A lot can happen in three months. Clothing can go from togs, togs to trackies. A war can kick off in Europe. China can batten down the hatches, exacerbating global supply chain issues. Oil prices can hit heady highs leading to rationing. A block of cheese can grate at $21. The centrepiece of Kiwi aspirations may no longer be the golden goose that lays the retirement egg. 🥚 And big box retailers, like Walmart (WMT), can go from boom to bust.
It could feel like the party is over, leaving us with the mother of all hangovers. But ‘party’ we did. In the US, where interest rates in 1980 hit 20%, twice, Americans have since benefitted from the Fed keeping interest rates at record lows. First in 2008 to combat the effects of the Global Financial Crisis. Then slashing them again in March 2020, cos, yunno... 😷 Some likened this to the Fed ‘printing money’. But quantitative easing kept consumers spending and the US economy moving. On the flip side, US household debt has risen US$1.7 trillion higher than pre-Covid. And its echo may have been felt across the Pacific, where our Reserve Bank’s interest rate lift was the biggest in two decades.
But perhaps the ultimate signalling that the US economy is not OK is Walmart. The ‘world’s biggest retailer’ last week announced ‘unexpected’ lower profits, seeing their share price fall more than 11% - their biggest tumble in 35 years. Causes may include their US$61.2 billion of excess inventory, China’s factory shutdowns, bloated wages to cover Covid affected staff, and a US$160 million surge in transportation costs that appeared so suddenly they weren’t added to shelf prices. 🛒
CNBC Mad Money’s Jim Cramer disagrees, labelling Walmart’s management ‘embarrassing’, and across the road, Home Depot (HD) reported their ‘strongest earnings’ on record. As we hunker down waiting to see what the next three months brings and the US egg crisis goes eggstra, it may pay to remember that ‘unpredictable’ share markets are possibly entirely ‘predictable’. As philanthropist Shelby M.C. Davis reminds us, ‘Invest for the long haul. Don’t get too greedy and don’t get too scared.’