As we always say the news flow is really not that much different week to week, or month to month - it's just what the market wishes to ignore and what the market wishes to recognize. We've seen some high profile earnings blowups this week in smaller stocks, and the creep of inflation is starting to hit some other names, ala Fedex (FDX) a name we've always used as an economic tell.

• FedEx Corp. reported a fourth-quarter loss Wednesday and offered a gloomy outlook as it wrestles with a slumping U.S. economy beset by soaring fuel costs and falling prices for homes.
• FedEx, considered a bellwether for the broader U.S. economy, predicted 2009 earnings of $4.75 to $5.25 per share, well below Wall Street expectations of $5.92 a share.
• "Looking ahead to '09, we do expect conditions to remain extremely challenging and we anticipate in both the first quarter guidance and the yearly target the current economic weakness will continue and the current level of fuel costs will not mitigate," chief financial officer Alan Graf said in a conference call with market analysts.
• FedEx customers pay fuel surcharges, but that does not cover all of the increases. The company's fuel costs for the quarter were 54 percent higher than for the same period last year, Ortwerth said, while the surcharges were up less than 30 percent. The fuel surcharges, which are added to the company's basic shipping rates, were 28 percent for June and will increase to 32.5 percent in July, Hatfield said. (no inflation there)
  

But frankly Fedex has warned (multiple times) in the past few quarters, and other than a 1 day blip the market didn't care most of the time - after all it was "backward looking" and "the 2nd half recovery is imminent". As I said almost every day of the "1st half", the "2nd half recovery" is a bowl of Kool Aid wrapped in an enigma of nonsense ... or something like that. I simply await the calls for "1st half 2009 recovery" that are sure to be the Kool Aid of choice soon, offered to you by the same people who last fall were offering the "1st half 2008 recovery". Of COURSE you should be buying NOW to take advantage of the recovery in early 2009 since the market is forward looking. Oh yes, those comments are only from the people who acknowledge there is any slowdown at all - many still cling to the government reports which show "no technical recession".

I'll keep repeating this until I'm blue in the (?) fingertips - inflation is a tax on all things - producers and consumers. Someone needs to eat it.