Equites were rattled by WMT’s profit report. Its CFO stated “uncertainties related to consumer behavior and global economic and geopolitical conditions” affected results and outlook. His comments followed last week’s retail sales report which indicated “an abrupt pullback by consumers.”
It is largely believed that consumers are dealing with stubborn prices and high borrowing costs, and many are turning to credit cards and other debt to support their spending. There are some indications that nonperforming debt is starting to rise.
The markets interpreted WMT’s comments as perhaps the proverbial “canary in the coalmine.”
Treasuries rallied nominally, perhaps on WMT’s news. A Federal Reserve official also stated that the Fed can potentially lower rates by 50 bps by year end. There is a growing group believing, however, that rates may not be able to be lowered, and some believe that the next move may be up.
What will happen today? An inflation and sentiment gauge are released. So are home sales.
Last night the foreign markets were up. London was up 0.06%, Paris up 0.40% and Frankfurt up 0.14%. China was up 0.85%, Japan up 0.26% and Hang Seng up 3.99%.
Futures are flat. The 10-year is up 4/32 to yield 4.42%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
