🚨 Walmart's Warning to the World!

Walmart is being forced to do the unthinkable, and for U.S. workers, it's terrifying. Now, is there a Bloomberg where you pick today's story about that line? As Walmart CFOs, shoppers remain focused on food and essentials, and we continue to see signs that consumers are struggling financially, despite the fact that many employers are still giving out pay raises. But the challenge for a lot of businesses, not just Walmart, is they're being forced to absorb the tariffs at the same time they're being asked to maintain their workforce. This means they're taking a massive hit at the margin. And for Walmart, well, that means their latest announcement is absolutely terrifying for U.S. workers, because what it means is many other employers are about to follow suit. Walmart said shoppers are still spending about the same as they did a year or two ago, with a focus on food and essentials over discretionary purchases. And this is something we warned would happen. When an economy slows and paychecks shrink relative to inflation, consumers cut spending on the discretionary side of the economy. And for a while, companies like Walmart have absorbed it at the margin. But as we're now finding out with their latest announcement, it means the unthinkable is coming. It's been very consistent, the CFO said. Wallets are stretched, and they're still stretched. So he's suggesting the economy isn't getting better, but the overall level of behavior has not been that different than what we've seen in the last year. So again, we're seeing very clear signs the economy is not improving. And we've been hearing from business executives that they expected that profits were going to rise and that consumers were going to come out and spend. And then every next earnings announcement, we find out the situation is getting worse and worse. And the problem again, inflation is rising too fast. And at the same time, again, despite the fact that employers are giving out pay gains, it's just not enough. And based on history, it says we're headed right into a recession. Let's take a look at this chart of real retail sales. That's inflation adjusted in blue. Here's the consumer price index in red. And we can see periods where inflation is rising, and yet at the same time, relative to that, paychecks shrink. And that means consumers spend less money. We see it takes us right into the dot-com bubble. The same thing happened due to rising energy prices that pushed us into the global financial crisis. But let's look at where we're at now because inflation has been cooling off. But at the same time, what are we seeing is real retail sales have largely remained flat, with the exception, of course, of all the front-runner purchases going into the trade war. But what is this really telling us? It's not about wage growth. It's about hours. And so what we're seeing is a lot of companies like Walmart are cutting hours. But their next move, this is what really has workers terrified. Declining consumer sentiment, weak discretionary demand, and tariff uncertainties have created turbulence across the retail industry and beyond. Fast-changing levies have made it more difficult for companies to forecast demand and plan for longer term. Well, the problem is there is no forecast of demand because companies keep saying that demand is going to go higher, and we keep saying it's going to get worse. The longer you see people on unemployment, the more businesses that cut hours. All this leads to is the decline in demand. And that's why Walmart's note that declining consumer sentiment, well, it's a real issue. Because it does lead to less demand, it leads to less spending. Because when you understand the heart of consumer sentiment surveys, what it means is that workers are worried about their paychecks. And when that happens, spending goes down. And we can see that very clearly as we look at real retail sales, still shown in blue, and now overlaid against the University of Michigan Consumer Sentiment Survey. And you can see that when consumers lose confidence in the economy, they tighten their wallets, they spend less. And that's the issue Walmart is saying is, look, we're seeing confidence has backed off here. Now, what they aren't telling us is there was a huge decline in confidence at the last survey. And what this means, in the future, there's going to be a big decline in demand at the retail side. And this is a problem because, again, we come back to the issue that a lot of businesses are facing right now is they've been taking a hit at the margin. And they've been willing to do that. The problem is they can't continue because if they do, it means they're out of business, now pushing Walmart and other businesses to do the unthinkable. And, again, this has workers all over the country terrified. Walmart warned last month they would implement price hikes on some goods, drawing ire from Trump, who said the retailers should, quote, eat the tariffs rather than passing the costs on to consumers. And a lot of businesses have been willing to do that to the extent that they can because they already know that consumers can't afford prices where they're at now, which is why their spending remains at the same level it was over the last year or two. And that's a huge red flag for the economy because what it's telling us are not only paychecks shrinking, but other metrics that don't show up in the consumer price index continue to go higher, taking away a lot of spending power. But, again, we come back to the heart of the issue here, and that is the fact that this isn't about price hikes. It's about