joesixpack writes:
Worst.
joesixpack | 04.23.08 - 9:49 am | #

GimmeAHellYa writes:
Well they just better not pull the plug on sponsorship for the 44 car
GimmeAHellYa | 04.23.08 - 9:52 am | #

Anonymous writes:
Well what a shocker wonder how the Christmas rush will be.
Anonymous | 04.23.08 - 9:58 am | #

doom writes:
BUT, we're not "officially" in a recession.
doom | 04.23.08 - 9:58 am | #

Vermont Trader writes:
Doesn't bode well for AMZN tonight.
Vermont Trader | 04.23.08 - 9:59 am | #

safe_as_apartments writes:
This is going to make a great movie someday.
safe_as_apartments | 04.23.08 - 9:59 am | #

Donny writes:
It's pretty obvious what's going on here. The consumer spending orgy is over, and now all that's left is a massive pile of sh**! The real question is, who's ultimately going to be the bagholder?

BTW ... not that opinion matters, but the equity markets are still trading like these events are not happening.
Donny | 04.23.08 - 9:59 am | #

Jimk writes:
But Remember... ALL IS WELL!!! The all knowing successful business man, George W Bush, bluntly stated this yesterday...


"We're not in a recession," Mr Bush said as he met Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon in New Orleans.

"But there's no question we're in a slowdown. And, yes, people are concerned about it, obviously."


Obviously, if you believe that, you are in the market to purchase a certain suspension bridge over the Lower East River that I will gladly sell to you.
Jimk | 04.23.08 - 10:01 am | #

Wicked Lad writes:
Donny wrote, "BTW ... not that opinion matters, but the equity markets are still trading like these events are not happening."

That's what baffles me, Donny.
Wicked Lad | 04.23.08 - 10:02 am | #

Bob_in_MA writes:
Asia to the U.S. is perhaps not as robust as it was but Asia to Europe remains robust.

Given the Euro's rise over the last year, a product from China is now about 10% less expensive than a few months ago ago, and about 3-4% more expensive in the U.S.
Bob_in_MA | Homepage | 04.23.08 - 10:02 am | #

grizz writes:
I'm pleased to finally hear one conference call where they didn't claim that the 2nd-half recovery fairy would wave her magic wand and make everything better. Point for honesty, anyway.
grizz | 04.23.08 - 10:04 am | #

ajmstilt writes:
News form the future:

Christmas sales were down this year do the cold weather and taking place in december.
ajmstilt | 04.23.08 - 10:06 am | #

doug r writes:
Um, just like housing, courier is EXTREMELY cyclical. Around Christmas, most overnight companies black out vacations. Every year, staff is laid off in January. Business picks up a bit for tax time, then dips again, picking up again when the kids go back to school in September. Then it's retail getting product ready for Christmas, then consumers getting their stuff for Christmas.....and so it goes every year.
doug r | 04.23.08 - 10:08 am | #

JLarkin writes:
This article today goes with something Tanta said about how banks cannot work delinquent loans case by case: they're overwhelmed.

http://www.washingtonpost.com/ wp...8042201339.html
JLarkin | 04.23.08 - 10:09 am | #

hiker90 writes:
Donny,

I would argue that the equity markets are trading like this earnings hit was already priced in and awaits clarity pertaining to future earnings. The UPS earnings reports gives a mixed picture: US sucks, Europe and Asia ok right now.

Best,
hiker90 | 04.23.08 - 10:11 am | #

Donny writes:
Hiker ... I believe the equity markets are trading like the obvious recession will be like that past one, short and shallow. Unfortunately, the evidence that is coming in reflects a recession unlike something we've seen in a very long time.

And no ... I do not believe in the decoupling theory. If we go down hard, so are the booming, emerging markets. It's really silly to think otherwise.
Donny | 04.23.08 - 10:17 am | #

Shnaps writes:
CR - check Q&A on the Internation? shipments.

Soes = Does?

