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Walmart Plunges, Drags Down Market, After Slashing Profit Outlook, Blames Fuel Costs
The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars. We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.” said Doug McMillon, Walmart Inc. president and chief executive officer.The plung on the chart includes the 8 percent after hours drop. Whether it holds, we'll find out tomorrow.A generalized rise in prices is a hallmark of inflation. A localized increase in food and energy that triggers collapsing spending on everything from gold to consumer items, is the hallmark of not-inflation. If your monthly bills are going up and you don't have more money coming in via inflated wages or inflated credit usage, then there is no generalized rise in prices. There is a giant "food and energy tax" on the economy. The Federal Reserve's answer is to tighten monetary conditions such that rising debt costs join fuel and food in soaking up spending. Eventually, the Fed will stop tightening, but will they ease? Not as long as oil prices remain high. The economy could well be on its own, at least until a deflationary collapse similar to 2008 causes an implosion in food and energy prices.
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