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It's been Walmart here. The company came out with numbers kind of in line. I thought they were pretty good numbers, but the guide that's definitely disappointed the stream. We've got the stock off six point four percent here today, but still about about sixty six percent year to day. To remember, this has got a market cap of seven hundred and eighty one billion dollars, does Walmart. So let's check in on this story. Emily Cone joins us Bloomberg Consumer Team
Leader joints us here and at Bloomberg Get Interactive Brokers Studio. Emily, what kind of jumped out of you for this earnings report from Walmart?
Thanks, Paul. Yeah, I'm definitely the the lower than expected profit forecast for the full year. I think you know, these were consistent estimates. This was a consistent guidance in line with what they laid out last year for the full year as well. But it definitely signaled that the you know the world's largest retailer, Walmart, isn't immune to
the risks that are out there for the broader economic environment. Granted, Walmart has historically given conservative outlook to start the year off, but this definitely showed, you know, and they they used the word uncertain. I haven't checked, but a number of times on their analysts call. That was sort of like the theme of the call.
What else did they say for this, I guess we could call it conservative or negative outlook? Did they mention it's because consumers are pulling back, people are looking for bargains. I guess, like, what did we learn about the consumer in this report?
Yeah, it was it wasn't negative. It was it was in line with what they offered last year, three to four percent growth. But I think, you know, and I think that's taking into account near term investments. So they mentioned things like consumer trends and near term investments like the cost of the acquisition of the smart TV maker Visio. We're still seeing those costs take a hit on the bottom line. But yeah, they said they haven't incorporated yet
the risk of tariffs into their guidance. We also saw US retail sales dip in January and core inflation pick up. So I think those are those are all things that are weighing on on retailers, and Walmart certainly isn't immune.
How about on the tariff front. I mean, they am looking at your Bloombergers right up here, talk about tariffs. Walmart imports food from Mexico and general merchandise products like microwaves in China. What are they saying about tariffs? Is that incorporating their guidance?
They said they have not incorporated tariffs into their guidance before. Tariffs aren't new for a company like Walmart. Obviously we saw import tariffs, you know, during the last Trump administration. But they're doing what we've seen most companies do so far this year, which is say it's uncertain, we're not sure what's going to happen, and we're not incorporating tariffs
into our guidance yet. But yeah, I mean, food prices were up for them, General merchandising prices I think came down a little bit.
I actually learned something new about Walmart today, and that's that you can buy a pre owned Chanel bag through their website. So I guess they're getting into online sales. They're beefing up their digital operation to include items like collectibles and pre owned Chanel bags. Wow, think about that, I mean luxury items at like a discount retailer.
Yeah. So Walmart is still small compared to Amazon, but in terms of e commerce, but that's an area where they're just continuing to see huge growth in e commerce in their their marketplace. So that that is something that you'll continue to hear them talk a lot about and there's a ton of upside there. Pharmacy delivery was another one that they shouted out today. That's a new business
for them. So these newer businesses continue to grow a lot for Walmart, and they would say there's still a big runway there when it comes to competing with Amazon.
It's interesting comparable sales excluding fuel rose four point six percent at US Walmart Star Wars open at least a year for the quarter end of January thirty first. That's higher than Wall Street had been anticipating. So it doesn't seem like the consumer per se, at least in this quarter was a problem. Consumer was still spending.
So an interesting thing about the growth this quarter and actually last quarter as well, was that growth was mostly coming from higher income households, So households that are earning more than one hundred thousand dollars a year. Not the person you typically think of as your average Walmart shopper. These are like wealthier people who are looking for deals, looking for value. Maybe they're coming to Walmart for groceries as opposed to whole foods this quarter because prices on
food are so high. So that's really where the growth is still coming from, are wealthier shoppers.
So that does that tell you then that the consumer is maybe weaker if these high income people are having to move down the spectrum.
It's possible.
