52 | 3074367 GetZeeGold
GetZeeGold's picture

 

 

As if we actually needed real proof.

Tue, 12/18/2012 - 09:52 | 3074368 LongSoupLine
LongSoupLine's picture

That's odd, Joe "I'll suck your golf balls" Kernen isn't talking about this...

Tue, 12/18/2012 - 10:02 | 3074414 azzhatter
azzhatter's picture

he had Lindsey's cock in his mouth all morning

Tue, 12/18/2012 - 11:44 | 3074732 GMadScientist
GMadScientist's picture

Pickin his teeth.

Tue, 12/18/2012 - 09:52 | 3074369 Cdad
Cdad's picture

We have arrived once again, in the US equity market Ponzi scheme, at that place where the only thing left is misinformation launched via The BlowHorn [CNBC], short squeezes as a result, and false [actually inane] equity catalysts such as The Santa Rally [soon to be replaced with The January Effect], etc.

It is stupefying that the criminal syndicate known as Wall Street [aka the financial services industry] still exists today.

 

Tue, 12/18/2012 - 09:53 | 3074371 MiltonFriedmans...
MiltonFriedmansNightmare's picture

Package shipments?  GDP?  We don't need no stinkin package shipments....we don't need no stinkin GDP growth.....we got flow, we got algos....

Tue, 12/18/2012 - 09:53 | 3074373 deKevelioc
deKevelioc's picture

Couple this with the BDI, and it's look out below.

Tue, 12/18/2012 - 12:12 | 3074846 Winston Churchill
Winston Churchill's picture

Ceridian idex is moving sideways also,It never recovered to 100

after 2008 anyway.

Tue, 12/18/2012 - 09:55 | 3074384 firstdivision
firstdivision's picture

Ben can easily fix this by shipping the lollar's he's printing.

Tue, 12/18/2012 - 09:55 | 3074385 mckee
mckee's picture

Given the FedEx traffic I've seen at my house my wife's Christmas purchases alone will be responsible for that chart going parabolic. That or she's having an affair with the driver.

 

 

Crap

Tue, 12/18/2012 - 11:29 | 3074683 edifice
edifice's picture

Solution: Don't get married, in the first place.

 

Sorry, had to. :)

Tue, 12/18/2012 - 11:43 | 3074729 GMadScientist
GMadScientist's picture

Are dildos and lube Core CPI?

 

Tue, 12/18/2012 - 09:55 | 3074386 insanelysane
insanelysane's picture

Started my shopping last night which I usually do the week before Christmas.  No one was out their.  Stores had plenty of cashiers on duty but half weren't doing anything.  Retail sales have to be tanked.  Going to need to blame Sandy.

Tue, 12/18/2012 - 11:23 | 3074664 smlbizman
smlbizman's picture

a friend of mine works at macys in white marsh mall, md.....she says the same thing...no traffic...macys is only hitting 70% of their goals for this store in this month....the numbers are getting weaker as the month goes along...

 

 

Tue, 12/18/2012 - 11:49 | 3074752 GMadScientist
GMadScientist's picture

Ravaged by Amazons.

Tue, 12/18/2012 - 12:41 | 3074951 SilverDOG
SilverDOG's picture

Went out yesterday solo, and girlfriend went out solo as well.

Sale prices everywhere, NOBODY in changing rooms, employees standing with glazed eyes,

road traffic minimal, people carrying SMALL packages/bags.

I laughed in subconscious horror, shtf this retail season.

Only viable number is from the UPS guy. He says record breaking amount.

We will see truth ... in 8 - 12 months! 

Stock up, food based inflation is accelerating, Bitchez!

Tue, 12/18/2012 - 09:56 | 3074390 fonzannoon
fonzannoon's picture

Chain GDP to scooter store sales. Problem solved.

 

Tue, 12/18/2012 - 10:04 | 3074397 Mercury
Mercury's picture

Well, at least previous plunges have been short lived - right?

