For Your Eyes Only — This Information Can Predict Next Year’s Economy
Sensitive financial information is starting to slip out into the open.
And if you know what you’re doing, you can use this info to identify “winners” in the market.
Here’s what you need to know.
For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.
I love this time of year.
Cooler temperatures... falling leaves... sensitive company information. Wait, what?
That’s right. Around this time every year, companies do their planning for next year. This is when they determine budgets, prices, and sales forecasts.
They do their best to hold this information close to the chest. But inevitably, some of it gets out…
And those who know how to interpret this information — hint: I do — can use it to snag some serious profits. Let me explain…
An Annual Ritual
Strategic planning is an annual ritual. It’s the process where companies create forecasts for the following year — including what they’ll need to generate this business.
Do they need more employees? Less employees? More office space?
This is when those questions are answered. And this is when companies begin making important public-facing moves — e.g., letting employees go, announcing price hikes, etc.
Thousands of public companies are in the midst of this process right now.
The thing is, we’re able to get a clear picture of all this activity…
Thanks to the planning being made by just one specific company.
The Company Others Rely On
The company I’m referring to is FedEx (FDX). And the reason is simple:
So many companies depend on this transportation business. And FedEx depends on them, too.
Essentially, FedEx takes all the sensitive pieces of planning info that leak out to form a picture of future economic activity. It then uses this picture to determine its own course of action.
Are companies planning to ship a greater or lesser number of products next year? Are they expecting shipping costs to fall now that inflation has tapered?
These are the questions FedEx tries to answer. And just the other day, we got a glimpse at the answers.
A Telling Price Increase
You see, FedEx just announced that shipping rates will go up about 6% next year. Notably, that increase is less than this year’s, which came in at around 7%.
That tells us that FedEx sees a slowdown in inflation next year. And it also tells us that a number of FedEx’s customers may expect to ship fewer products in 2024.
But here’s where it gets tricky…
When strategic-planning information trickles out, the stock market may not interpret it correctly — at least, not at first. In other words, bad news can often be good news, and vice versa.
Let’s say information gets out about Meta (META) and its plans to let people go.
At first blush, that could be seen as a positive. After all, having fewer people on the payroll will improve margins. And it could be a sign that the tech giant is getting lean and mean.
But never forget: Companies that are growing will hire. And those that are shrinking won’t.
So while Wall Street may initially react well to a scenario like that, it’s likely that any rally would quickly come back down to Earth.
Bottom line: This is the ideal time of year to gain insights into how next year will shape up. But don’t worry about keeping your eyes and ears open.
That’s where I come in. I’m here to keep my ear to the ground and share with you any insights I discover. So stay tuned.
In the meantime, we’re in it to win it. Zatlin out.
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