Public Holidays
Singapore, Hong Kong, China & the USA have no public holidays in the coming week.
Economic Calendar (17 Mar 2025)
from Investing
Notable Highlights
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Core retail sales and retail sales figures will be released in the coming week. This will provide a good overview of consumption in America.
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The most watched news would be the Fed’s interest rate decision. The forecast is expecting the interest rate to remain status quo. A different outcome is expected to introduce volatility into the market.
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Philadelphia Fed Manufacturing Index will bring understanding about the manufacturing sector.
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Existing home sales is a good barometer about the real estate market in the USA.
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Initial jobless claims will be announced. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.
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Crude Oil Inventories can be seen as forward indicators of market demand and consumption. If the trend of excess inventories continues, demand erosion can lead to reduced production & weakened consumer spending.
Earnings Calendar (17 Mar 2025)
from FACTSET
I am interested in the earnings of FactSet, TME, Jabil, Accenture, Nike, Micron and FedEx.
Let us look at FedEx, which is one of the leading couriers in the world.
Description of FedEx
Supply Chain companies’ outlook can be used to forecast the market.
summary
The Technical Analysis has a “Strong Sell” rating. The Analysts Sentiment has a “Buy” rating. The price target is $313.85, which implies a potential upside of 29.58%.
The stock price has fallen 2.4% from a year ago.
10 years summary
Observations of FedEx’s recent performance
Revenue
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Growth Trend: FedEx's revenue has shown a general upward trend over the decade, growing from $47.453 billion in 2015 to a peak of $87.693 billion in 2024. The compound annual growth rate (CAGR) over 10 years is 6.8%.
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Volatility: Revenue growth has been inconsistent, with notable declines in 2020 (-0.7%) due to the pandemic and further drops in 2023 (-3.9%) and 2024 (-2.7%). These drops reflect challenges in the logistics sector amid economic fluctuations.
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Competitive Advantage: The steady long-term revenue growth suggests a strong market position in the global logistics and delivery industry, likely driven by its extensive network and diversified services (e.g., FedEx Express, Ground, and Freight).
Operating Profit
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Growth Trend: Operating profit increased from $2.143 billion in 2015 to $6.298 billion in 2024, with significant growth in the early years (e.g., 78.4% in 2016 and 70.0% in 2017). However, growth has been uneven, with declines in 2020 ($2.852 billion) and 2021 ($5.973 billion) before recovering.
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Operating Margin: The operating margin improved from 4.5% in 2015 to 7.2% in 2024, indicating better cost management and operational efficiency over time.
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Competitive Advantage: The ability to maintain and grow operating margins amidst revenue volatility highlights FedEx's operational resilience and scalability, a key strength in the competitive shipping industry.
Earnings Per Share (EPS)
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Growth Trend: EPS rose from $3.65 in 2015 to $17.21 in 2024, with a remarkable 10-year CAGR of 18.7%. Notable jumps include 141.4% in 2020 and 296.9% in 2021, though there were setbacks (e.g., -87.9% in 2019 and -26.3% in 2022).
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Volatility: EPS growth has been highly volatile, reflecting sensitivity to economic cycles and one-time events, but the long-term upward trajectory is impressive.
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Competitive Advantage: The strong EPS growth suggests effective capital allocation and profitability, enhancing shareholder value and signaling financial health.
Dividends
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Growth Trend: Dividends per share increased from $0.80 in 2015 to $5.04 in 2024, with a 10-year CAGR of 15.7%. The dividend growth rate peaked at 60.0% in 2017 but slowed in later years (e.g., 9.6% in 2024).
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Consistency: FedEx has consistently raised dividends, even during challenging years, demonstrating a commitment to returning value to shareholders.
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Competitive Advantage: A robust and growing dividend policy reflects financial stability and confidence in future cash flows, a hallmark of a mature, competitive business.
Price-to-Earnings (P/E) Ratio
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Valuation: FedEx's P/E ratio is 14.9, which is moderate compared to industry standards. This suggests that it is reasonably valued relative to its earnings.
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10-Year Median Returns: The 10-year median return on assets (ROA) is 4.6%, return on equity (ROE) is 15.6%, and return on invested capital (ROIC) is 6.7%, indicating solid but not exceptional returns.
