Latest / Markets with Megan: A Quick Financial Markets Update / Walmart's Warning Sign | S2 E013 | 02-20-25

Transcript

Walmart's Warning Sign | S2 E013 | 02-20-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The equity markets did not like what Walmart had to say this morning about the outlook for the economy.
• 0:05
  Megan Horneman: It is Thursday, February the 20th, and this is Markets with Megan.
• 0:09
  Megan Horneman: If you like this podcast, please hit subscribe, hit that alarm bell, share it with friends or colleagues.
• 0:14
  Megan Horneman: But let's dig in today.
• 0:15
  Megan Horneman: What's moving the markets?
• 0:16
  Megan Horneman: And that started with Walmart this morning.
• 0:18
  Megan Horneman: They came out and they downgraded their earnings estimate for 2025.
• 0:23
  Megan Horneman: And why is this important to the markets?
• 0:26
  Megan Horneman: This is because Walmart tends to be a consumer bellwether.
• 0:29
  Megan Horneman: So when they come out and either revise earnings downward their outlook for earnings downward or talk about the consumer behavior, this tends to get the market's reaction, and we're seeing that today across the board.
• 0:42
  Megan Horneman: In the US, we're seeing markets down.
• 0:44
  Megan Horneman: The Dow Jones is down.
• 0:46
  Megan Horneman: It was down close to 600 points when we came down to film this.
• 0:55
  Megan Horneman: So what did Walmart do?
• 0:56
  Megan Horneman: They basically said that there was uncertainty around the consumer behavior as well as the global economic and geopolitical conditions.
• 0:59
  Megan Horneman: We've seen the consumer start to weaken.
• 1:02
  Megan Horneman: We got a really poor retail sales report in the last month and we've seen continued declines in consumer confidence.
• 1:10
  Megan Horneman: All of this stems around the inflation picture as well as the outlook on the economy.
• 1:17
  Megan Horneman: Walmart also did not include any of the downside estimates that they might be impacted from the tariffs.
• 1:24
  Megan Horneman: So this is something I think the markets are getting spooked because they've already downgraded guidance and there's a chance that they may have to lower it further if the tariffs continue to materialize throughout this year.
• 1:35
  Megan Horneman: This is you know we have.
• 1:38
  Megan Horneman: We do see Walmart tend to come out and give some conservative guidance, but the reaction that we've seen today in the market really does show that fear that we've had that equities are not looking at any of the downside risk.
• 1:50
  Megan Horneman: The consumer is a downside risk.
• 1:52
  Megan Horneman: We've talked about this at length.
• 1:54
  Megan Horneman: Tariffs and inflation are a downside risk and the markets were not pricing in this.
• 1:58
  Megan Horneman: They were pricing in more like perfection.
• 2:00
  Megan Horneman: So we're going to see these drastic moves on a regular basis and volatility is likely to stay high as we try and get a better, more clarity around what the economic picture looks like for 2025.
• 2:12
  Megan Horneman: We also saw some disappointing data on the leading indicator index this morning as well, and that was also similar to what Walmart had said.
• 2:22
  Megan Horneman: It was dragged lower by the consumer expectations and confidence.
• 2:27
  Megan Horneman: So, again, there's a lot of challenges in the first half of this year.
• 2:30
  Megan Horneman: We'll continue to monitor what's going on in the market and we'll come back with some more data points and what's moving the markets in the days ahead.
• 2:37
  Megan Horneman: If you would like to see a history of our podcast, you can also go to marketswithmegan.
• 2:41
  Megan Horneman: fm.
• 2:43
  Megan Horneman: Thank you.