-FedEx Express Segment operating margin 6.7% v 10.5% y/y (-44%)
- Fedex Ground Segment operating margins 11.8% v 17.3% y/y (-46%)
- Fedex Freight Segment operating margin 7.6% v 10.0% y/y (-31%)

In their earnings statement this morning it was said…

"We will continue to reduce expenses to match volume and revenue expectations.”

I read that as layoffs coming at FedEx. It is not just fuel prices that have FedEx losing money, it is the economy and the reduced shipments being made by corporate USA.

Thornburg Mortgage (TMA) is just about bankrupt. Washington Mutual (WM) is about to start cutting ‘hundreds of jobs’, as reported by a newspaper in Puget Sound, WA. And HMO health provider, Coventry Health (CVH) reduced forward earnings for FY 2008. Reasons cited are higher payments for health costs and an anticipated reduction in number of people being covered by their HMO. I feel it was the latter that had the rest of the HMO’s trading down tonight as well. The concept here, Ockhams’s razor again, the more people that become unemployed, the less active paying subscribers to the HMO’s. Couple that with the rising health care costs (hospitals, doctors, medicines, etc), and you have the next burden coming for the average American - rapidly rising health insurance premiums.

Friday is options expiration, the closer we get to that day the more likely it is we will see even more wild price swings. We can’t rule out a rally in the markets leading up to Friday. But, there is just as much of a chance of a crash right through current support levels. At this time the market is on a see-saw. The long term forecast of the markets remains clear, and that forecast is down. But, the next couple of days or so could get crazy, especially following some of the dramatic declines in the financial sectors. Bounces are possible here, but upside potential remains limited.

We remain firm to our forecast of a long bear market. Nothing has fundamentally changed to warrant any change in our predictions. If anything, the data only continues to get worse for the economy.

(S&P 500 - Daily Chart)

(Financial Sector - XLF - Daily Chart)

(Bank Index - BKX - Multi Year, weekly chart)

Jobless claims tomorrow at 8:30 am (US EST), Philadelphia Fed Index & leading indicators data at 10:00 am

Earnings:

Before the Open: ATU, CCL, CC, FLOW, SJM, MESA, PIR, PRGS.

After the Close: HRB, SMOD, PAY.