And I think, you know, we are looking forward to the rest of the big pox results coming this quarter. We're looking at Home Depot, We're looking at Target. I think they will tell us a bigger picture view of how the US consumer is doing. But yes, I have the same question, where are those shoppers coming from? Who's losing here?
Emily Cohen, thank you so much for joining us. Emily Cohen, she's a consumer team leader for Bloomberg News, joining us live here in our Bloomberg Interactive Brookers studio talking about breaking down those Walmont Earnings.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Let's switch gears here talk about this Federal Reserve. We had the FED minutes yesterday. I did not read them. I never read them. That's why we have people like Mike McLoone, I mean Mike McKee. We've got Danielle di Martino Booth joining us here in studio. She's the CEO and chief strategist for QI Research. What's our FED doing here? Our Fed can do? Is it safe to say they could do nothing all year? And that would be okay?
I really don't think markets are priced for that.
Okay.
In fact, in the last week, if there's anything that we've seen, it's the second it's the second rate kind of the year begin to be really priced in. So I wouldn't be surprised if we were to see something around June.
And I think what's going to force their hand is the job market.
What did you learn from the minutes?
Not too terribly much and It's not that they didn't try and present a unified front in the minutes, But when the chair of the FMC gets up at the podium and swats away the verbiage of the statement, you know, without even reading a single line of the minutes that there was a lot of controversy, dissent, disagreement in that room. So you're going to see very little when it comes
to the minutes. Remember in two thousand and eight, Janet Yellen said we can use the minutes as another tool in the toolbox to continue to shape the thinking of markets, even though they're theoretically timestamped, but they're not.
You mentioned the labor market earlier. What what is your read of the labor market these days? We had I guess we had the initial job as claims came in just a little bit higher than expected today, but I do know any number with it, two ten, fifteen, two twenty seems like the norm. How do you view the labor market?
So I think right now what we have is a pig and a python, and we've had a very constant stream of layoffs in the private sector. I mean, I need to meet and shake the hand of the person who runs bcygo because I don't think they sleep because the bankruptcy cycle has as even though it hit a fourteen year high in twenty twenty four, it's only accelerated. My gosh, we've had almost four thousand store closings announced and it's just February twentieth so far this year.
To give you context, co Star.
Reported that there were seventy three hundred closed for all of twenty twenty five.
So we know that there is a there's.
A bulge of layoffs moving like a pig through a python, plus plus public sector job cuts, and that's the.
Big that's the big change agent.
You know.
It was interesting to see that the survey week end at February the fifteenth, that was what was coincided with what was reported this morning, and yet we saw continuing jobless claims pushing three million, not not seasonally adjusted.
The high for the for the cycle.
If you lose your job, if you have a job, don't lose it, That's what Powell said at the podium. But when you figure that there been one hundred thousand jobs cuts announced in the private sector this thus far in February alone, and then you tack on what seventy five thousand who took the buyout, and the fact that they waited until today to start laying off six thousand people at the IRS seven thousand Department of Defense. It's going to snowball, and it's gonna snowball before the FED meets.
Not maybe not in March, because today coincided with the survey week for non farm payrolls and obviously a fairly low number. But if we don't see it in the February jobs report, we're going to see it in the March jobs report, and then the Fed will meet again. So I think that that's why markets have begun to sniff this out. Seventy percent of jobs created in the month of January were either government jobs or related to
the government healthcare. So when you begin to take that job creation machine offline, it's been such a massive support. In addition to the fact that we haven't had any private job creation net net for two and a half years, something's going to give.
So when we see then that the minutes, the officials are saying in the minutes that you know they want to keep rates steady, we look at what markets are pricing. Maybe only one more rate cut is the FED not aware of this snowballing effect that you see coming in the labor market.
Oh, I think FED officials are more than aware. They do have a narrative to uphold. They're not allowed to say that that. You know, they're not allowed to screen fire in a crowdit theater. But we know that FED officials know because Chair Powell, because Governor Christopher Waller, you know, the closest thing to him speaking himself, his closest confidant on the Federal.
Ban Market Committee.