Speaking of internation shipments, whatever happened to when the dollar falls, foreigners buy all our shit theory?
Shnaps | Homepage | 04.23.08 - 10:28 am | #

idoc writes:
BTW ... not that opinion matters, but the equity markets are still trading like these events are not happening.
Donny

i think one day we will find out that there is in fact a PPT propping up the stock mkt.
idoc | 04.23.08 - 10:32 am | #

energyecon writes:
OT but related,

Credit market appear to show increasing strain again, the TED spread creeping back up and the CP 30 day spread was 111 bps yesterday, 5 day MA 99 bps. That 111 bps ties the highest one day rate in the 1Q2008 EOQ dash for cash, and while the 5 day MA is lower than the end of 1Q2008, this recent bottom was basically the top of rhe first wave back in September 2007 (for the 5 day MA 30 day CP spread).
energyecon | 04.23.08 - 10:53 am | #

Anonymous writes:
sounds perfect for a hundy point rally....

And out come the "buy tech" pumpers....

Ciao
MS
Anonymous | 04.23.08 - 10:57 am | #

mock turtle writes:
PPT ?

i think so

out of their own mouths

http://www.newyorkfed.org/market...rkets/ pdcf.html

"Primary Dealer Credit Facility
The Primary Dealer Credit Facility (PDCF) is an overnight loan facility that will provide funding to primary dealers in exchange for a specified range of eligible collateral and is intended to foster the functioning of financial markets more generally."

and whatya think the "specialist" do with the proceeds of the loans advanced to them by the primary dealers?
mock turtle | 04.23.08 - 11:01 am | #

mock turtle writes:
"...funding to primary dealers in exchange for a specified range of eligible collateral...

uh...hmmmm...like dog eared baseball cards stuck together with used gum maybe?
mock turtle | 04.23.08 - 11:04 am | #

energyecon writes:
mt,

Not sure how one might characterize the $33 B of TIO slosh in the markets today... ;-)
energyecon | 04.23.08 - 11:15 am | #

mock turtle writes:
the nyse, presently, appears to be a rigged game.

i'd prefer to have someone convince otherwise...wanna believe in truth justice and the American way but with each passing year my view has been tainted by an ugly reality.

lies, lies, lies
mock turtle | 04.23.08 - 11:26 am | #

Bob Dobbs writes:
"Um, just like housing, courier is EXTREMELY cyclical."

I would think that UPS knows its own business cycle rather well and knows where it _expected_ to be in March, versus where it actually was.
Bob Dobbs | Homepage | 04.23.08 - 11:28 am | #

steelhead writes:
Animal House character Chip "All is well, all is well".
steelhead | 04.23.08 - 11:30 am | #

mock turtle writes:
in all of my business dealings i can't think of a more valuable factor in the operation of commerce than trust and integrity. all the other desirables follow from that.

corruption, bribes, cronyism, violence, fraud, deception, ...ultimately, in sufficient measure, will bring down any system
mock turtle | 04.23.08 - 11:31 am | #

Sebastian writes:
Simply more proof of the bearish bias in both the blogs and the posts in response.

CR, et al, aren't you getting just a little embarrassed, because I'm getting embarrassed for you, seriously.

"ATLANTA (AP) -- UPS Inc., the world's largest shipping carrier, said Wednesday its profit *rose 7.5 percent in the first quarter*, though it was affected by the weakening U.S. economy. The company lowered its earnings guidance for the year..."

"...Revenue in the quarter *rose 6.5 percent to $12.68 billion*, compared to $11.91 billion recorded a year earlier...."
(all asterisks mine)

http://www.nytimes.com/aponline/...rss& oref=slogin


Sebastian
Sebastian | 04.23.08 - 11:39 am | #

giacutter writes:
And limiting discretionary spending including business travel, relocations and consulting services.

Further bad news for residential real estate if this is the trend in much of corporate America, as I suspect it is.

No relocations, less turnover of high-end managerial houses, no subsidized home sales, etc.
giacutter | 04.23.08 - 11:41 am | #

Quincy k writes:
I was going to respond to Sebastian's post, but it is not even worth it.

