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Walmart earnings and more politics -2

09:00 21-Aug-25

Walmart earnings missed on the bottom line, which as tipped below, is contributing to American equity futures continuing their streak of being negative every morning this week.  Even though the company's guidance beat by a penny, management's comments make this an early inflation reading.  I've given plenty of recent reasons for this, and think renewed concerns about Fed independence are topping the list again.  I actually see media and statistical manipulation as more troubling for the long term, even though the market is less sensitive to them. Regardless of the reason, FedWatch chances for a rate cut have declined slowly and just crossed below 80%, making tomorrow's Powell speech all the more important.  The retail sector may make it harder for indexes to hit new highs, but I still see the chance for a rebound between tomorrow and Nvidia earnings next week.

The White House is now looking for equity stakes in other companies in exchange for CHIPS grants in  a move that is getting coverage around the globe.  Commerce Secretary Lutnick calls this "creative idea that has never been done before".  In keeping with my rules comment, below, I'd say that's because he should be substituting dilutive for creative.  Such a move would mostly wipe out the already reduced stimulus benefit, at least as far as shareholders are concerned.  It's one more example of the dangers of dealing with governments, and in particular, constantly moving goalpost where American policy is concerned.

Appropriately, we're seeing USD start to give back recent gains this morning, and American equity futures modestly negative again.  I note that yesterday's big fade in the indexes looked mostly like rotation away from Google and other megacap tech as a report out of MIT's NANDA project indicates overwhelming failure in most corporate efforts to get top line results from genAI.  I suspect interpretations claiming a need for deeper integration is bad analysis that is ignoring the law of large numbers, and failing to realize that the few startups that do increase revenue aren't selling to end customers.  I offer this example from LinkedIn to support my own interpretation.

Even so, I think it's still very possible that we'll see another rebound from the current pullback.  While I join many others in being concerned about the associated trend in electricity prices, I note that I didn't call out that factor in the recent CPI numbers because electricity costs actually went down.  That doesn't mean we're out of the woods, though.  I'll add Walmart's earnings tomorrow to my data point watch list, after TGT shares gapped down over 10% this morning despite modest beats on the top and bottom line.  Target also announced a CEO succession from within and maintained its forecast for single digit sales declines this year.  Although I've never invested in the retail sector, the point here is that the American economy can't simply ignore it, and the indexes will have to take note sooner or later.

On 8/18/25 19:19, Esekla wrote:

Intel has issued a press release documenting a $2b INTC purchase by Softbank at $23.  Although this represents less than a 2% stake, the vote of confidence at only a small discount (indeed, a premium to last week's prices) may be just what Intel needs.  Furthermore, it may set a price bar for the 10% stake that the federal government is rumored to be considering.  It seems like there simply are no rules anymore.

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