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FedEx warns runaway stock markets could be ‘first in a series’

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The bad news from FedEx for investors may just be the beginning. The parcel delivery giant shocked markets with a profit warning Thursday night that caused its shares to plunge more than 20% the following day, their biggest daily drop ever. Fears of similar news from other companies in the coming weeks are mounting.

The FedEx The announcement was the “first in a series of warnings we could see in the coming quarters,” Swissquote senior analyst Ipek Ozkardeskaya. told Bloombergadding that it “came as a blow” to investors and was a “solid sign” that the economy was beginning to slow.

Others shared the sense of doom. Carl Riccadonna, chief US economist at BNP Paribas, told MarketWatch Friday, “You’ll see more companies talking about the slowing economy, less pricing power.” Some companies can “defy the math,” he says told the outletbut ultimately macroeconomic trends lead to microeconomic narratives.

A global recession

FedEx CEO Raj Subramaniam did not spare investors from the doom and gloom. Asked on CNBC if a “global recession” was on the horizon, he replied, “I think so; these numbers don’t predict very well. We’re seeing volume decline in every segment around the world. So we’re just assuming at this point that the economic conditions aren’t going to be good.”

His company’s poor results are “a reflection of everyone else’s activities,” he added in a particularly ominous tone.

FedEx, with the wide range of items it ships worldwide, has long been considered a clock tower of global economic growth.

The company was due to release its first quarter results on Sept. 22, but opted to pre-announce earnings, unsurprisingly given that actual results fell short of forecasts and expectations.

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In its warning, FedEx said it expected business conditions to weaken further, adding that it would withdraw guidance for the remainder of the fiscal year. It blamed the poor performance on “global volume smoothness” that “accelerated” in the final weeks of the quarter.

“We are tackling these headwinds quickly, but given the speed with which conditions are shifting, Q1 results are below our expectations,” Subramaniam said in a statement. “While this performance is disappointing, we are aggressively accelerating efforts to reduce costs and are evaluating additional measures to improve productivity, reduce variable costs and implement structural cost-saving initiatives.”

The company also said it would delay hiring, reduce flight frequency, close 90 office locations and cut capital expenditures by $500 million over the next year.

This story was originally on Fortune.com

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