Dear Reader,
Today I want to talk about Walmart’s earnings…
Walmart’s earnings were actually pretty good…
Fabulous growth for 2024.
But when they talk about 2025, they’re saying the consumer is starting to show signs of hurting.
So instead of 6% revenue growth, they’re looking at 3% to 4%.
Walmart is a great indicator for consumer sentiment around the country because they have stores in every state.
They’ve got their finger on the pulse of the American consumer.
Walmart is a great economic indicator.
And they sounded the alarm that consumers are starting to struggle before the Consumer Confidence Index came out Friday confirming the same.
Walmart’s seen customers making smaller purchases.
If you’re Walmart and your average customer comes in once every 10 days and spends $150…
And all of a sudden you start to see them once every 11 days, spending $140…
You’re going to say to yourself, my goodness – that is not a good sign.
So when a company like Walmart says they expect 3% growth – basically the inflation rate – that really means no growth.
The Federal Reserve released this chart I wanted to share with you:
You can see here Americans are missing debt payments as if there’s a recession already.
Delinquency rates of 90 days-plus on U.S. consumers’ credit card payments are higher than they’ve been in 13 years.
They haven’t risen this fast since The Great Recession.
And today’s delinquencies have already exceeded the post-Tech Wreck’s recession levels.
We are really seeing the consumer struggle.
The Fed’s chart shows us this…
Walmart’s earnings show us this…
The consumer sentiment report that came out Friday confirms these things.
And even with all this going on in the background we’ve seen retail investors, mom and pop investors buying stocks at the fastest pace in recorded history!
Investor flows into tech stocks more than doubled in recent weeks.
Meanwhile, professional investors, institutional investors, Warren Buffett, have been selling stocks the past 3-4 months.
A LOT of stocks.
And, how do professional investors sell stocks?
They sell them when retail investors are scooping them up. That’s how the pros get out of their positions.
So it’s always a truism:
If you don’t buy a stock when it looks absolutely terrible, you’ll never get a bargain…
And, conversely, if you buy a stock when everyone else wants it, in the long-term, you’re never going to do well.
You might play musical chairs and get lucky…
It may keep going up because retail investors keep bidding it up, but it’s not a good strategy over time.
Right now we’re in a scenario where under the surface there’s a lot of cross-currents that were not present during Trump 1.0.
Remember when Trump first came into office our debt was reasonable – 40% of GDP. Now, it’s 100% of GDP.
Our interest payments alone are bigger than our defense budget.
So institutional investors are saying, we don’t want to buy United States long-term debt.
And professional investors, the Buffetts of the world – and us! – we’ve been selling stocks for the past four, five, six months.
Because, as we’ve been warning you, we believe a crash is coming. There is no doubt about it.
This is the nature of cycles. It’s not really good or bad, it just is.
It’s the way human nature works in a crowd when it comes to financial markets.
You can’t control when a crash comes. You can only control how you react when the market gets hammered.
And this market is walking on a tightrope right now.
Again, we have professional investors, the “smart money,” selling as retail investors rush in…
They don’t understand valuation.
They keep saying, “hit me on 18!”
I think of it like Blackjack – they might get a few lucky hits but over time it’s not going to work.
The market is going to get hammered at some point.
The question is, what are you going to do about it?
Well, I have said before and I’ll say again…
I have made more money in market crashes than any other time…
You could take $10,000 into a crash and turn it into $100,000 as the market recovers…
Take that $100,000 into the next crash and turn it into a million…
Take that $1,000,000 into the next downturn and turn it into $5,000,000 when the market turns back up.
This is how fortunes are made.
“The Buck Stops Here,”