paychecks. And, again, putting companies like Walmart in a position to do something they don't want to do, something that workers don't want them to do, but something that should be flying high that's your trading account. Let's take a look at a recent trade on GDX or Momentum Timer Pro subscribers. And while a lot of people talk about trades, we talk about our actual trades, this one on the books right now, up 3.55% since May 30th. Now, how do we do this? Well, stay tuned to the end of the show or grab the links in the description below and use a coupon code for your free 30-day trial because we trade momentum in a different way, and we have a major announcement coming that's going to change the game in momentum trading. This is one you're not going to want to miss out on because we look at the effects of what's happening at Walmart and businesses all over the country, and that is a hit to their profit margin. Here we see corporate profits in blue after tax against continued unemployment claims in red. And what we can expect is what we've seen throughout history. There is a point as you see profits decline in the late 1980s and eventually going negative, there is a point where businesses hit a breaking level, and they say, look, we're going to start putting some of our employees on the unemployment line, and that means at that point we're headed right into a recession. And that's the risk we're facing right now. And it's not just the fact that Walmart might lay off. It's the move they're going to make because what everyone needs is even if we go into a slump, they need to know that employers are going to turn around and hire a second time when things turn around. But based on the moves that Walmart's making right now, again, they're doing the unthinkable. It means these jobs are never coming back. But the problem is a lot of employers are about to follow suit. And Walmart, viewed as a broad member of the U.S. economy due to its large number of customers, expects more uncertainty in the coming months. And while other retailers have taken a similar tone, few have been explicit about tariff-driven price increases. And, again, Walmart, again, who keeps their prices at the lowest possible level, runs on razor-thin margins to begin with. They say, look, we have no choice. We're going to raise prices, and we see uncertainty in the future. And not only have they seen uncertainty, but their employees and employees all across the country are faced with the same level of uncertainty. When that happens, again, we see belts getting tightened, and businesses start making very difficult decisions. One, it's going to not just put people on the unemployment line for a little while, but as you're about to see, could be permanently. Investors and economists are closely monitoring price changes, as well as how consumers respond to them. Well, there's nothing to monitor, because every time prices go up, what are we hearing from companies like Walmart? That the price increase gets rejected. We're hearing other companies say, look, we're not going to raise prices on everything. We're going to raise prices on a few things and see what happens. But we already know consumers aren't going to pay it. Yes, there's some level they're going to have to pay some of the price increase, but they're going to find ways around to spend money elsewhere. Because U.S. shoppers were already cautious heading into this year after persistent high inflation, and with confidence plunging, that means, of course, their outlook for their job and finance going down. That means, of course, spending about to drop with it. But if we look to the real reason why, again, we started out by talking about it's about hours, and sure enough, it indeed is. Again, take a look at real retail sales in bloom now, overlaid against average weekly hours of production and non-supervisor employees. And you can see a very strong link between the two. When paychecks shrink, that means spending goes down. And what have we seen recently since 2021? Average weekly hours have been on the decline and right in line with retail sales. And it wasn't until this recent increase due to the trade war, where we saw businesses choosing to give out more hours rather than hiring, and that brought retail sales up. But the problem is, it wasn't enough. It didn't move the needle in the economy. And now what you're about to see is a move that Walmart's going to make, and you're going to watch. A lot of other businesses are going to follow. And for U.S. workers, this couldn't be any more terrifying. CEO Doug McMillan told employees that the company continues to focus on new technologies. Of course, we know what that means. When companies are willing to add technology to increase productivity, right in line with that means a decrease in demand for employees. The retailer this week said to expand new drone delivery service, again getting rid of delivery workers, to five more cities and advance a new AI-powered chat for online shoppers. The chat called Sparky aims to simplify the shopping experience. It can help with returns and exchanges, as well as deliveries and getting products set up, meaning fewer employees are going to be needed. And this is, again, just the beginning, because there is a level where companies will defend their profit margin. We're seeing Walmart say, look, we've got to increase prices. We know that our customers are going to reject them. So what do we have to do? We have to get our spending down, and that means implement tools like AI and technology and get rid of employees. And this, again, is a major red flag. And you can see why U.S. workers