Kind of like arguing with a six-year-old that 1+1=2 as opposed to 3.
Quincy k | 04.23.08 - 11:48 am | #

anon writes:
We are at the beginning of the great de-leveraging. So lots of bad debts must find their ways to the next group of bag holders... Plus, in an interview with Bill Moyer a while back, former SEC chief Donaldson mentioned that on any given day hedge funds' activities can account for ~ 50% of the total volume...Beware if anyone wants to test the water.
anon | 04.23.08 - 12:01 pm | #

flaminia writes:
Thank you Sebastian for at least being honest enough to provide the link to the NYT article so that I could read that the good results for UPS were due to its international business and in spite of the dreary domestic volume. I believe CR posted this conference call as a reflection of the condition of the US economy, not as a reflection of the condition of UPS. And you point is?
flaminia | 04.23.08 - 12:02 pm | #

anon writes:
...moreover on the hedge funds' activities have just been recently juiced up with FED's hundreds of billion-dollar swaps for their bad debts in return for liquidity. Be nimble if one must test the water.
anon | 04.23.08 - 12:07 pm | #

wally writes:
The snowball gains momentum. The very cutbacks that UPS or any other company announces will help the economy slow even more. That's how it always works and this time is not different.
wally | 04.23.08 - 12:10 pm | #

Lionel writes:
"Simply more proof of the bearish bias in both the blogs and the posts in response.

CR, et al, aren't you getting just a little embarrassed, because I'm getting embarrassed for you, seriously."

Subtext: Wahhhhh! CR's bias is not the same as my bias! Wahhhhh!!!
Lionel | 04.23.08 - 12:22 pm | #

TM writes:
Seb -

Aren't you slightly embarrassed about pumping an economy that is currently getting bent over a $120 barrel of oil? Do you really believe UPS is in the business of talking down its sector "just because"?

There is no - NO WAY - we don't go into a severe recession. No way. I'll repeat. NO WAY. And that's just based on balance sheet destruction coming directly/indirectly at the hands of oil. Factor in a real estate depression, an insolvent banking system, penniless homeowners and the very real probability that Fannie and Freddie are toast without a bond market-destroying gov't bailout, and your sanguine posture is mystifying at best, but cheap entertainment nonetheless.
TM | 04.23.08 - 12:24 pm | #

Alec writes:
And you(r) point is?
flaminia

Sebastian's only point is on his dunce cap.

What do they say; It's a recession if your neighbor loses his job, a depression if you lose yours?

My landlord cold called me today to see if I wanted to buy the place I'm renting, and it turns out he's having to liquidate a big chunk of his RE portfolio because he levered up and got burned. hoocoodnode?. I passed but told him I'd be in there at least another 2 years.
Alec | 04.23.08 - 12:39 pm | #

mock turtle writes:
Sebastian

i appreciate when you make erroneous posts cause it creates the opportunity for others to clear up your falatious assertions.

see year over year net income reports by industry, wall street journal

totals for all

Q1 2008 y/y minus 30%

Q4 2007 y/y minus 57%

as for attributing embarrassment to CR over his or others posts...

you just crossed the line.

most of us have been quite civil and even supportive of your right to post contrarian views.

i have defended you in this regard.

cease your churlishness, now.
mock turtle | 04.23.08 - 12:46 pm | #

dryfly writes:
Speaking of internation shipments, whatever happened to when the dollar falls, foreigners buy all our shit theory?
Shnaps | Homepage | 04.23.08 - 10:28 am | #

WTF Shnaps - they said exports are up. From CR's front page... UPS: We're seeing certainly changing trade flows and U.S. imports are slowing, but at the same time, U.S. exports are increasing. Asia to the U.S. is perhaps not as robust as it was but Asia to Europe remains robust.

The thing is the RMB is still WAY TOO WEAK... it has weakened against the Euro too, not as much as the USD but plenty... and considering cost structures in Asia vs Europe a flood of stuff is gonna be heading their way unless THOSE particular imbalances rebalance also.

