Core Insights - The manufacturing industry is experiencing contraction, with the Purchasing Managers' Index (PMI) at 49.1% in September, indicating a slight improvement from August but still below the threshold of 50% that signifies growth [1] Demand Indicators - Demand remains weak, with three out of four subcategories showing poor performance; however, backlog orders increased slightly to 46.2%, potentially due to a rise in new orders in August [2] - New export orders significantly declined by 4.6 points to 43%, reflecting the impact of tariff-related news [3] - The customer inventory index decreased to 43.7%, suggesting a faster rate of contraction, which may lead to increased orders from customers in the future [3] Production and Supplier Performance - Production saw a rise of 3.2 percentage points to 51%, attributed to an uptick in orders from August [3] - Suppliers delivered faster in September, with the supplier deliveries index at 52.6%, although it still indicates slower delivery performance for the second consecutive month [4] Employment Trends - The employment index improved to 45.3%, up 1.5 percentage points from August, but comments from the survey indicate more negativity regarding layoffs than hiring [5] Economic Impact - The manufacturing sector's gross domestic product contracted by 67% in September, a slight improvement from 69% in August, highlighting ongoing struggles due to staff reductions, hiring freezes, and price increases [6]

All right. Uh let's uh let's move on to the broader markets. The S&P 500 is pacing for what would be at least if it maintained what it's doing right now, a third straight day of declining.Still, although we're very close to record levels, joining us with his outlook is Michael Caneritz. He's Piper Sandler's chief investment strategist. Nice to have you here, Michael.Thanks. Uh you write um that you expect improving EPS breath to take over after three years of PE expansion. Can you explain what that means an ...

Group 1 - The flash PMIs indicate weaker than expected performance in manufacturing, services, and composite sectors, with all three metrics showing sequential declines [1][2] - The headline PMI is at 52.0%, marking the weakest level since July, while the services PMI is at 53.9%, the lowest since June, and the composite PMI is at 53.6%, also the weakest since June [2] - Despite the declines, all three PMIs remain above 50, indicating that the sectors are still in expansion territory [2] Group 2 - Interest rates are slightly lower, with a decrease of three basis points in the 10-year yield [3] - Upcoming data from the Richmond Fed manufacturing and service indices is anticipated, which may provide further insights into the economic landscape [3]

Group 1 - US business activity experienced a decline in momentum in September for the second consecutive month, as indicated by the S&P Global's Composite Purchasing Managers' Index (PMI) [1] - The PMI index decreased to 53.6 in September from 54.6 in August, suggesting continued expansion but at a slower rate [1]

