FedEx Slips After First Earnings Since Spinoff

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1:54Scarlet Fu:Bloomberg Audio Studios. Podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. FedEx reported some numbers last night. I thought there were some pretty good numbers given what's going on out there in the world. The stock's kind of unchanged on the day. It's up 35 % year to date. Let's break it down because we all deal with FedEx almost on a daily basis, it seems like. Lee Klaska, senior transport logistics and shipping annals for Bloomberg Intelligence.

2:35He's also a host of a weekly podcast, Bloomberg Intelligence Talking Transports. Lee, talk to us about FedEx. What did we learn from their earnings? Yeah, hey, Paul. I thought they did a pretty good print for their physical fourth quarter. What they've been able to show is that their cost controls, they've had a number of different programs in place that are really starting to pay off, and that kind of helped them with their beat. They also painted a relatively okay demand picture for us. They noted that they didn't see much demand destruction from higher fuel costs, which is a very good thing to hear.

3:16And also they mentioned their B2B business has been benefiting from the built out of data centers and all the stuff that goes into that. They're helping bringing those technologies to the places where they're building those centers. So they pointed to decent top line growth. And also what they also did, which is kind of probably why the stock is down so much over the last 24 hours, is they provided their first calendar year outlook because they were on a physical calendar. Now they're going on a regular good old-fashioned calendar reporting schedule. And so I think that might have raised some confusion.

3:54Also, the guide, which topped out at$18.10 at the top of the range, I think was slightly below whisper numbers that we were hearing. Call it a dime or a quarter, so nothing terrible. So I think analysts are going to be rejiggering their numbers to probably fit within management's expectations. But what I would note is that management recently has been doing a pretty good job of providing some sort of modest guidance, if you will, and then beating that. And that is something that the street definitely wants to see. Because prior to, I would say, the last couple of quarters, they had a history of doing the opposite, maybe over-delivering and over-promising and under-delivering.

4:36So, yeah,

4:38Scarlet Fu:investors tend not to forget that. So Lee, when it comes to competition, I mean, there's only so much FedEx can do about things like oil prices and tariffs and demand is tied to how the economy is doing when it comes to competition. Amazon, of course, plans to expand its logistics business. How well positioned or perhaps not so well positioned is FedEx and along with its peers for that. Yeah, so, you know, Amazon made an announcement a couple of weeks ago that it was broadening out its logistics services to third parties. This really wasn't new news. They were kind of doing these services for a while.

5:16They kind of more or less repackaged that. Yes, they are a competitor to FedEx, but FedEx really doesn't want the same business that Amazon's going after. You know, Amazon, first and foremost, is starting these business to reduce their overall cost to deliver their packages. And if they can offset that cost by putting other freight into their system, they're absolutely for it. You know, FedEx would rather have, you know, obviously all growth is relatively good growth. But if they had their choice, they'd rather have B2B business, which tends to be higher margin business than B2C business.

5:51Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. at Brookfield we invest in the thing behind the thing behind the next big thing our focus across infrastructure energy real estate private equity and credit is helping build the backbone of the global economy we combine deep operational expertise with disciplined long-term investing uncovering value and partnering alongside clients to shape tomorrow's economy today Brookfield. Own what's next. Learn more at brookfield.com. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. The thing about AI for business, it may not automatically fit the way your business works.

6:35At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.

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8:10Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. All I know is the weather apps on my phone, they're getting better and better and better. It tells you now, which is so cool, particularly when you're a beach guy, when you need weather forecast for boating and fishing, is rains can start in 12 minutes. Sure enough, 12 minutes later, it starts raining. Yeah, it's pretty impressive. Gone are the days where you had to stay up and watch the 11 p.m.

8:45Scarlet Fu:news to figure out what things would look like the next day. You would think sometimes people actually get PhDs in weather. That's the thing, you know. Our next guest does that, Ryan Ward. He's a weather associate, BNEF. Ryan, talk to us about AI is hitting all parts of our life. It's got to be impacting your business forecasting weather because it's all about the models and what this model is saying. how is AI being used in the world of weather? Yeah, definitely. I think a lot of people think, you know, they hear AI and they're thinking like Claude or ChatGPT or whatever. We have very specific models now that are emerging for a variety of purposes in weather.