Europe will hollow out faster than NAFTA if this continues. It won't, the EU will dissolve before that happens (the south & east in the EU will just 'walk away').

dryfly | 04.23.08 - 12:47 pm | #

mock turtle writes:
i apologize for my missspelung


fallacious
One entry found.

fallacious


1 : embodying a fallacy 2 : tending to deceive or mislead : delusive
mock turtle | 04.23.08 - 12:49 pm | #

mock turtle writes:
although the more i think about it...kinda like falatious...

a combination of fellatio and falacy
mock turtle | 04.23.08 - 12:51 pm | #

dryfly writes:
i apologize for my missspelung

Here all these years I thought it was embodying a phallus. Stuff you learn here on CR.

dryfly | 04.23.08 - 12:51 pm | #

RE writes:
This might be a good incentive for China to purchase a little more oil...

China down to 12 days worth of coal - report


CHINA only has enough coal for 12 days of consumption, three days less than a month ago, state media reported Wednesday, sounding the alarm bells over the nation's most important source of energy.

In certain parts of China, such as densely populated Hebei province in the north, reserves are down to less than a week, Xinhua news agency reported, citing the China Electricity Regulatory Commission.

In the period since early March, coal reserves have slumped by 12 per cent to 46.7 million tonnes, according to the commission.

Reasons for the shortage were "multi-dimensional," the commission was quoted as saying, without elaborating.

Demand for coal has risen rapidly since China experienced brown-outs early this decade, motivating a construction frenzy in the power industry, with large numbers of new coal-fired plants emerging across the country.

China counts on coal for about 70 per cent of its energy consumption, a proportion that has stayed almost unchanged for the past nearly three decades despite a skyrocketing rise in demand for power.
RE | 04.23.08 - 12:52 pm | #

k harris writes:
Sebastian,

I knew you were blind to any fact that didn't fit your view, but either you can't actually read, or you are just plain dishonest. That profit rise you singled out for mention represents a 12% deterioration from the prior reading. Fedex reported a 7% drop in earnings, so it's not like UPS is alone. UPS cut its forecast, which is to say that it now expects business to be weaker than it did in the past. The highlight of the UPS report was overseas, not in the US, so there is nothing about the UPS report that suggests the US is doing well.

Now, I realize that your response to being caught saying stupid stuff like this is to utter a cutsie non-sequitor and then change the subject, but that's getting a bit tired. Suggesting that our hosts ought to somehow be shamefaced because they are more willing to tell the truth than you are is deplorable. If don't have anything honest to say, just don't say anything.
k harris | 04.23.08 - 12:54 pm | #

dryfly writes:
RE - maybe UPS can send them some from W Va - they got unused capacity.

dryfly | 04.23.08 - 12:55 pm | #

RE writes:
Dryfly, you mean "brown" (*) does China? :)

* coal
RE | 04.23.08 - 12:58 pm | #

dryfly writes:
China counts on coal for about 70 per cent of its energy consumption, a proportion that has stayed almost unchanged for the past nearly three decades despite a skyrocketing rise in demand for power.
RE | 04.23.08 - 12:52 pm | #

If they let the RMB appreciate faster - they could buy foreign energy cheaper AND slow some of their energy demand growth to manageable levels (make less worthless crap, use strong RMB to import technology to improve efficiency).

Rebalancing doesn't just help the US.

dryfly | 04.23.08 - 12:58 pm | #

jin writes:
If they let the RMB appreciate faster - they could buy foreign energy cheaper AND slow some of their energy demand growth to manageable levels (make less worthless crap, use strong RMB to import technology to improve efficiency).

Rebalancing doesn't just help the US.

dryfly | 04.23.08 - 12:58 pm | #

If they let the RMB appreciate faster, there will be no enough jobs to sustain the energy demand--thus energy will also be cheaper.
jin | 04.23.08 - 1:04 pm | #

other jim writes:
The tone of the excerpts suggests UPS volume is shifting to cheaper ground service instead of next-day air. Did I miss something about US volume declining? The daily UPS truck on our street seems to still be coming by. But then between my son buying DVDs and our neighbors stocking up on end-of-the-world stuff, I am not surprised...
other jim | 04.23.08 - 1:05 pm | #

energyecon writes:
Interesting, the 'trading down' to ground lines up with a comment from a couple of weeks back that stuck in my mind (think by cobradriver in FL) - delivery truck was full up and the driver reported not due to RIF - ties in nicely.
energyecon | 04.23.08 - 1:22 pm | #

dryfly writes:
If they let the RMB appreciate faster, there will be no enough jobs to sustain the energy demand--thus energy will also be cheaper.
jin | 04.23.08 - 1:04 pm | #

I'm not 100% certain there would be 'fewer' jobs - increased buying power resulting from a stronger RMB would stimulate domestic consumption & especially domestic SERVICES consumption IN CHINA. That results in job growth too.

