Financial Markets Meltdown

[Dean2]

For you guys asking about Walmart.

New York (CNN Business)Inflation is weighing on everyone — even the world's biggest stores.
Walmart (WMT) said Tuesday that higher costs and supply chain constraints squeezed its profit during its latest quarter. Walmart also slashed its profit outlook for the year, signaling that it expects inflation to continue to hurt its business.
"Bottom-line results were unexpected and reflect the unusual environment," Walmart CEO Doug McMillon said in a news release. "US inflation levels, particularly in food and fuel, created more pressure" than the company predicted.

The results drove Walmart's stock down 11.4% Tuesday, its worst day since 1987, according to Refinitiv.

Shoppers buying private-label brands

Walmart, America's largest retailer and employer, is an economic bellwether.
Walmart's net income fell 25% to $2 billion during its latest quarter ending April 30 compared with the same stretch a year ago.
In February, Walmart said it expected its profit to increase by about 3% this year. But Walmart now expects profit to decease by about 1%.
Other retail giants are also facing cost pressures. Amazon said last month that higher inflation in fuel and its supply chain also hit profits.
Some analysts said Tuesday that Walmart has been raising prices at a slower pace than many rivals to appeal to bargain shoppers. This likely impacted its profits, the analysts said.
Consumer prices were up 8.3% in the 12 months ending in April, according to the latest data from the Bureau of Labor Statistics.
Why the US is entering a stagflation environment

Why the US is entering a stagflation environment 05:04
Walmart has a new way to turn college grads into store managers
Walmart has a new way to turn college grads into store managers
Despite higher prices, consumers are still spending. Walmart's sales at stores open for at least one year increased 3% during in its latest quarter.
Also on Tuesday, the Labor Department said US retail sales increased 0.9% in April, demonstrating the resilience of consumers.
However, Walmart said shoppers' buying patterns changed because of inflation.

More customers have been turning to private-label food brands — particularly in meat, deli items and dairy products — and shifting away from discretionary items, the company said.
Walmart also said consumers were buying fewer items when they shopped.

[MooseRiverTrapper]

Looks like WTI headed to new highs this summer.

[MyAlberta]

Originally Posted by Dean2

Walmart said shoppers' buying patterns changed because of inflation.

The power of real-time consumer data. Frickin awesome.

[Map Maker]

Originally Posted by MyAlberta

The power of real-time consumer data. Frickin awesome.

No kidding eh.
Consumer robots.
Prey on the weak.

[bdub]

Originally Posted by Dean2

If you look at Walmart's results, sales are up a bit but net profit is way down. That is in large part inflation. You are correct that if the increase in gross sales don't equal inflation then they are actually decreasing, assuming product pricing stays flat. Even if gross sales increase equals inflation, again assuming prices stay the same, they are just holding even and gross margin will be going backwards as cost of goods sold, wages, trucking etc are all increasing. This will happen unless they found other areas to cut costs or raise their prices. If they raise their prices 8% with 8% inflation, then they sell the same number of items, just at a higher price. Gross margin and net profit should come out close to previous.

bdub

Have done well with Pembina Pipe, Trans Canada, Cenovus, Vermillion, Whitecap, Peyto, Ensign, Freehold Royalties and a few others but I bought them in the big dips almost 2 years and 1 ago. I have not sold them off yet because I think there is still a bunch of upside in them. that said, I am not a long term fan of oil and gas and consider these short to medium term holds, except the pipelines.

I have I have Pembina in common with you. Also Tourmoline, CNRL, Altagas and exposure (ex IPLs assets) via Brookfield. I am becoming a bit heavy in the sector but can't bring myself to lighten up just yet. The structural issues with energy look several years away from being solved.

[DiabeticKripple]

STEP has been going crazy the last month, i bought some more this morning. looking for a quick 10-20%

[MooseRiverTrapper]

Originally Posted by DiabeticKripple

STEP has been going crazy the last month, i bought some more this morning. looking for a quick 10-20%

STEP ESI TCW all an easy double from here.