Put your fingertips together and say: It doesn't matter, we're about e-business solutions now...

 

Tue, 12/18/2012 - 10:00 | 3074398 Shizzmoney
Shizzmoney's picture

All we need is more paper!

Tue, 12/18/2012 - 10:00 | 3074406 youngman
youngman's picture

It shows our "markets" are really being taken over by the Fed...they now have 30- 50% of it now...80% of bonds...

The other curtain that is being pulled is earnings per share...this is going to look "good" because of all the stock buybacks...and stock prices will go up because of the QE´s.......

We as individuals are left out...they are not even thinking about  us now..its all about saving themselves now...

Look at the fiscal cliff deals....they are smoke and mirrors.....10 years out crap...that is a lie and fake...and these are the people we elected to lie to us...scary huh????

and now gun control....yeah right....I am buying more and ammo

Tue, 12/18/2012 - 10:01 | 3074407 azzhatter
azzhatter's picture

Reality setting in. Yesterday that insufferable prick Immelt warned GE is dead and now FedEx

Tue, 12/18/2012 - 10:27 | 3074487 CrimsonAvenger
CrimsonAvenger's picture

If ever anyone needed a swift cock punch, it's Immelt.

Tue, 12/18/2012 - 10:05 | 3074410 scatterbrains
scatterbrains's picture

off topic but I heard Forker.. I meant porker.  Corker I mean just farted...  is that considered movement ?  Can I buy stawks now ?

Tue, 12/18/2012 - 10:02 | 3074412 monopoly
monopoly's picture

Duh!

Went to look for a newer car at dealers this weekend. Downsizing again and part of preparing. The common theme. "Since the election car sales have plummeted to almost nothing." Great country! Keep printing boys, keep printing.

Tue, 12/18/2012 - 10:36 | 3074511 azzhatter
azzhatter's picture

I think the Obama effect is kicking in. Yeah, 51% of the people voted for him but the other 49% are hunkering down. Not that Mittens would have been any better but we already knew what a fuckstick Obama is, Mittens would've been given a chance to prove himself

Tue, 12/18/2012 - 11:18 | 3074654 karzai_luver
karzai_luver's picture

No thx---anyone or thing that could lose to obomber has already proven all one cares to see.

 

DIAF mittenezzzzzzz.

 

Tue, 12/18/2012 - 10:02 | 3074413 Dr. Engali
Dr. Engali's picture

Should be good for a new 52 week high in Amazon

Tue, 12/18/2012 - 10:06 | 3074423 Savvy
Savvy's picture

It could just be FedEx is a crappy company. I ordered a package from Illinois, paid shipping, it got as far as Vancouver. I get a call from fedex, they want more shipping money or they send my parcel back. I said forget it, they sent my parcel back. I phoned the sender and explained, he said we are dropping fedex completely, complaints like mine are far too frequent. I know I'll never deal with them again nor would I reccommend any one else use them.

Tue, 12/18/2012 - 10:19 | 3074456 buzzsaw99
buzzsaw99's picture

interesting point

Tue, 12/18/2012 - 10:19 | 3074461 mckee
mckee's picture

And you live in Ohio!!!!!!!

Tue, 12/18/2012 - 10:26 | 3074485 Savvy
Savvy's picture

LOL no I live in British Columbia.

Tue, 12/18/2012 - 11:04 | 3074609 adr
adr's picture

Um, no they are all crappy. But are you going to use the USPO? Still I prefer UPS, but that company has been taken over by central planning morons.

The black drivers complained to UPS management that it wasn't fair that they had the same routes every day. Since most of them worked near where they lived, they had ghetto routes. So they forced management to rotate routes and then I didn't get packages for three weeks. The result of being afraid of the Jesse Jackson effect. When you have the same driver for years, you get to know them and they know your schedule. I even gave my driver my cell phone number so I could give him permission to drop off a package if I wasn't there.

