XPO Logistics CEO Brad Jacobs has seen a few recessions in his many decades building and leading industrial companies.
And while he acknowledges recessions are scary stuff, the dealmaking exec isn't yet ready to predict a U.S. recession this year amid soaring energy prices due to the Russia-Ukraine war.
"I have seen a few recessions over my career and they aren't fun," Jacobs said on Yahoo Finance Live. "I don't know that we are close to a recession. Right now the consumer is very, very strong and the industrial economy is in its early beginnings of growth. We do have to watch the effect of the European war and how that affects the world economy. We do have to look at how oil prices affect the world. And we do have to see how the Fed lands the plane in terms of raising interest rates in a careful way. But we are not close to a recession, absent some big geopolitical jolt. There is too much strength in the economy right now."
Some on Wall Street are arguing, however, we have witnessed an economic shock in the form of exploding oil costs. And if those inflated prices persist, it could lead to a potential recession in the U.S. this year.
Brent crude oil prices traded around $122 a barrel on Wednesday as traders digested the Biden administration's ban of imports of Russian oil, liquefied natural gas and coal in response to the country's war on Ukraine.
Oil prices have surged roughly 29% since Russia's invasion of Ukraine as the U.S. and its allies have slapped the country with debilitating sanctions.
Prices at the pump have skyrocketed above $4 a gallon on average, notes AAA.
As for Jacobs, he is using the backdrop of lingering economic strength to fine-tune his business further after spinning out a new public company dubbed GXO in 2021.
XPO said Wednesday it will separate its tech-enabled brokered transportation services from its less-than-truckload (LTL) business in North America. The company also plans to divest its European business and North American intermodal operation.
Shares of XPO Logistics surged 13% on the news. The company's ticker page was in the top 10 most visited on the Yahoo Finance platform.
"These transactions would make XPO pure-play North American LTL which we think will help the stock re-rate given better focus on operational efficiency in NA LTL and more focused capital allocation for the brokerage asset post-spin. Bottom line, growing NA LTL is the number one priority and this announcement supports that focus," said Jefferies analyst Hamzah Mazari.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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