[Dean2]

Target did even worse than Walmart.

For those looking to cash in on oil and gas, the dip the last few days is making some buying opportunities. Freehold at 14.25 to 14.50 is a real good deal. There are a few others I mentioned before worth having a look at. In my opinion, you want to stay away from Enbridge, TC and PPL are better choices in the Pipelines. TD at 90 bucks is also on my buy list as is RBC at 122, but I am still sitting on the cash from selling them down a couple of months back when they were 15-20% higher and I am waiting to see the earnings releases that are coming up before buying back in heavily.

New York (CNN Business)Target's earnings didn't hit the mark. Far from it.
The retail giant reported a stunning 52% drop in profit for the first quarter, badly missing Wall Street's forecasts. The company blamed higher expenses due to continued supply chain disruptions. Consumers also are holding back on nonessential purchases because of rampant inflation.
Shares of Target (TGT) plunged 25% in early trading on the news Wednesday, potentially setting up the stock for its worst day since 1987.

Target's bad news dragged down the broader market as well. The Dow fell nearly 550 points, or 1.7%. The S&P 500 was down 2%. Retailers Dollar Tree (DLTR), Dollar General (DG), Tractor Supply (TSCO), Costco (COST) and Best Buy (BBY) were among the biggest losers in the index.

Target's earnings surprise comes one day after rival Walmart's (WMT) stock had its worst day in 35 years. Walmart also posted poor earnings and a weak outlook due to rising shipping and labor expenses. Walmart fell another 5% Wednesday.

"We faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time," said Target CEO Brian Cornell in the earnings press release Wednesday.
It appears that Target shoppers are still spending on daily essentials, such as food and beverages and beauty products. Target said overall sales for the company were up 4% from a year ago, topping analysts' estimates.
As prices soar, consumers aren't splurging on bigger-ticket items, such as televisions and exercise equipment. The company noted that there were "lower-than-expected sales in discretionary categories," and Target was forced to write down the value of excess inventory that's stuck in warehouses.
Most CEOs are bracing for a recession
Most CEOs are bracing for a recession
Target shoppers are concerned about "the high and persistent inflation they've been experiencing, particularly in food and energy," Cornell added during a conference call with analysts.
Inflation is a significant problem for many retailers. T.J. Maxx and Marshalls owner TJX (TJX) reported sales that were below estimates Wednesday. TJX also lowered its revenue outlook.
The continued problems in the supply chain are hurting retail profits. Target, like many other retailers, has needed to boost hourly pay to attract workers. The company said higher compensation costs for employees in its stores and distribution centers put a dent into earnings.
Big retail chains are also grappling with the fact that last year's earnings were boosted by federal stimulus checks from the government, a phenomenon that has largely disappeared in 2022.
"We view the result as disappointing...and against a backdrop of heightened costs and weakening discretionary spending, especially lapping 2021 stimulus," said Stifel analyst Mark Astrachan in a report Wednesday morning.

Cornell said during the earnings call that "while we anticipated a post-stimulus slowdown...we didn't anticipate the magnitude of that shift."
Some retailers are holding up better, though. Home Depot (HD) reported strong sales Tuesday thanks to the continued boom in housing. Rival Lowe's (LOW) also posted earnings that beat estimates on Wednesday.

[KGB]

Today is a pure bloodbath the markets. Don’t think we are at the bottom yet… Retail is down due to the inflation and based on today reality I think this is just a beginning for the downturn in retail.
Oil companies aren’t doing too bad, at least some of them but the news from China aren’t comforting either… I honestly don’t know what to do with money now. Still have 50% invested but I am bleeding red wit h the market…Should’ve listen to Dean and unloaded back in December….

[fishtank]

Ugly day Indeed ! I don’t expect it get better the retail sector all reported outlook that are below Wall Street expectations , as has mention even Walmart is adjusting to the inflation. I don’t expect anything positive coming out of the retail earning reports as they might make a deeper cut on outlook now and lower expectations .

