Yesterday after the close, the largest global courier delivery service, Federated Express (FedEx), warned of weaker than expected earnings and revenue for the second time in six months. In response, the shares have fallen 37% since January 2018 and 5% today alone. 

This is not a FedEx only story–management explained that the global economy is slowing all over. Last month A.P. Moller-Maersk A/S, the world’s biggest shipping line that carries nearly one-fifth of global shipping containers also lowered its 2019 profit forecast on a dimming outlook for world demand.

My partner Cory Venable’s chart of the Dow Transport Index (TRAN below in red) and the broader Dow Index (blue) as of yesterday’s close, shows the underperformance of transport stocks in the recent rebound since December 24th. With transports off nearly 2% so far today, this lag is widening. It’s noteworthy because when transports do not confirm moves in the broader market, they throw doubt on the sustainability of a rally.

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As a barometer of global trade, transport stocks also tend to lead US GDP growth. The chart below shows the correlation between price moves in FedEx shares and US GDP growth since 1990 and suggests US GDP growth will disappoint bulls in the months ahead.

(Click on image to enlarge)