They've recognized that new rents are the way to gauge inflation.
They've talked about it on multiple occasions.
Apartment List yesterday was out with the highest vacancy rate six point eight five percent, which check out the July twenty twenty high. We've got seven hundred and thirty five thousand apartments that are still coming out of the construction pipeline, and one apartment read after another saying rents are falling.
I'm going in all.
These details because if it's rents that Powell and Waller are falling to gauge inflation, and that's exactly what we're seeing in trueflation, tru bond Traders introduced me to that metric.
It's real time, if you will.
It's come from three come down from three point one percent two point three percent this year true inflation. We can see what's happening in real time with inflation. And then there's the dot dot dot what happens with tariffs and who on Earth knows, but we do know that in twenty eighteen with the first Trump tweet about tariffs, by the end of twenty nineteen, the CPI was actually lower because it's because tariff's slowed growth.
Yep.
Absolutely, daniel Dee Martina Bouth, thank you so much for joining us. Danielle Di Martina Booth, She's a CEO and chief strategist QI Research. Joining us live here in our Bloomberg and DIRECTI Brokeer studio, one of our absolute go to voices when it comes to the Federal Reserve and what those folks are doing there.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Sorry, demil gurfail sitting in for Alex Steele Paul Sweeney were live here in a Bloomberg Interactive Broker studio and we are streaming live on YouTube as well. In the Greater New York City area. One of the biggest stories over the past couple days is congestion pricing. I went into effect earlier in January. It seems to be working. I mean, congestions down. My travel time into the city when I come in is less, you know, revenues up.
I don't know. But the federal government, Donald Trump put a stop to that, a temporary stop perhaps, and we've got some litigation stemming from Governor Holkl here to maybe keep the congestion pricing going. But it is a big, big deal, certainly here in New York City, but also for some other regions around the country that also have some types of congestion pricing. So everybody's kind of watching to see how this will play out. So we want to get a smart voice on this. Sarah Lynn joins this,
co executive director of Open Plans. It joins us from New York City via zoom. Sarah, kind of where are we today with this congestion pricing?
Is it on?
Is it off?
Where are we I think The first really important thing to say is that congestion pricing works and it's good for business, you know, and you have groups like the Partnership for New York and Redney supporting congestion pricing. They're doing it because they know it's good for business within the zone and in the regional economy as a whole.
It's still on.
Governor Hokel was very clear yesterday the cameras are still on. The NCAA has already filed suit against the administration's action, and I expect the cameras will be on while that all plays out in court.
What do we know about the presidential administration's rationale for wanting to halt this? And then I guess what kind of power they have to actually put this through.
I think rationale is a strong word with many things this administration is doing. This feels very personal. Frankly, again, there's not a good business rationale. There's not a good rationale in terms of this is reducing congestion. This is speeding up bus times. That's good for working New Yorkers. This is already reducing traffic crashes in the zone. It's reducing air pollution. So from every perspective that matters, congestion
pricing is working the administration. Sean Duffy has made arguments that congestion pricing is bad for working New Yorkers. That's just patently false. Only four percent of working New Yorkers, low income New Yorkers drive into the zone. All of the rest of them rely on public transportation that has gotten better already with only a month and a half of congestion pricing, and we'll continue to get better. So that rationale is just false. I think that they think
they have the authority, but we really believe they don't. Again, lawsuits will bear this out over the next few months, but federal approval has already been given. The program is already in place.
So folks on the other side of that argument would say, then I live in the grade state of New Jersey. Defend that one.
It's a tax.
It's just another tax on Metro New York people, and boy, aren't we taxed enough. What's a response to that.
Well, it's a toll and there are toll roads all over New Jersey, for example. And you know this is a common this is a common technique that states and municipalities use to raise money both for you know, highways and for other.
Funding.
You know, this is going to the MTA and funding our public transportation system. But Governor Murphy, you know, has been very critical of this. We'd love to see him get rid of all the tolls on the New Jersey roads if that's his argument.