[Dean2]

Have a look at the various sub Indices performance over the past year. Pretty easy to see how the TSX can be off over 10% from its high but a properly built portfolio is only down 2-3%

[Trochu]

Originally Posted by KGB

I honestly don’t know what to do with money now.

I handed in a fairly substantial land offer yesterday. The sellers are fighting amongst themselves, so I don't think it will happen, but with land's historic performance, easy maintenance/rental, low taxes, inflation, and relatively low rates, I'd be thrilled if it goes through.

[KGB]

Originally Posted by Trochu

I handed in a fairly substantial land offer yesterday. The sellers are fighting amongst themselves, so I don't think it will happen, but with land's historic performance, easy maintenance/rental, low taxes, inflation, and relatively low rates, I'd be thrilled if it goes through.

The best time to buy the real estate is when you have 3 D’s present. Death, Divorce or Distraction…. You just might get what you want…

[KGB]

Originally Posted by Dean2

Have a look at the various sub Indices performance over the past year. Pretty easy to see how the TSX can be off over 10% from its high but a properly built portfolio is only down 2-3%

You just couldn’t sent me that a year ago, couldn’t ya?

[Buckhead]

It depends what your strategy is. In general I do not pay much attention to the monthly and yearly gyrations of the market. I seek out the good companies that I am comfortable with and proceed from there.

[Map Maker]

Very interesting watch individual stocks right now.
Tech getting hit hard. No surprise.
Electrical utilities ( fortis) are gaining.

[MyAlberta]

Originally Posted by KGB

The best time to buy the real estate is when you have 3 D’s present. Death, Divorce or Distraction…. You just might get what you want…

Don’t forget taxes. ‘Tis the season and some smoking deals passed through. Foreclosure is another motivator.

[Dean2]

Google is down to 2045, Shopify is $410, Norwegian Cruise lines from $24 a couple of months ago to under $13, SNAP and a whole bunch of other tech names have also been decimated. It REALLY does matter what you buy in terms of reasonable multiples on valuation, P/E etc.

That said, TSX is still almost 10% off its previous highs but most of the damage has been in Tech, Health Care, Consumer Cyclicals etc, per the chart I posted a few days ago.

There are some big offsets if you are holding Energy or Pipeline stocks. Ensign bought at 60 cents, now at $4.80 and headed to $8 in the next 12 months. A true ten bagger and you don't see those very often. Freehold Royalties has quadrupled etc.

Bank earnings so far are mixed, BMO not great, BNS stellar, both in Canada and Internationally. Once CIBC, RBC and TD report we will have a full picture. Waiting for the full financial statements to be posted so I can have a look at domestic deposits, loan and mortgage growth as well as their U.S. results.

Overall, with the last couple of days of strength, overall portfolio is back within 1% of its previous high value. Quality companies, owning only the best in their space, and prudent diversification helps a lot.

[MountainTi]

NG over $9 today. First time in 14 years. While oil will continue with it's typical cycle that it has always done, I still believe strong NG prices are here to stay. Keep that in mind

[ganderblaster]

Originally Posted by Dean2

For you guys asking about Walmart.

New York (CNN Business)Inflation is weighing on everyone — even the world's biggest stores.
Walmart (WMT) said Tuesday that higher costs and supply chain constraints squeezed its profit during its latest quarter. Walmart also slashed its profit outlook for the year, signaling that it expects inflation to continue to hurt its business.
"Bottom-line results were unexpected and reflect the unusual environment," Walmart CEO Doug McMillon said in a news release. "US inflation levels, particularly in food and fuel, created more pressure" than the company predicted.

The results drove Walmart's stock down 11.4% Tuesday, its worst day since 1987, according to Refinitiv.