There certainly would be less export mfg related job growth but I don't think that is necessarily a bad thing FOR CHINA as well as the rest of the world.

US consumes too much & produces too little... we get a free ride with a lot of that lift coming from China. China produces a lot but doesn't get the full benefit of that effort - they give it away to US & EU via undervalued currency. That imbalance has to correct. Its good for everyone.

dryfly | 04.23.08 - 1:33 pm | #

Cobradriver writes:
dryfly | 04.23.08 - 12:47 pm |

We are BOOMING outbound.

Chris
Cobradriver | 04.23.08 - 1:33 pm | #

Cobradriver writes:
"Fedex reported a 7% drop in earnings, so it's not like UPS is alone."

If you would read the details in the last quarters statement,Fedex had a one time benefit in the same quarter a year ago. If you deduct that one time tax benefit earnings were flat.

Chris
Cobradriver | 04.23.08 - 1:37 pm | #

jin writes:
I'm not 100% certain there would be 'fewer' jobs - increased buying power resulting from a stronger RMB would stimulate domestic consumption & especially domestic SERVICES consumption IN CHINA. That results in job growth too.

dryfly | 04.23.08 - 1:33 pm | #

It sounds good in long term. But in long term we all die. With 30% of Chinese July's graduates still unemployed, there is not much room for a further appreciation.
jin | 04.23.08 - 1:39 pm | #

Nozferatu writes:
There's 2 things people can do:

1) Once and for all revolt against the bastards that rock the boat and control the money flow in ways that take us for rides every 15 to 20 years....building us up, then tearing us down...so as to gain huge wealth through other's losses.

OR

2) Just STFU and accept that we are complete, utter, stupid, ignorant sheeple who have a huge latex glove shoved up our collective asses.

Which do you all think we currently are? Which do you think we will continue to be?

Oh I have a good guess....all at the expense of our future, our children, our environment, our social welfare, and our health.

Pick your poison.
Nozferatu | 04.23.08 - 1:39 pm | #

dryfly writes:
Chris - I'm hearing similar stories from pilots flying for brown... less in, way more out bound. It won't get us out of recession but it is at least one support that can help deaden the blow a bit.

It is also the first step in getting the dollar stronger again... foreign held dollars buying US product greatly reduces the total flood of dollars abroad & corrects the exchange ratios. At some point when fewer dollars are out there we'll see it stabilize. I think we are there (if not over-sold) vs the euro... its the Asians that are resistant. They'll come around, they aren't dummies - no one likes to work for nuthin' forever.

dryfly | 04.23.08 - 1:43 pm | #

dryfly writes:
It sounds good in long term. But in long term we all die. With 30% of Chinese July's graduates still unemployed, there is not much room for a further appreciation.
jin | 04.23.08 - 1:39 pm | #

So they like working for *FREE* then? Because sending us undervalued product is the equivalent of sending us their effort for free - just divided up among a lot of other folks too.

Americans have been plenty happy to do that - probably wouldn't mind continuing to do that (have them all work for us for free).

And if you don't want the RMB to appreciate there are only a couple ways to stop it:

(1) increase capital controls so its harder to exchange USD & RMB - that will drive Chinese inflation to the moon - seriously.

(2) buy even more of our financial products - like our mortgage backed securities & collateralized debt obligations. You know, the stuff that's failing. I'm pretty certain our banks & hedge funds would sell it to them.

(3) buy our products

China would have to do one or a mix of those three to maintain the RMB where it is...