9:21And I think the one that we're, I think, really shocked and excited by right now is tropical cyclones, right? It's hurricane season right now. We're expecting probably a lower than average count of hurricanes this year. But surprisingly, you know, last year was basically the first year that AI models were deployed to actually model hurricanes. And they did really well insofar as they did basically better than every model that already exists, models that have been here for 30 plus years.

9:46Scarlet Fu:I guess the question is, how far back do the models go when it comes to data? Because I remember how often we hear that this was the storm of the century or we haven't had this kind of storm in X number of years. And if your data only goes back, say, 15, 30, even 50 years, that doesn't take you far back enough. Yeah, definitely. I think this is one of the major concerns is that we're concerned that if AI models are only trained on previous data and storms are getting more extreme, maybe they won't be able to actually predict those future storms that are the most extreme stored on record. And yet last year we had one of those.

10:19It was Hurricane Melissa. And yet, you know, the Google DeepMind model, which is an AI based model, did better than every other hurricane model. Basically got its intensity basically correct and its path, you know, where it exactly went also correct. and it's a storm that it could never have seen in the trading data, right? So that was, I think, really remarkable and exciting for us as meteorologists that these models are doing so exceptionally well given they're like a couple of years old. What is El Nino and how is it gonna impact hurricane season this year? Yeah, a lot of people are talking about El Nino right now.

10:49It's this large scale climate phenomenon. It basically, all it means is that the Pacific is warmer than average, but that has a lot of downstream implications for weather across the world, really. As far as hurricanes are concerned, we nominally expect that there will be fewer hurricanes than average. You know, if there's maybe on average seven hurricanes in the Atlantic that this year, NOAA expects maybe somewhere between three and six, something like that. And so, you know, that basically just results from the fact that the wind patterns change over the Atlantic and it's less conducive for hurricanes this year.

11:21Scarlet Fu:And what is the relationship between hurricane season here in North America versus, say, the typhoon season in Asia? Does it affect that? Yeah, definitely. So what we generally expect is that the relationship between El Nino and what happens in the Atlantic, that's a pretty tried and true impact. We can look over 50 years of data and see, usually during El Nino years, there's less hurricanes. In the Pacific, you kind of see different effects. In fact, on the eastern side of the Pacific, closer to the United States, you see perhaps more hurricanes than average. So the way that El Nino impacts globally hurricanes and the circulation patterns is different depending on where you are.

12:00And so just because we see less here, we might still see more in the Pacific depending on where you are. So who predicts our hurricanes and tells us where they're going and all that kind of stuff? Is that the government or is that a private thing? Yeah, I think it's a lot of people. So there are a lot of government agencies which have these models because the models are really... Is it like a Canadian model, American model? Yeah, exactly. That's what I hear about. Exactly, exactly. I think as far as tropical cyclones are concerned, American stakeholders are more interested because, you know, the Canada, the Canadians don't really have an incentive to make a really great tropical cyclone model because there's not like a lot of hurricanes in Canada, you know.

12:33But NOAA, I think, is usually the gold standard for this kind of stuff. Who was that? National? NOAA. The National Oceanic and Atmospheric Administration.

12:40Scarlet Fu:Are they are they still funded? I mean, you know, Doge took a, you know, cut a lot of jobs. And I'm guessing that, you know, something that forecasts weather is not high on the current White House's list, priority list. Yeah, definitely. I think we've seen pretty big highs and lows, probably, as far as NOAA is concerned. You'll see those hiring pushes very recently to bring back meteorologists because some were, you know, cut in that, you know, the doge of it all. Right. And so, you know, I think it, but, you know, all that aside, like the meteorologists are doing hurricane prediction and general weather prediction are like super important.

13:13Right. So these feel a little bit more like jobs that have a little more staying power, I would hope. All right. So we're going to fewer than average hurricanes. That is good news.

13:23Scarlet Fu:That's good news for everyone. Just a quick question. You have your Ph.D. in atmospheric science. When you were growing up, what did what did you want to be like? You knew you loved weather, but like how did you see things playing out? Yeah, I think for me, there was two things. I was always like really interested, just like we I grew up in Florida. And so Florida is known like it's in this area where like the clouds are crazy. Like I lived in L.A. for five years. There's like no clouds there ever. But in Florida, you look up outside any day and just like the scale and scope of the clouds are so crazy.

13:52And I was just like always fascinated by that. And then also the BP oil spill was like such a huge impact on like all of our like Gulf communities. I think just like that really got me turned on to like, you know, environmental like engineering science.