Shoppers buying private-label brands

Walmart, America's largest retailer and employer, is an economic bellwether.
Walmart's net income fell 25% to $2 billion during its latest quarter ending April 30 compared with the same stretch a year ago.
In February, Walmart said it expected its profit to increase by about 3% this year. But Walmart now expects profit to decease by about 1%.
Other retail giants are also facing cost pressures. Amazon said last month that higher inflation in fuel and its supply chain also hit profits.
Some analysts said Tuesday that Walmart has been raising prices at a slower pace than many rivals to appeal to bargain shoppers. This likely impacted its profits, the analysts said.
Consumer prices were up 8.3% in the 12 months ending in April, according to the latest data from the Bureau of Labor Statistics.
Why the US is entering a stagflation environment

Why the US is entering a stagflation environment 05:04
Walmart has a new way to turn college grads into store managers
Walmart has a new way to turn college grads into store managers
Despite higher prices, consumers are still spending. Walmart's sales at stores open for at least one year increased 3% during in its latest quarter.
Also on Tuesday, the Labor Department said US retail sales increased 0.9% in April, demonstrating the resilience of consumers.
However, Walmart said shoppers' buying patterns changed because of inflation.

More customers have been turning to private-label food brands — particularly in meat, deli items and dairy products — and shifting away from discretionary items, the company said.
Walmart also said consumers were buying fewer items when they shopped.

In
My opinion a big part of Walmart’s problem is the Dollar Store etc. When walmart sells a broom for $16.50 and consumers can get pretty much exactly the same item for $1.50 for handle and $1.50 for broom at the Dollar Tree with a human teller and not having to go through the hassle of finding the bar code on every item.
I see Dollar Tree replacing Walmart as the go to store for cheap Chinese goods and since that’s the majority of what Walmart offers they are going to have to get used to it or change it up. It’s not hard to save $20 a trip on the same items Dollar Tree vs Walmart
Then the things you can’t find at the Dollar Tree such as clothes and electronics better deals, service and quality can be had at Costco. In my opinion the only advantage walmart offers anymore is location convenience as they are in good convenient locations but when people are up against it they will spend the time to go where the savings are.
Also the the segment of Walmart shoppers that don’t want to put the energy into getting out of their Pajamas probably doesn’t want to exert the energy to find barcodes either. So Walmart has a few issues.
Then throw in Amazon and I would be leery of Walmart’s future.

[KGB]

Originally Posted by Dean2

Google is down to 2045, Shopify is $410, Norwegian Cruise lines from $24 a couple of months ago to under $13, SNAP and a whole bunch of other tech names have also been decimated. It REALLY does matter what you buy in terms of reasonable multiples on valuation, P/E etc.

That said, TSX is still almost 10% off its previous highs but most of the damage has been in Tech, Health Care, Consumer Cyclicals etc, per the chart I posted a few days ago.

There are some big offsets if you are holding Energy or Pipeline stocks. Ensign bought at 60 cents, now at $4.80 and headed to $8 in the next 12 months. A true ten bagger and you don't see those very often. Freehold Royalties has quadrupled etc.

Bank earnings so far are mixed, BMO not great, BNS stellar, both in Canada and Internationally. Once CIBC, RBC and TD report we will have a full picture. Waiting for the full financial statements to be posted so I can have a look at domestic deposits, loan and mortgage growth as well as their U.S. results.

Overall, with the last couple of days of strength, overall portfolio is back within 1% of its previous high value. Quality companies, owning only the best in their space, and prudent diversification helps a lot.

Thanks for the tip man, if this one comes to fruit I will be delivering the case of booz to you, not just a bottle!

[rusty99]

Originally Posted by MooseRiverTrapper

STEP ESI TCW all an easy double from here.

What makes you say it will easily double? Help a guy out here to learn a bit of what you are seeing? Cheers

[Dean2]

All the major Banks have reported. RBC and TD had very strong results, as did BNS. CIBC and BMO, not as good. Large dividend increases across the board, except for TD who already raised theirs earlier. With rising interest rates their profitability will continue to increase. The runoff of deposits appears to have been a flash in the pan at least for TD and Royal. The Royal actually grew their Canadian deposits by 4 billion, or a little over 1.1%, over last quarter.

