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By Adam Zoll and Jeremy Glaser | 09-20-2012 03:00 PM

Trying to Hold On

Industry headwinds could slow down some companies, but further central bank moves and improving housing data offer the economy much-needed support.

Adam Zoll: I am Adam Zoll for Morningstar and welcome to the Friday Five. The stock market seems to be holding on, but how about the rest of the economy? Here to talk about five places in the market that are trying to hold on is Morningstar's markets editor, Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Adam, always good to be here.

Zoll: So, what's on your mind this week?

Glaser: Well, we're going to talk about consumer packaged goods, about FedEx, Europe, housing, and finally Japan.

Zoll: Jeremy, we saw some decent earnings news from some major food companies this week. What's your take?

Glaser: We got reports from both General Mills and ConAgra, which are big consumer packaged goods companies and generally, you're right, they had decent returns. Our analyst, Erin Lash, thought that they were really basically in line with our expectations; the stocks are fairly valued. But certainly I think there are some underlying trends there that are pretty interesting.

I think the fact that they are growing relatively slowly, that excluding acquisitions, their organic growth still looks relatively under pressure. They are having trouble pushing out huge growth in volume. They getting a little bit better price than they were before but are having trouble moving a lot more product. I think that shows that consumers are still a little bit cautious and are not just totally diving in. The companies are also starting to deal with those rising commodity prices again. This is a theme that we've talked about time and time again just how a lot of companies are getting squeezed by the fact that commodity prices are rising at a time when economic growth doesn't look great and how that potentially is very challenging for margins. So, certainly these companies are holding on for now. They've been making smart acquisitions. For the most part, they've been trying to develop new products, but it's not going to be an easy road ahead, particularly if those commodity pressures don't abate.

Zoll: Meanwhile, we also heard some noise of pessimism from a major shipping company this week?

Glaser: Yeah. We did. FedEx came out this week with its quarterly results. The results themselves were in line with what people were expecting. But what the market was really focused on was the firm's outlook for 2013, which was weaker than it had thought it was going to be previously, and FedEx is seeing weakness across the globe. It's not just that Europe is slowing down; it's not just that the firm is worried about Asia. Businesses across the globe are really cutting back on the inventory that they have to ship; they are cutting back on their shipping needs really everywhere. And FedEx is well-positioned to make these kind of comments. It is a truly global company. The firm is talking to these managers and how much they are going to be moving on a pretty regular basis.

So, I think, certainly it's useful to heed the firm's warnings that the rest of the economy is slowing down. Certainly just because it's one data point doesn't necessarily mean that the world is careening toward recession, but certainly it put investors on high alert to be keeping an eye out for any sort of slowdown.

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