Okay, And so where are we on the process of how New York is trying to fight back. Just walk us through kind of like what the timeline looks like here.
Yeah, So the MTA immediately filed suit. We knew this was coming. Trump has been talking about this, you know, since the campaign. So the mt immediately filed suit. I expect that there will be a countersuit from the administration to turn off the cameras, seeking an injunction. I don't know that, but just that would be my assumption. And so then obviously the MTA and Hopel will fight that.
My opinion is that an injunctions not warranted here because that would be clear and present damage to the state and the mpta's budget. We should be allowed to continue receiving this funding. Well, the lawsuit, the main lawsuit, plays out in court, and that can take you know, that can take a long time. Lawsuits famously are not the fastest thing.
So just thirty seconds left, Sarah in the interim, giving them now into the legal realm here and the delays. The cameras are on. Are they still recording everybody? Is it still like functional?
Yep, the cameras are on. They're still issuing tolls. That will continue until we are told otherwise by a court, and we'll continue to receive all the benefits. And the program has been getting more and more popular over time. Every program in the world that is put in place does, and I think New Yorkers are continuing to see the benefits of this.
All right, Seralyn, thank you so much. We appreciate that. Serlyn co Executive director, open plans again. Congestion pricing folks here in New York is a big, big issue affecting
a lot of folks here. Our offices are Lexington Avenue, the Bloomberg offices Lexington Avenue at fifty ninth Street, so we are just one block inside this zone here, and so for people like John Tucker, Bloomberg News, Michael Barr Bloomberg News who drive into the city from New Jersey very early in the morning two three, four, o'clock in the morning. It's an issue just for them to their daily commits. It's issue for a lot of people, and there's arguments.
For both sides here.
So but now it's in the courts.
Yeah, the Bloomberg headquarters actually have they have cameras, and so we had Bloomberg News actually has a unique perspective and a unique way to report on this because we can actually see exactly, you know, which.
Our building on the street right outside the bloom the Bloomingdale's across the street from the Bloomberg headquarters of blooming Gills. That's where the cameras are and they're right over Lexington Avenue and they've been there for almost a year. So we'll stay on.
Top of that.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarcklay and Android Auto with the Bloomberg Business app, Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Emily Grafe was sitting in for Alex Steel and Paul Sweeney. We are live here in the Bloomberg Interactive Broker Studio. We're streaming live on YouTube to theay can actually see us for better or worse. I go over to YouTube dot com search Bloomberg Podcast Live. That's where you'll find us here. Earnings coming in we have been about eighty percent of the S and P five hundred companies have reported already double digit increases in earnings for share, a
little bit better and expected. Gina Martin Adams and Bloomberg Intelligence was just saying how the narers are coming on a little bit better than she had been looking for. The question is is that enough for this market? Because I don't think the FED is going to be doing a lot for us this year. That let's you know, kind of what the market's telling us. Phil Orlando joins us. He does this stuff for a living. He's a chief equity market strategist and head of client portfolio management at
federatedt Hermeis. We was appreciate getting a few minutes of Phil's time. So, Phil, how did you kind of set the expectations for twenty twenty five with your clients after the really good performance the SMP has had really for the last couple of years.
I absolutely right Paul that in twenty three and twenty four the S and P was up between twenty and twenty five percent total return. And then where we got really aggressive on stocks was what we thought was that over sold bottom. In October of twenty three, the SMP was down around forty one hundred, and then our year end target for the S and P last year was sixty two hundred. That was, you know, roughly a forty eight percent rally in stocks over like a fifteen to
sixteen month period. That's phenomenal, and it's not replicable. I mean, we're not going to do that this year next year. But what we have been telling clients is in light of the fiscal policy initiatives that we think are going to put in place over the course of the next fifteen months or so, in light of a gradual decline in interest rates that we expect to see out of the FED over the next year or two, we can still see stocks grind up, you know, mid to upper teens,
but not you know, twenty or twenty five percent. So still a constructive environment, but not as phenomenal a it's been the last couple of years, Phil.
