) is a leading indicator for many emerging markets, and after
delivering a profit warning for the full year yesterday, they're
saying the growth up until the first quarter, particularly for
Asian markets, is looking uncertain.
Tim Seymour joins us, founder of EmergingMoney.com. Hi Tim.
Are you worried about FedEx and what that means for
emerging markets in the area of the world that you
Yeah, I think a lot of this news on the lower Asian
growth is priced into a lot of markets and a lot of
different sectors but when you listen to FedEx, they have
their hand on the pulse. They are a leading indicator, and
they're telling you that the visibility through at least
the end of the first quarter is uncertain. So, you
know, for a company who's had international
business grow to about 31% of their overall revenues from
the low 20's in a decade, this has become a very important
part of their earnings profile.
When you listen to the CEOs of not only shippers, but
also other parts of the cyclical economy, the
auto dealers are down, the current output for
Europe remains very challenging and I think it came in
weaker than expected.
A lot of that is because China is telling you that things
are much weaker there. The imports number for China printed
a negative for the first time in four years and I think that
weighs in on the whole story.
Against that though, the central banks, certainly in the
United States and Europe, are pumping strongly or at
least threatening to pump strongly in Europe, and therefore
arguably people can get, I guess, trapped into risky
stocks where the fundamentals aren't very good, because
there's not a lot of other places to go. And actually FedEx today
for what is this - the second or third morning we've
had this summer, is actually only down about 2%.
Well, I think you've seen people do a lot of rotation, I
think people still tend to be somewhat underweight here.
If you look at the transports, places where I think you
have a little bit more upside to emerging markets, and
a safer part of the complex. I think if you look at
valuations, they're not terribly cheap. But I would go with
the Kansas City Southern (
), who's got 45% of their business coming out of Mexico.
The Latin America story is a lot easier to see here,
again because there's real growth going on coming out of Mexico.
There's five new steel plants, there's four new auto plants that
are driving their business. The intermodal cross-border delivery
process is something that's actually changing for them, it's
changing their business. So on a five-year take, these guys I
think have a slightly different story to tell than
If you look at some of the cargo shippers and the
airlines space, Copa Airlines (
) gives you great exposure to Latin American cargo
shipping, which is a lot stronger than what we're
seeing in Asia right now.
Interesting Tim, thank you for your time. You can catch more
on Fast Money and on Tuesday right here on Squawk On The