With the increasingly regular announcements of layoffs and plant closings, it's clear that the recession is deepening. One clue to the economy's future direction that investors may be watching for is the upcoming earnings release of FedEx Corp. (NYSE: FDX). The world's largest delivery service has been considered an economic bellwether, and it just may have benefited recently from lower fuel prices and the announced departure of rival DHL from the U.S. package market.

For the company's fiscal second-quarter 2009 report, analysts surveyed by Thomson Reuters on average expect to see earnings of $1.57 per share, about 2% higher than in the year-ago period, and 21.7% higher than in the previous quarter. That's about the same as the $1.58 per share FedEx forecast in preliminary results last week. Analysts expect revenues for the quarter ended November 30 to total $9.8 billion, 3.9% more than a year ago. The Memphis-based company has only fallen short of earnings expectations in one of the past five quarters, and exactly matched estimates back in the first quarter.

As part of its expansion plans, FedEx broke ground on a new Portland hub in October, and said that a new facility in China will be fully operational in the first half of 2009. The company continues to make service improvements, and declared a quarterly dividend in November. But in its preliminary results, FedEx lowered its full-year forecast, citing continued weakness in the economy.

Today started out looking like a great Monday after the Chinese announced a $586 billion stimulus package. Unfortunately, some of this was already in the works and many doubt its projected 8% to 9% growth for 2009 can stave off a recessionary environment ahead. Bonds closed early ahead of Veteran's Day, and are not trading Tuesday.

Here are the unofficial closing bell levels:
52-week lows
Top Upgrades & Downgrades
Solar Downgrades

American Capital, Ltd. (NASDAQ: ACAS) got killed after three major announcements: -$2.63 EPS, a $158 million acquisition, suspension of its dividend. Shares were down over 43% at $7.75 to a new multi-year low right before the close.

American International Group (NYSE: AIG) got a larger lifeline as the old $85 billion package grew to $120+ billion and then to $150+ billion, with some $40 billion coming from the TARP funds at better terms. Shares came off with the market at the end of the day, but were still up 9% at $2.30 right before the close.

United Parcel Service (NYSE: UPS - option chain) and FedEx (NYSE: FDX) shares are getting a lift after competitor Deutsche Post AG announced it will close all DHL Express service centers in the U.S. Since UPS has been the steadier of the two survivors over the past year, I am more interested in a trade on that stock. If you think that UPS won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on the stock.

UPS opened this morning at $53.98. So far today the stock has hit a low of $52.80 and a high of $55.01. As of 12:45, UPS is trading at $53.53, up $1.61 (3.1%). The chart for UPS looks neutral and S&P gives UPS a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just six weeks as long as UPS is above $40 at December expiration. UPS would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

UPS hasn't been below $40 at all in the past year and has shown support around $50 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in UPS nor FDX.

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Roadway below in the comments.

Once or twice a year, the family and I take a long, cross-country drive to one vacation spot or another. So when I heard that that the nickname of the freight hauler Roadway Express was "always on the Road and in the Way," I knew exactly what that meant. It never seems to fail: just as I'm about to catch up to a semi truck, it suddenly swings over into my lane, the passing lane, and then spends the next five to ten miles inching past a very slightly slower truck. In the meantime, I get a nice close-up view of the Yosemite Sam mud flaps, while impatient traffic builds up behind me.

According to their website, Roadway Express, now a division of YRC Worldwide Inc. (NASDAQ: YRCW) has been on the road and in the way since it was founded in 1930 by a pair of brothers hauling freight between Akron, Ohio, and St. Louis, Missouri. By the end of its first decade, it had offices in 22 cities and operating revenues of more than a million dollars. After the Interstate system was established, that expanded to 65 cities and more than $40 million in operating revenue from nearly 1,000 trucks. The company celebrated its 75th anniversary in 2005, and now delivers to all 50 states, Puerto Rico, Canada, and Mexico with more than 8,500 trucks.

Recently, I was shopping for a couple of books on half.com. However, having spent about a half hour in my search, I decided, at the last minute, to forego my purchases. While the sellers were offering great prices, the shipping raised the books' costs to above what I would pay in a local bookstore. In the end, it just wasn't worth it.

As the price of gas goes up, so does the price of postage. While this hasn't been much of a concern with the U.S. Postal Service, private carriers like DHL, UPS (NYSE: UPS), and FedEx (NYSE: FDX) all pass the cost of fuel on to their customers. For example, at the end of 2007, UPS was tacking on a 4.75% gas surcharge for ground deliveries. Right now, it's 8.5%, with an even higher price for express shipping.

Some retailers are fighting back with free shipping or a flat fee for unlimited shipping. Unfortunately, while these deals may draw in customers, they chip away at the sellers' bottom line. As many online sellers have built their client base by offering better-than-store prices, the added costs may make it impossible for them to generate sufficient profit. This is likely to be particularly devastating for companies like Amazon.com (NASDAQ: AMZN), who are completely reliant upon their internet sales. At the very least, we're likely to see a major surge in companies that use U.S. Postal Service!

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

When you need to ship a package, which company first comes to mind? According to last year's Battle of the Brands non-scientific poll, an overwhelming majority said they favored United Parcel Service Inc. (NYSE: UPS) over FedEx Corp. (NYSE: FDX). Higher fuel surcharges, a weak economy, reduced domestic package volume, and a recent push from the U.S. Postal Service have impacted both of these international shipping companies in the past year, but Americans still want the same quality service at a discount price.