14:05Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. What if you could have more wins? More support? More sound effects? At LPL Financial, we like the sound of that because LPL offers more. Advisors, what if you could have more ways to help your clients? Ready to invest? What if you could find an advisor that really understands you? When it comes to your finances, your business, your future, at LPL, we ask, what if you could? Paid advertisement. Investing involves risk, including potential loss of principal. LPL Financial, LLC. Member FINRA, SIPC. Support for the show comes from Public.com.

14:42If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

15:19An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by public investing. Brokerage services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference.

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16:44Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Well, in the historical time coming up for ESPN that we definitely want to spend some time talking about, Linda Cohn joins us, sports center anchor for ESPN, retiring after 34 years from ESPN. Linda, thank you so much for joining us. I guess I'd love to just get a sense, since you've seen everything in sports television, for better or worse, how has it changed?

17:25How has sports television changed? Because ESPN changed everything. Yeah, first of all, thanks for having me, Paul and Scarlett. Really appreciate it. Yeah, it's been a fun time for me. The big shows, the final shows are this Friday. And so I have seen everything and and most of it's been for the great. You know, I like telling this story. You know, I started in 1992, July of 1992. for those who can do the math, 34 years. And when they first instituted the bottom line, that ticker at the bottom, before that, you know, telling the scores before we gave them the information. I share this story because many of us on-camera SportsCenter anchors were horrified about this because we really cared about our writing and telling a story, setting up the highlight of the game you're about to see.

18:26But you're giving away the score. And this was, I don't even know what year this was. It might have been late 90s or whatever. But it was like, you know, Twilight Zone-ish for us. You know what I mean? And it was like, and we thought there was a talent meeting and all of us like stood up and made our case how awful this would be. Of course, we didn't get our way. And then it turned out to be, again, one of these things that if we don't see, you know, what's wrong with the TV? There's no bottom line that tells us a score before we talk about it. So that's always the first thing that jumps up. But then technically, all the stuff we see when we watch live football, get any kind of sporting event, making it easy to watch and all this.

19:11But for SportsCenter, ESPN, yes, we were always ahead of it. and I'm really proud that I played a small part of it with my colleagues from the golden era.

19:22Scarlet Fu:I feel like you played an instrumental part of it, not a small part of it. Thanks, Scarlett. The fact that you started in radio, that's near and dear to our hearts, of course, because we're talking to you on radio right now. Just give us a little bit of background about you because I'm intrigued by the fact that you played hockey as a teenager with the boys and against the boys. how much did that factor into your wanting to go into sports broadcasting? Yeah, and thanks, Scarlett, for saying that. Yeah, first, I don't want to forget to say this, how, you know, young women like yourself, all these women have reached out to me that are in the business.

19:59And that is like, I'm really proud of that professional legacy of inspiring all these young women who are in kindergarten, first grade, second grade, watching the sports every Three years before they jumped on the bus, realizing that they, too, could do it if they saw a woman up there telling them about what happened in the game. Right. So I'm really professionally most proud of that the most. So getting back to the hockey thing, I was a kid with very low self-esteem. I wore very thick glasses. Now the glasses are not as thick. Thank God. But I love sports. Watched it with my dad. Sports gave me something to look forward to.

20:39That's how I always phrase it, because I didn't really have a lot of friends. I mean, I mean, I listened to the carpenters growing up. I love depressing stuff. It was awful. It wasn't, you know, don't worry. You were emo before your time. Yeah, exactly. Exactly, Scarlett. So anyway, you know, then I then I start playing street hockey with the boys. And I realized, you know, I'm really good at this goalie thing. And what I loved about that position is that I could deter here's this girl, low self-esteem, shy as a wallflower, you know, just kind of melted into the wall and playing goalie, realizing that I was good at it.

21:18And I got contact lenses, by the way, that helped my vision. And, you know, and then I was like, wow, people are noticing me. And it wasn't like, you know, conceited kind of way. But I felt like I was, wow, I'm helping people. I'm winning games I'm making the save at the right time I'm suddenly like somebody and so I rode that emotion and I added that to just my love of sports and my sports teams and watching the games with my dad but being a goalie I like telling this story too because I don't think I ever would have had this career in broadcasting and then on to ESPN you know because I start out on radio, like you said, in New York, working seven days a week, loved it.