Market Musings 2/20/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Walmart’s muted outlook reignites consumer worries
Markets pulled back after Walmart’s muted outlook reignites #ConsumerConfidence worries as investors continue to tread lightly amid an uncertain economic backdrop. Walmart’s earnings beat, but provided a more muted outlook forecasting slower growth for the year.
Now, markets were already on edge. We’re at all-time highs here, but with a lot of uncertainty given the political turbulence while still hopefully moving towards that #Goldilocks soft landing.
So, why Walmart?
Well, this all goes back to #ConsumerConfidence. Obviously, Walmart is a massive retailer and dependent on how much you, the consumer, want to spend.
Now, it’s been a rough few years for consumers:
We’ve seen #Inflation surge. While it peaked around 9% and has vastly improved, we’re now sort of stuck above the 2% rate we had previously gotten used to.
Meanwhile, the #LaborMarkets are starting to regress. Unemployment is back up to 4.1%. While still relatively strong, it’s up from 2023 lows.
Also, high interest rates are muting housing. Average mortgage rates have skyrocketed to 7% from 3% in 2021. This has caused the average mortgage payment to rise almost 60%.
Meanwhile, consumers have been incredibly resilient－continuing to spend despite the challenges.
Markets are keeping a close eye on whether that resiliency can continue. Near-term, we’ve seen consumers dip into savings and use credit card debt to offset any hardship. However, those are temporary measure and at some point won’t be enough.
It’s why investors are concerns with sticky #Inflation and the new #Tariffs. Things can add up and may finally break the consumer.
However, it’s just a single data point and the market flavor of the day, we’ll keep monitoring new consumer data as it comes. We’ll get the consumer sentiment index on Friday and consumer confidence data next week.
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As of the publish date, Ursa portfolios do not own Walmart with no plans to open any new positions in the next 5 days.
The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.