What Walmart/Target earnings are telling us … how Eric Fry is playing Trump 2.0 with oil … the first “crypto president” and altcoins … Jonathan Rose’s event next Tuesday
U.S. consumers are hanging in there…and this bodes well for stocks as we look ahead to 2025.
Yesterday, Walmart’s earnings provided insight into the health of Main Street America.
Here’s The Wall Street Journal:
Walmart said U.S. sales rose during the most recent quarter, propelled by shoppers buying groceries, home goods and toys—a sign that spending is off to a steady start this holiday season. The retail giant raised its sales and profit estimates for the year…
“Overall, we are feeling good about holiday,” Rainey said. But “consumers are still discerning,” he said. “They are spending more of their wallets on food than they have historically.” That means overall sales of nonfood items are still growing slower than spending on consumables, he said.
We saw evidence of Rainey’s conclusion in this morning’s earnings report from Target. The big box retailer missed third-quarter earnings and revenues and cut its full-year guidance. As I write, the stock is down 20%.
Behind this miss, juxtaposed against Walmart’s beat, is the different sales mix from the two companies. Groceries account for about 60% of Walmart’s revenues, but only about 23% of Target’s. With consumers being far more selective about their non-grocery purchases, it’s hurting Target far more than Walmart.
Overall, despite the slowdown in non-grocery sales, shoppers are still opening their wallets. And Walmart doesn’t see this changing for its customers. In fact, the grocery giant raised its fiscal year forecast for comparable sales growth, helping its stock climb 3% yesterday.
As to the potential impact of Trump’s proposed tariffs that have been in the headlines recently, Rainey said that prices could rise, but it’s too soon for any specifics. He also mentioned that tariffs are nothing new anymore.
Here’s CNBC:
[Rainey] said about two-thirds of the items that Walmart sells are made, grown or assembled in the U.S., which reduces the tariff risk for those goods. And he added that Walmart, like other retailers, has been trying to diversify where it imports goods.
“We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that,” he said. “Tariffs, though, are inflationary for customers, so we want to work with suppliers and with our own private-brand assortment to try to bring down prices.”
Overall, Rainey said that holiday spending is “off to a pretty good start.”
Score another one for this bull market.
Switching from the potential impact of “Trump tariffs” to “Trump drilling,” how is Eric Fry playing the oil patch?
Last week in the Digest, we discussed how oil stocks might perform under Trump 2.0. The issue is complicated.
The kneejerk line of thinking goes, “Trump is friendly to oil… he’ll deregulate… time to buy some top-tier oil plays.” However, if Trump follows through on “drill, baby, drill,” then U.S. production stands to flood the global market. And as you remember from Econ 101, all else remaining equal, an increase in supply puts downward pressure on prices.
But it’s not that simple.
- If Trump sanctions Iran and Venezuelan oil production, will that supply reduction bolster global prices? How much? Enough to offset new U.S. supply?
- How will China impact supply/demand given its wobbly economy?
- If Trump brokers a ceasefire between Russia and Ukraine, how might the return of Russian oil to the global market impact prices?
- If Ukraine takes out Russian oil production facilities with U.S.-based long-range missiles, what will be the impact? What if a broader war breaks out?
As you can see, oil prices could go in any number of directions. That’s why our macro expert Eric Fry suggests playing energy a different way…
Volume.
Here’s Eric reminding his readers about what happened the last time U.S. production volumes spiked (due to the shale revolution):
[Pipeline, refiner, and export stocks] thrived because their revenues were tied to the volumes of hydrocarbons they handle, not the price. The cheaper the oil and gas America pumped from the ground, the more money these “downstream” companies printed every quarter.
Pipeline firms succeeded by acting like toll roads, taking the same fee for every “car” (i.e., cubic foot of gas) regardless of the vehicle’s value. Refiners benefited from cheaper feedstocks. And exporters saw a bonanza as the world snapped up America’s low-cost fuels.
Exploration and production companies (“upstream” energy companies), on the other hand, saw the value of their reserves drop for every decline in energy prices.
We see a similar story playing out in the energy sector under a Trump 2.0 presidency.