Core Insights - FedEx Freight is set to become a standalone public company by June next year, with plans to invest $600 million in IT infrastructure ahead of the spinoff [1] - FedEx reported consolidated adjusted earnings per share of $3.83 for its fiscal first quarter, exceeding consensus estimates by $0.22 and showing a year-over-year increase of $0.23 [2] - FedEx Freight's revenue for the quarter was $2.26 billion, reflecting a 3.1% year-over-year decline, with tonnage per day down 2.5% and revenue per hundredweight down 0.6% [3] Financial Performance - FedEx Freight's operating ratio was reported at 84%, which is 280 basis points worse year-over-year, impacted by $9 million in separation costs related to the spinoff [5] - The decline in revenue and a 100-basis point increase in salaries, wages, and benefits as a percentage of revenue were significant factors in the financial performance [6] - For the fiscal year ending May 31, FedEx Freight's revenue is expected to increase by a low-single-digit percentage year-over-year, with modest yield improvements anticipated in the latter half of the year [7] Market Conditions - The Purchasing Managers' Index (PMI) for August was 48.7, indicating negative territory for 32 of the past 34 months, with the new orders subindex moving into expansion territory at 51.4 [4] - The LTL market is described as "rational," but top-line trends are constrained by a weak industrial economy and share loss to the truckload market, where capacity is abundant and rates are low [3]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the manufacturing and non-manufacturing sectors in China, specifically analyzing the National Bureau of Statistics (NBS) Purchasing Managers' Index (PMI) for August. Core Insights and Arguments 1. **Manufacturing PMI Performance**: - The NBS manufacturing PMI increased slightly to 49.4 in August from 49.3 in July, which was below market expectations [1][2][3] - The output sub-index rose to 50.8 from 50.5, while the new orders sub-index increased to 49.5 from 49.4. However, the employment sub-index fell to 47.9 from 48.0 [3][8] 2. **Non-Manufacturing PMI Performance**: - The official non-manufacturing PMI rose to 50.3 in August from 50.1 in July, driven primarily by the services sector, which saw its PMI increase to 50.5 from 50.0 [1][9] - The construction PMI notably dropped to 49.1, marking the lowest level since early 2020, attributed to adverse weather conditions [9][10] 3. **Sector-Specific Insights**: - The pharmaceuticals and electronics sectors showed stronger performance, with their output and new orders sub-indexes significantly higher than the overall manufacturing sector [3] - Conversely, sectors such as textiles, apparel, and chemicals reported sub-indexes below 50, indicating contraction [3] 4. **Trade-Related Sub-Indexes**: - The manufacturing new export order sub-index edged up, reflecting some improvement in trade conditions [4] 5. **Deflationary Pressures**: - The report indicates that deflationary pressures are easing, as evidenced by the increase in the price sub-index within the manufacturing PMI. The input cost sub-index rose to 53.3 from 51.5, while output prices increased to 49.1 from 48.3 [8][10] 6. **Impact of Weather Conditions**: - Adverse weather conditions, including high temperatures and heavy rain, have negatively impacted construction activity and overall PMI readings [9][10] 7. **Government Intervention**: - Increased government focus on overcapacity and price competition has contributed to alleviating deflationary pressures [10] 8. **Market Sentiment**: - A recent rally in the Chinese stock market has positively influenced the services PMI, particularly in capital market services, which reported a PMI above 70 for two consecutive months [10] Additional Important Information - The report emphasizes that investors should consider this analysis as one of many factors in their investment decisions [4] - The data presented reflects the current economic conditions and is subject to change, highlighting the importance of ongoing monitoring [26]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the manufacturing and non-manufacturing sectors in China, highlighting the impact of heightened US tariffs on economic indicators such as PMIs (Purchasing Managers' Index) [1][2][4]. Core Insights and Arguments 1. **Decline in Manufacturing PMIs**: - The NBS manufacturing PMI dropped to 49.0 in April from 50.5 in March, marking the lowest level since May 2023. This decline was attributed to the negative effects of increased US tariffs [1][4]. - The Caixin manufacturing PMI also fell to 50.4 in April from 51.2 in March, indicating a slowdown in manufacturing activity [1][9]. 2. **Sub-index Performance**: - Key sub-indexes within the NBS manufacturing PMI showed significant declines: - Output sub-index decreased to 49.8 from 52.6 - New orders sub-index fell to 49.2 from 51.8 - Employment sub-index dropped to 47.9 from 48.2 [4][8]. - The manufacturing new export order sub-index fell sharply to 44.7 in April from 49.0 in March, the lowest since December 2022, reflecting weaker external demand [4][9]. 3. **Non-Manufacturing PMI Trends**: - The official non-manufacturing PMI decreased to 50.4 in April from 50.8 in March, with the services PMI also declining to 50.1 from 50.3 [1][4]. - The construction PMI fell to 51.9 in April from 53.4 in March, although infrastructure-related construction PMI rose to 60.9 from 54.5 [4]. 4. **Deflationary Pressures**: - The input cost sub-index decreased sharply to 47.0 from 49.8, indicating deflationary pressures in the manufacturing sector. Output prices also fell to 44.8 from 47.9 [8][9]. - Companies reported that increased competition among vendors led to a drop in input costs, which were often passed on to customers through lower selling prices [9]. Additional Important Insights - The report indicates that larger manufacturers experienced a more significant slowdown in activity, with PMIs for large, medium, and small enterprises falling to 49.2, 48.8, and 48.7, respectively [8]. - The overall economic sentiment is cautious, with market expectations not being met, as evidenced by the lower-than-expected PMI readings [2][4]. This summary encapsulates the critical findings from the conference call regarding the current state of the manufacturing and non-manufacturing sectors in China, emphasizing the adverse effects of US tariffs and the resulting economic indicators.