What would have to change at least for the FED environment to kind of dent that view. We were talking earlier about how potentially we might only see one rate cut this year. What if we don't see any at all? How much would that affect your stock outlook.
So we are in the one or two rate cut camp right now in the back end of the year. We're thinking the first cut might be September or so, second one if there is one, December or so, and that's largely a function of the data. Now remember, Emily that the Federal Reserve has a dual mandate, so they're looking at the trajectory with that Phillips curve trade off. What's going on with the labor market, what's going on
with inflation? And right now, the labor market's pretty strong, and inflation has actually been reaccelerating over the course of the last you know, six to eight months, based upon whatever metric you want to look at. So given that environment, you know, the market a year ago thought the Fed was going to be cutting interest rates seven times last year. That obviously didn't happen, and there's a school of thought that the Fed is going to slow down materially, you know,
from this year. Remember they cut their their SEP target down to two cuts for this year, and the market's thinking, well, maybe it's one, maybe it's none, and and I guess the bears are thinking, well, maybe the Fed's going to turn around and start hiking interest rates at some point. So there's a lot of confusion about, you know, what monetary policy is going to look like, and to some degree that's going to be driven by what What does
fiscal policy look like? What what is the incoming Trump administration able to get done in terms of extending and making permanent the tax cuts, What are they doing with tariffs, what are they doing with regulations and and and how is all of that going to impact economic growth and inflation. I think there's a giant question mark mark on all of that. Yet, yet stocks have been just powering through.
We hit you know, another all time record high yesterday, So there's a little bit of a disconnect there in terms of the uncertainty in the marketplace. Yet, uh, the you know, very strong performers of the equity mark.
Pill What is the January Barometer portfolio indicator? What is it and what's it telling you?
The January Barometer Portfolio indicator is telling us that the sectors of the market, the eleven s and p five hundred sectors in the month of January. Historically, the market sort of tips their hand, and the sectors that do well or do poorly in January tend to continue in that direction through the balance of the year. What we saw on January this year is that a lot of the growth and technology mag seven kind of names took it on the chin. In the month of January, investors
began to lock in some profits. Yet the sectors of the market that we felt had been left for dead the last year or two, financials, healthcare, industrials, utilities, they had a pretty good month, all better than the S
and P five hundred performance. So what we've been talking about since the middle of last year is that we felt that there would be a reversion to the mean, that the dramatic ou foremant of the meg seven names would ease to some degree, that there'd be some profit taking and a rotation of some of those profits into
the forgotten four ninety three that had dramatically underperformed. And we thought that there was, you know, a significant catch up trade in the offing, and for the better part of the last couple of quarters, that trade has started to work, and we think it's got legs.
Phil, We don't have a ton of time left, but I want to get your thoughts on the data that we saw showing a slump.
In retail sales.
What does that mean for the equity market.
I wrote a piece beginning of the week that hit the Federated website. Yesterday we talked about the consumer slowing down. We had a pretty good Christmas, all right, and we defined Christmas as October through January. Christmas sales were up three point nine percent year on year this year versus two point eight percent last year. So it was a pretty good Christmas. But October, November, December were pretty good. January sort of fell off a cliff. January was not good.
And you look at a number of the issues that are that are happening. We talked about inflation starting to re accelerate, consumer confidence has started to roll over, personal savings rate had come down with two year low. Low end consumers are struggling. Our view is that the strength we saw in the fourth quarter of last year is
going to decidedly slow here in the first quarter. And I guess, depending upon what happens with the Fed and Washington, that trend, you know, may stabilize in March or April. Or it may continued a week and we'll just have to say.
Phil, thanks so much for joining us. Always appreciate getting a few minutes of your time. Philler Lando, chief equity market strategists and head of client portfolio Management and federated at Hearmeyes joining us via zoom Appreciate getting his thoughts. He's been really clear on his market calls over the last four five, six years, and more than not he has been spot on. So it's a good voice with like check it in with pill Orlando.
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