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Competitive Advantage: The P/E ratio, combined with decent ROA and ROE, suggests a stable investment with potential for value creation, supported by its established market presence.
Free Cash Flow (FCF)
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Growth Trend: The EV/FCF ratio is 27.4, implying that free cash flow generation is robust relative to enterprise value. The 10-year CAGR for FCF is 15.7%, reflecting strong cash flow growth.
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Capital Structure: The median debt/equity ratio is 3.2, and debt/assets is 0.4, indicating a manageable leverage position.
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Competitive Advantage: Strong FCF growth and a balanced capital structure enable FedEx to invest in infrastructure, pursue acquisitions, and return capital to shareholders, reinforcing its competitive edge in logistics.
Other Key Metrics
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Gross Profit and Margin: Gross profit grew from $8.558 billion in 2015 to $18.952 billion in 2024, with the gross margin stabilizing around 21-22% in recent years, up from 18.0% in 2015. This reflects improved pricing power and cost control.
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Return on Invested Capital (ROIC): ROIC fluctuated between 1.5% (2019) and 13.6% (2018), settling at 6.9% in 2024. The 10-year median ROIC of 6.7% suggests efficient use of capital, though it has varied with economic conditions.
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Competitive Advantage: The consistent gross margin and ROIC improvements underscore FedEx's ability to maintain profitability and invest in its network, a critical advantage in a capital-intensive industry.
Overall Assessment
Over the past 10 years, FedEx has demonstrated resilience and growth despite economic headwinds, such as the 2020 pandemic. Its revenue and EPS growth (CAGR of 6.8% and 18.7%, respectively), coupled with a strong dividend policy (CAGR of 15.7%) and robust FCF generation, highlight its financial strength and competitive advantages. The company's ability to improve operating margins (from 4.5% to 7.2%) and maintain a stable valuation (P/E of 14.9) further supports its position as a leader in the logistics sector. Challenges include revenue volatility and occasional EPS declines, but FedEx's extensive global network, operational efficiency, and shareholder-friendly policies position it well for long-term success.
The EPS and Revenue forecast are $4.61 and $21.92B, respectively.
While FedEx demonstrates good resilience, I prefer to monitor the stock for now, given the current climate. The outlook of FedEx can be a good indicator of the global economic outlook.
Market Outlook of S&P500 - 17 Mar 2025
Volume tells of the momentum of the trend. The average volume is over 4.6 B, and the latest volume is 3.0 B. This suggests a weak strength to the current momentum. One day does not make a trend, and let us monitor. There is a difference between buying the dip and catching a falling knife.
Observations:
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The MACD indicator is starting a downtrend.
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Moving Averages (MA). The MA50 line has started a downtrend, while the MA200 line is on an uptrend. This implies a downtrend in the mid-term and bullish in the long term.
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Candle. The last candle is below the MA50 and MA200 lines, implying a bearish outlook for the medium and long term.
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The 3 Exponential Moving Averages (EMA) lines are showing a downtrend.
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Chaikin’s Monetary Flow (CMF) shows a downtrend (below the 0 line).
Using technical indicators and Moving Averages, Investing.com has a “Strong Sell” rating for the S&P 500 (using daily interval). There are 20 indicators with a “Sell” rating compared to only 3 with a “Buy” rating.
Here are the indicators in detail.
The candlestick patterns above point to a more “bearish” outlook.
With the above information, I lean towards a bearish outlook in the coming days.
News and my thoughts from last week (17 Mar 2025)
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The closed OpenAI is asking the Trump administration to ban DeepSeek, the AI model which is open-source and truly innovative. Every time China has a successful product, Americans scream for censorship and sanctions. So much free-dumb. - X user Kanthan2030.
There is a limit to how much posturing is adequate. I am aware of reciprocal tariffs - tariffs or absence of tariffs being equal. Is the USA pushing Canada and Mexico into the arms of China and other alliances? Is the USA forcing the forming of a new alliance? What can happen if Canada, Mexico, China and Europe work together without the USA? President Trump has threatened these countries/regions with tariffs.