Enjoy the choices.

dryfly | 04.23.08 - 1:55 pm | #

k harris writes:
Cobradriver,

Take your word for the special item. The point, however, was that it is dishonest to characterize what is happening in the package shipping sector as evidence of good US economic performance. The CEO at Fedex said there was no growth in the US, that the only positive story now is exports. Very much like the things heard from UPS that Sebastian chose to ignore.
k harris | 04.23.08 - 1:55 pm | #

dryfly writes:
The CEO at Fedex said there was no growth in the US, that the only positive story now is exports. Very much like the things heard from UPS that Sebastian chose to ignore.
k harris | 04.23.08 - 1:55 pm | #

Yup & that's what one would expect in a recessionary period - the ratio of import/export is getting more 'favorable' but still an over decline in 'consumption' of the good/service.

dryfly | 04.23.08 - 2:07 pm | #

dr strangemoney writes:
Surprise, surprise. More payback for failed assumptions coming our way.

``Most people use the assumption senior unsecured bonds are going to recover 40 percent. I don't think you're going to see that.''
http://www.bloomberg.com/apps/ne...9B_M& refer=news
dr strangemoney | 04.23.08 - 2:48 pm | #

jm writes:
... its the Asians that are resistant. They'll come around, they aren't dummies - no one likes to work for nuthin' forever.

But when we gave the Japanese a big raise to $1/80 yen, they immediately acted to push it back down to $1/120 yen. Couldn't let all those people start vacationing and partying all over the world at bargain rates, could they? How ya' gonna keep'em down on the assembly line after they've seen Paree?
jm | 04.23.08 - 3:05 pm | #

eric in vegas writes:
UPS must be really slow because I'm getting ground shipments delivered overnight from any nearby states.
eric in vegas | 04.23.08 - 3:22 pm | #

--Andrew writes:
Jin, I understand your points, but I'm with dryfly. The Asian manufacturing countries in effect did a deal with the devil in the 90's and early 2000 by manipulating their currencies to jump start manufacturing/export-lead economic growth. They needed jobs and infrastructure and exporting themselves out of a recession seemed like a good thing.

However, they got used to the idea that they could control their economies and exports through currency manipulation and ignored the econ 101 rule that trade should balance or things tend to blow up. In other words, there's a price to pay for artificially manipulating trade and they are going to have to pay it now, when it is painful, because they didn't want to pay it (or thought the check would get passed to someone else sitting at the global table - Take note, the EU will not stand for it) earlier when it was a smaller cost. Waiting further will just make it worse.

You think China has troubles? All I can say is join the club, no one is specifically picking on China, just pointing out reality. There is no free lunch. The U.S. is also going to get hurt big time in this and will have to pay it's fair share of the tab. You think a 30% new grad unemployment rate is bad? Wait until the fall out of this housing bubble REALLY hits here in the U.S. We also are going to have to pay the cost of allowing ourselves to believe that the rules didn't apply to us. We could have objected to the blatant Asian (and other countries) currency manipulation versus the dollar as they exported themselves out of crisis in late 90's by exporting to U.S. markets. We could have also objected to our own self-created internal credit bubble. But we didn't, it was too seductive and ego stroking, and are now going to have to deal with a whopper of a hangover. When I graduated from engineering school in the early 90's recession over 50% of my class didn't have jobs. This is going to be worse.
--Andrew | 04.23.08 - 5:00 pm | #

jin writes:
Enjoy the choices.



dryfly | 04.23.08 - 1:55 pm | #



Regarding the choices you gave out:



1) This is probably a miscalculation. If they can really control the capital flow, there will be LESS pressure on inflation since they can reject the hot money.



2) More Treasury or equity I suppose. Or maybe shift from USD to EUD. I am not sure how this will play out, but given U.S. gov has the largest stake in US financial market, it is safer to follow US gov.



3) This is the best solution. But it is U.S. has restriction on export, especially on High tech stuff, which US has comparative advantage. China probably is willing to buy, but U.S does not want to sell.
jin | 04.23.08 - 6:03 pm | #

yhvd writes:
dryfly: Do you count in the impact of inflation when you consider the strength of RMB? Shouldn't inflation have roughly the same effect *from the point of view of an entity that doesn't keep chinese money* in the medium to long term as an increase in value of the RMB would have?
yhvd | 04.23.08 - 7:26 pm | #