are starting to worry, because not only is it about their current outlook for their job, it's the fact that they realize their employer is going to replace them with something that is not going to need a human to do. And despite all this uncertainty, we turn to the Federal Reserve, and what do we find out? The Fed's harker said policymakers need to wait for more clarity, and yet I don't know how much more clarity we need. When a company like Walmart says that spending is back at a level it was one to two years ago, when they tell us that their consumers are spending less on the discretionary side of the economy, when they're looking at implementing technology to get rid of human workers, well, it should tell us that the economy is going in the wrong direction. Because if you want to see the economy boom, well, what should happen is demand should be going up. The number of hours should be driving higher, and that means, of course, businesses will hire. We're going the wrong direction. And as far as the Fed's concerned, well, they're lost. Even in a time of uncertainty, we remain as certain and deliberate as ever in our approach. He added that he was supportive of recent decisions to keep the Fed's policy rates steady. And this baffles me, because in times of uncertainty, well, you should err on the side of uncertainty. So from the Fed's perspective, I don't understand why they're not cutting rates here, if nothing else, at least to give people some hope that the government is doing something to ease financial conditions, perhaps make it easier to get credit, or perhaps it's even just the psychological effects of rate cuts. And we know that tends to work on economies, but the problem is the Fed, despite massive amounts of uncertainty that we know will push us right into a recession, still are doing nothing. And Harker, in his last speech as the president of the Philly Fed, said that while it's possible, it's far from certain that officials could face both higher prices and higher unemployment. Well, here's what we do know. If you do get higher unemployment, any price increases become transitory, because as wages go down, when people get on the unemployment line, well, their spending goes down. And there is a level that even if businesses continue to raise prices, if they don't move inventory, well, they'll be the next ones out of business. And to adjust policy in the right direction, he said, we need to know more about the magnitude and persistence of the effects on inflation and employment. But we already know the effects of inflation on employment. It's very clear, Harker. In fact, we've got tons of data on it. Let's take a look at this chart right here. Because the consumer price index now shown in blue, we're going to overlay that against the unemployment rate in red. And we can see periods going all the way back to the late 1980s. Inflation's on the rise. And what happens? It's not passed on to paychecks. And in turn, what do we see? Demand goes down. The unemployment rate goes up. We see it happen going into the dot-com bubble. Once again, in the financial crisis, thanks to rising energy prices, sapping consumer budgets. And now we're seeing it again. Even though there's clear signs of disinflation, the trade war is giving us some perspective that we could see a transitory pop. But the reality is with about 4.2 percent unemployment rate, it means that workers cannot absorb higher prices. Walmart's making that very clear. They already know it. Everybody already knows this. And yet, once again, we're going to find out in less than two weeks that the Fed's going to do nothing here. So the challenge we're facing, the reason workers are so terrified about the coming economy, is they realize it's not just Walmart that's going to replace workers with technology and AI. It's going to be businesses all over the country. When we come out of the next cycle, what we're going to find out is a lot of people are going to be on the sidelines with little to no opportunity, suggesting we could be facing a prolonged slump in the economy. But just because things are looking bleak from the retail side doesn't mean your trading account has to look that way. Let's talk about the trade on GDX. Now, that showed up on our hot list back on May 30th. Now, how do we trade momentum differently? Well, not only do we look at the technical indicators like the RSI and the MACD and aggregate them together to look at when momentum's coming out of oversold territory, but we also pair it with the trend. Now, we run momentum across the broad equity, bond, currency and commodity markets each and every day. And when we see all of our indicators hit, well, it shows up on our hot list just like GDX did. But not only do you get our hot list, you get to see the momentum signals on a one-day, one-month, three-month and six-month window. And right now, we are doing something that's going to change the game of momentum trading. And our existing subscribers are going to get this. And if you want to jump in on what is going to be the next generation of momentum trading, well, you've got to get in and get in now. Grab the links in the description below. Use the coupon code for your free 30-day trial because you get the daily report. You get all the signals. You get my opinion on the best trades. You get stop-loss levels, full tracking of all the open trades and returns, a weekly update. And again, you get that 30-day free trial. Grab, again, those links in the description below. Use the coupon code for your free 30-day trial. With that, I'm Steve Van Meter. Thanks for watching. Thanks for being fans. Bye now.