I called UPS and complained to the highest manager I could get, told them if I didn't get my old driver back I would put the 10k+ packages I ship through UPS a year through FedEx. My old driver showed up a week later and said, somehow I got my route back. I replied, thank you.

Tue, 12/18/2012 - 11:21 | 3074661 karzai_luver
karzai_luver's picture

tons of "shipping" has moved off Fedex/UPS to local dudes with vans that will work for nothing.....

The market (whats left of it) is moving to lower cost service.

 

Too bad X.

 

Tue, 12/18/2012 - 11:42 | 3074720 GMadScientist
GMadScientist's picture

"local dudes with vans that will work for nothing"

...also known as Fed Ex contractors.

Tue, 12/18/2012 - 10:27 | 3074483 ElvisDog
ElvisDog's picture

This is totally anecdotal and a small sample size, but I have definitely noticed fewer UPS/FedEx trucks making deliveries to my neighborhood this Xmas than was the case last year.

Tue, 12/18/2012 - 10:37 | 3074521 Glass Seagull
Glass Seagull's picture

 

 

In unrelated news:

 

Federal Reserve to begin shipping millions of Fed Ex boxes (filled with sand) between its regional banks.

Tue, 12/18/2012 - 10:55 | 3074553 NoDebt
NoDebt's picture

That's just them losing market share to UPS and Priority Mail.  Nothing to see here.  Move along.  ;)

Agreed- we no longer need fear what happens in the real economy.  The Fed has finally solved the "gravity problem".  If the market isn't meeting their price expections they'll just print money and keep buying it until the price returns to a "normal" level.

But that's just their part time job.  Their Day Job, the one they will never compromise on, is monetizing our federal debt.

Tue, 12/18/2012 - 11:06 | 3074618 adr
adr's picture

haa ha haa ha ha, Priority Mail, good one. 

I guess as long as you are shipping anything that isn't valuable or actually needs to get where its going.

Tue, 12/18/2012 - 11:59 | 3074782 AynRandFan
AynRandFan's picture

Our crackerjack postal carrier put a package outside our office door on Saturday, and there it sat all weekend.  Our office door faces the street.

Tue, 12/18/2012 - 11:23 | 3074669 pine_marten
pine_marten's picture

On our street the chance of seeing a FEDX/UPS truck the last few years are about the same as seeing an ivory billed woodpecker.  The old "rope barometer" is hard to refute........

Tue, 12/18/2012 - 11:38 | 3074713 GMadScientist
GMadScientist's picture

Clearly bullish for domestic numbers. LOL

Tue, 12/18/2012 - 11:50 | 3074758 donkshover
donkshover's picture

Guess whats getting shipped to me! Guess what i'm getting for christmas!   A SNAP PHONE! WOOOHOOOOO! merry christmas everybody!

Tue, 12/18/2012 - 11:59 | 3074786 connel20
connel20's picture

Amazon told all of the package shipment companies to eat shit and uses Lasership for most of their packages, at least in my part of the country (Northeast).  As much shit as Amazon gets on this site (for making 0 or negative profit), it is building a comprehensive end-to-end vertical value chain and slowly eliminating anyone in between.  They might slowly bleeding retail dry and then at some time in the future raise prices by a few percent to reap some sweet benefits.  At some point when they own the entire distribution chain the barriers to entry will be too high for anyone else to complete.

Tue, 12/18/2012 - 12:23 | 3074889 hannah
hannah's picture

fedex doesnt ship autos or student loans which is 100% of the gdp...

Tue, 12/18/2012 - 15:31 | 3075606 dunce
dunce's picture

Fedex shipments are hard numbers but GDP is a grand piece of fiction that can be safely ignored.

Tue, 12/18/2012 - 19:19 | 3076627 DowTheorist
DowTheorist's picture

However, the Transports are displaying great relative strength. Today they broke above their 06/19/2012 highs.

http://www.dowtheoryinvestment.com/2012/12/dow-theory-update-for-dec-18-...

 

 

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