[Dean2]

Originally Posted by rusty99

What makes you say it will easily double? Help a guy out here to learn a bit of what you are seeing? Cheers

Maybe try reading through this thread in detail, then do a little independent research on each of those companies, then come back with some well thought out questions. Always willing to help a guy learn but he has to be willing to do some of his own work. Personally I only post what I am thinking and what I am doing, I never suggest that is the right course for any other person since I have no idea what their full financial picture, risk tolerance, timelines and family situation are.

[bdub]

For anyone interested in the gold market the annual In Gold we Trust report is out this week. The compact version, 28 pages and the full 400+ report, in pdf. Some reading for the weekend. Tab on the top converts to English if your browser doesn't.

Stagflation 2.0

https://ingoldwetrust.report/in-gold-we-trust-report/

[Fisherdan]

Sentiment, at the moment, is that inflation may have peaked.
https://www.reuters.com/markets/euro...es-2022-05-27/

What do you guys think? I have a hard time believing it… the message around inflation has been downplayed and incorrect for some time… so I don’t really trust what is being said. The price of oil keeps marching up. Supply issues persist with no end in sight.

But the markets seem to think otherwise and are much more optimistic the last week or so.

[fishtank]

Inflation will keep rising check out grocery store and everything else around , on Thursday another interest hike to tame it

[roper1]

Most(not all) recessions are created by rising interest rates. Inflation just an insidious disease that cripples growth & standard of living.

Central banks' ability to pull off a soft landing much harder with this much printed money in the system. My family planning on fiscal prudence, but WTH, always been that way. Good luck!

[Dean2]

Originally Posted by Fisherdan

Sentiment, at the moment, is that inflation may have peaked.
https://www.reuters.com/markets/euro...es-2022-05-27/

What do you guys think? I have a hard time believing it… the message around inflation has been downplayed and incorrect for some time… so I don’t really trust what is being said. The price of oil keeps marching up. Supply issues persist with no end in sight.

But the markets seem to think otherwise and are much more optimistic the last week or so.

They are selling the same bag of lies they have been for the past two years. First it was a temporary spike due to supply chain disruptions, next it was transitory, next it was elevated but controlled, then high enough to be worrisome and require Central Bank intervention in interest rates and a more rapid shrinkage of their balance sheets etc. To date none of that has had any effect at all, and inflation has only increased. True inflation, rather than the cooked number all governments publish is running near 20% in Canada and the states.

Peak implies it is set to start coming down, I would be happy if it levels off and quits accelerating, but I don't think we are at that point yet. Money is still being flushed into the system by out of control government spending, supply chains are still a mess, transportation is fractured, food supplies are at risk and oil is headed to $150 bucks. On top off that GDP growth has stalled. Peaked my ass.

[roper1]

Originally Posted by Dean2

They are selling the same bag of lies they have been for the past two years. First it was a temporary spike due to supply chain disruptions, next it was transitory, next it was elevated but controlled, then high enough to be worrisome and require Central Bank intervention in interest rates and a more rapid shrinkage of their balance sheets etc. To date none of that has had any effect at all, and inflation has only increased. True inflation, rather than the cooked number all governments publish is running near 20% in Canada and the states.

Peak implies it is set to start coming down, I would be happy if it levels off and quits accelerating, but I don't think we are at that point yet. Money is still being flushed into the system by out of control government spending, supply chains are still a mess, transportation is fractured, food supplies are at risk and oil is headed to $150 bucks. On top off that GDP growth has stalled. Peaked my ass.

I'm surprised the disappointing 'Nuk GDP numbers haven't affected the TSX as much. 1/2 point fully priced maybe ?? Or when it actually happens, violent stomach upheaval ?