So far, there are no signs that tariff threats are driving inflation. A lot of the data suggests the opposite. The lack of clarity around tariffs appears to be causing businesses to pull back investment sharply. Watching the freight charts in recent days has me highly concerned. - X user Craig Fuller
President Donald Trump’s 25% tariff on all imports of steel and aluminium takes effect, ramping up tensions with America’s trading partners - BBC
With the affordable labor, infrastructure, supply chain and raw materials, sanctions can help China to be independent and other economies dependent. It would be interesting to see how things unfold.
Portugal has cancelled the order for F-35s from the US and will replace their F-16s with European fighters. “We have to be able to count on the predictability of our allies, which is no longer the case with the United States." - X user jdpoc
Chinese nationals banned from US student visas under new House GOP proposal - Fox
Over 5,000 youths in Malaysia have declared bankruptcy since 2020, mostly due to personal loans.
Correction is part of the normal business cycle. It is a matter of when and, with it a tremendous opportunity in wealth transfer. Buy in tranches after blood on the street
“By 2050, there could be more than 40 million metric tonnes of wind turbine blade waste piling up worldwide.” - X user James Melville
any concern for California
The credit card debt crosses $8b; delinquency rate about 1% to 3%: MAS and Credit Bureau Singapore data - Straits Times (Singapore)
My Investing Muse (17 Mar 2025)
Layoffs & Closure news
Indonesia’s layoff crisis deepens as factories shut; growth hangs in the balance Rising costs and cheap imports hit manufacturing sector hard; other industries are also bleeding jobs, though for different reasons - Business Times SG
Alibaba's Tsai discusses AI's potential: 'Research analysts can be completely replaced' - CNBC
Employees at PwC, Deloitte, EY, and KPMG are bracing for layoffs as the consulting sector deals with economic volatility, decreased demand, and client prioritization of core expenses. - Techgig
These are just several of the many F&B establishments which have pulled the plug recently. Five of seven F&B tenants in the National Gallery Singapore will be ceasing operations. October last year also saw one-Michelin-starred Sommer exiting the local dining scene. - Timeout Magazine (Singapore)
The Dickey's Barbecue Restaurants chain has not filed for bankruptcy, but the company's franchisee Smokin' Dutchman Holdings filed for Chapter 11 protection in September 2024, blaming its financial difficulties on Dickey's for allegedly imposing extreme and unreasonable demands on the debtor's resources. - The Street
The above are some snippets of news about layoffs and closures in the past week. There seems to be more of such news in recent weeks. Widespread retrenchment is one of the early signs of a market correction.
Some relief for the market
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The S&P 500 adds over $1 TRILLION of market cap and officially posts its best day of 2025. - X user The Kobeissi Letter
Before we start turning bullish, there are some interesting cues from top investors like Buffett and Dalio.
Should we be cautious like some of the top investors?
Here is some news that leans me towards a cautious posture.
What can we learn from the world's top investor - Mr Buffett / Berkshire?
This clip from the interview reaffirmed the view that Trump is WILLING to weather a recession. When asked if he "sees a recession this year," he responds, "I would hate to predict something like that." He says, "It will be great," but knows there will be short-term pain. - X user The Kobeissi Letter
Billionaire investor Ray Dalio says that the U.S. won’t ‘be competitive in manufacturing with China in our lifetime.’ - X user Unusual Whales
Hedge funds' unwinding comes at a time when leverage in the industry is at a record level. A Goldman Sachs note showed overall hedge funds' leverage in equity positions was at 2.9x their books, a record level over the last 5 years. - Reuters
The above considerations have guided me to a more cautious outlook for the coming weeks.
My final thoughts
Given the news above, we can afford to be more cautious. With some of the top investors exercising caution, we can take more time to qualify the opportunities that we have identified. There is a chance to make money but we can always afford more due diligence.
Tension is boiling within the cities as waste has been uncovered. This has led to job cuts, a freeze on funds, and much concern as thousands of federal workers find themselves without a job. Protests and reactions aimed at Trump and Musk have followed. With more scheduled audits, will there be more “unrest”?
No trade can also be a good trade.
It is time to consider our available options, including reviewing our expenditures, income, and savings. Let us spend within our means, invest with what we can afford to lose, and avoid leverage.
Let us do our due diligence before we take up any positions. Here is wishing you all a successful week ahead.
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