As to specific stocks that performed well the last time we were in this environment, Eric highlighted Cheniere Energy Inc. (LNG), CVR Energy Inc. (CVI), Valero Energy Corp. (VLO), Marathon Petroleum Corp. (MPC), and ConocoPhillips (COP). The all enjoyed double-digit gains.
To be clear, these aren’t official recommendations, but they’re good starting points for your own research. To learn more about joining Eric in Investment Report for more of his research, click here.
Leapfrogging from “Trump drilling” to “Trump crypto,” if you’re willing to speculate, today is the day to take some starter positions in leading altcoins
Trump will go down as the first “crypto president” (his words). As we’ve detailed here in the Digest, he’s been very warm toward the sector.
In July, when Trump gave the keynote speech at the Bitcoin Conference in Nashville, he said:
This afternoon, I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world, and we’ll get it done.
We will have regulations, but from now on, the rules will be written by people who love your industry, not hate your industry.
In recent days, Trump has been announcing who will head up government departments under his administration; and it appears he’s making good on his pro-crypto stance.
Here’s Bitcoin.com:
According to “people familiar with the matter” who spilled the beans to the Wall Street Journal (WSJ), Coinbase CEO Brian Armstrong reportedly met with U.S. President-elect Donald Trump on Monday.
WSJ reporter Brian Schwartz claims the meeting would be the first since Election Day on Nov. 5 and the two will discuss “personnel appointments for his second administration.”
Meanwhile, yesterday, Trump made another Bitcoin-friendly pick, nominating Cantor Fitzgerald CEO Howard Lutnick as Secretary of Commerce. Under Lutnick, Cantor has custodied billions of dollars’ worth of assets for stablecoin giant Tether.
With these pro-crypto appointments, 2025 could be a breakout year – not only for Bitcoin, but for smaller altcoins.
As we’ve noted here in the Digest, when crypto investors aren’t feeling bullish, they pile into the safety of the big dogs: Bitcoin, Ethereum, Tether, and Solana
But when “risk on” sentiment takes hold, that’s when investors fan out, allocating to smaller altcoins. The sector “leadership” moves from Bitcoin and the larger market-cap-weighted cryptos to the smaller altcoins.
While Bitcoin still leads today (as I write, it’s pushing to news highs, trading at nearly $95,000), Trump’s victory plus these crypto-friendly appointments is sending bullish ripples through the sector, and certain altcoins are beginning to heat up.
To illustrate, here’s the performance of a handful of such altcoins over the last seven days, according to CryptoSlate.com:
- Cardano (ADA): 40.01%
- Ripple (XRP): 56.19%
- Stellar (XLM): 94.20%
- Hedera (HBAR): 106.14%
- Mantra (OM): 153.59%
Again, this is just seven-day performance.
To be clear, investors must treat these altcoins as speculations. Invest no more than you can afford to lose. But based on their historical performance, you don’t need more than a few bucks to generate needle-changing returns.
For example, in his altcoin service Ultimate Crypto, our specialist Luke Lango still holds Cardano (ADA). Even after all the sector carnage in recent years, subscribers remain up 2,141%. That turns $500 into nearly $11,000. Not bad vacation money!
Bottom line: The combination of Trump and his crypto-friendly appointments is likely to result in an explosive 2025 for Bitcoin/altcoins. It will be a rollercoaster ride – but one that could put a fat wad of cash in your pocket.
Finally, if triple-digit returns overnight – literally – are your speed, put next Tuesday on your calendar
That’s when master option trader Jonathan Rose will broadcast in real time, demonstrating the power of one of the hottest strategies in the market today: zero-day options.
Zero-day options are a high-octane way to trade the markets during a single trading session. These options can return triple- or quadruple-digit returns in as short of a period as a few hours.
Yesterday, we looked at the power of hedging your portfolio using options. Tomorrow, we’ll look at their wealth-creation ability. But until then, here’s a preview…
Earlier this fall, when the Fed announced a 50-basis-point rate cut, the Nasdaq jumped 2.5% the following day. Zero-day options on the Nasdaq exploded higher with same-day gains like 477%… 1,665%… and even 1,820%.
Next Tuesday at 11 am ET, Jonathan will explain how they work, detail the risks/rewards, then demonstrate how to use them in real-time. It’s a free learning event that could transform your portfolio, you just need to click here to register.
Have a good evening,
Jeff Remsburg
