FedEx Drops the Bomb

The moment of recognition approaches. FedEx issues ominous warning about the global economy, shares tumble

"Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S." FedEx CEO Raj Subramaniam warned in the release. "We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations."

Economic data is going to fall off a cliff.

Predictions are hard, but I expect FDX will get to long-term support. I think long-term support could also break and enter a free fall. That's the scenario where the bear market is worse than anything seen since at least the early 1970s.

Events always take longer to play out in time, but bear markets are when time accelerates. The extreme bear scenario includes several possible tripwires. One is the Federal Reserve loses control. Everyone expects inflation, which is why losing control means uncontrolled deflation. Everyone, even deflationists such as myself, assume the government would print money in that scenario. 

What few have contemplated is what happens when its say August 2023 and inflation is back to 5 percent and the Biden admin is pushing a big spending plan because the recession is going on six consecutive quarters. There are easily imaginable scenarios where some combination of the Fed funds rate, inflation and U.S. budget deficit conspire such that the Fed's choice is massive dollar devaluation and exchange-rate driven "hyperinflation" on the one hand and deflationary collapse on the other. The GOP only needs one house of Congress to block any type of crazy spending plan from Biden.

Additionally, read Ages of Discord. The indicators point to civil war, political violence and depression. The setup for an economic depression that exceeds the 1930s is there if enough dominoes fall.