Let's take a look at a few changes since last year:

The US Postal Service Tries To Gain Ground

The largest player in the U.S. overnight package delivery business is attempting to increase its market share in the fast-delivery business next month. USPS is barely holding on to its 32% market share in the business, as FedEx and UPS continue to push the envelope at 31% and 25% market share, respectively. For the first time, shippers using Express Mail, Priority Mail, and several other parcel services will be able to get lower rates for large- and medium-volume contracts, according to the agency. Will UPS and FedEx need to cut their prices further to compete with the USPS?

FedEx Corp. (NYSE: FDX)'s dream of entering India's domestic logistics business has failed with the withdrawal of its bid for SafeExpress, one of the largest Indian logistics companies. Had the deal been approved, it would have given FedEx quite a large chunk of the express cargo, third party logistics and warehousing segment.

Instead, FedEx wasn't willing to pay the high price that SafeExpress demanded, sources close to the deal told The Economic Times. SafeExpress founder and managing director Pawan Jain valued his company at Rs2000 crore, nearly $500 million. FedEx was willing to spend up to Rs1800 crore, or $445 million, for the Indian logistics company.

The move hurts FedEx's chances of successfully entering India's domestic logistics segment through a strategic acquisition. Competitors DHL and TNT (OTC: TNTTY) have already been successful in finding a logistics company in India, with DHL acquiring 81% of Blue Dart for Rs 730 crore, or $181 million, in 2004 and TNT's acquisition of Speedage, a division of ARC India last year, for Rs200 crore, or $50 million.

The lack of an acquisition also hurt SafeExpress, after a multitude of regional managers and operational leaders from various divisions have left the company in the past eight months, unsure of the company's future. On the topic of acquisitions, this weekend Barron's said that FedEx themselves could be a private-equity target.

Analysts, shareholders (and would-be shareholders), and many others no doubt will be keeping on eye on Memphis-based FedEx Corp. (NYSE: FDX), the global leader in express transport and delivery, when it reports Q4 2007 earnings next Wednesday, June 20. Many consider FedEx to be a bellwether for the economy.

Since FedEx reported a mild Q3 back in March, the trend of its share price hasn't been especially impressive these past three months. Blame it on the economy, fuel costs, the weather, or stiff competition from rivals United Parcel Service (NYSE: UPS) and DHL, a Deutsche Post (LSE: DPO) company, but FedEx has struggled of late, as reflected perhaps in the BloggingStocks Battle of the Brands match-up: FedEx vs. UPS. Analysts' feelings are mixed on FedEx as well, and the company does still face such troubles as discrimination lawsuits.

But it's no accident that FedEx is within the Fortune 500's top ranks. It continues to expand, both domestically and internationally, and stands to benefit from impending increased air traffic between China and the United States. General Motors (NYSE: GM) recently declared FedEx its 2006 Supplier of the Year, and the FAA has given FedEx a vote of confidence as well. And in May, FedEx announced a 10% boost in its cash dividend, to ten cents per share. The Motley Fool thinks FedEx may be a bargain, as well.

According to Thomson Financial, the brokers' consensus on FedEx is buy (6 buy, 7 strong buy, 7 hold). Its P/E is 15.89 (compared to 11.96 industry average), and its market cap is $33.16 billion. When FedEx reports earnings next week, Wall Street is expecting revenue of $9.14 billion, or earnings per share of $1.89, compared to $1.82 actual last quarter, and $1.35 a year ago. Its price target is $124.42; the 52-week low was $97.79 in August 2006 and the high was $121.42 near the end of this past February. FedEx closed Wednesday at $108.82.

In the face of less than stellar April national retail sales, Limited Brands (NYSE: LTD) managed to hold its position fairly well. It reported a small reduction in same store sales for April which looks pretty good when compared to the 16% reduction reported by Gap Inc. (NYSE: GPS). For the four week period ending May 5, 2007, Limited Brands total sales fell 1 percent. Compare that to the year to year figures, which show that for the thirteen weeks ending May 5, Limited Brands same-store sales grew 4% and net sales grew 11% to $2.31 billion, from $2.07 billion last year. That ain't all bad, bunkie.

What does the future hold for middle to upscale retail? Much depends on two major factors. While fuel prices will have their chilling affects on consumer confidence and spending, those costs will also translate into a significant negative pull on profits all around. We may not begin to fully realize the damaging effects of rising fuel prices until mid June or so when the dynamics of the summer travel season come into full view. Suffice it to say that fuel prices are the biggest player right now in the game of consumer spending. I'm sure that's not breaking news to you.

The other significant factor which will color the canvas of retail catalog sales from here on out is the massive change in rate structure now being entertained by the United States Postal Service. Never in our lifetime has such a tremendous and far reaching postal rate hike been levied upon us in one single policy change. Companies which derive major revenue flow from catalog sales will surely be feeling the pinch and will be required to raise prices to compensate. I can't honestly say if the new higher postal rates are wrong, but I can say that they'll hurt a lot. I'd be tempted to go long on United Parcel Service (NYSE: UPS) and FedEx (NYSE: FDX) right about now. Let us also not forget Kevin Shult's blog post regarding the significance of DHL.

In my Battle of the Brands: UPS vs. FedEx, many people commented on how one company handled remote locations better than the other. If you think Avoca, Minnesota is a "remote location" check out this study.

Each year, students at the Supply Chain & Logistics Institute at Georgia Tech in Atlanta, GA send packages to locations around the world through different parcel carriers and observe the results. This year, the students chose United Parcel Service (NYSE: UPS), FedEx Corp (NYSE: FDX) and Deutsche Post's DHL to deliver five packages to five of the most remote locations on globe:

• Apia, the only city on Upulu, one of the islands of Samoa. Upulu lacks something important for parcel carriers - street addresses.

• Florianopolis, an island off the Brazil near Uraguay, which is considered a "remote area" by carriers.