Trouble Coming To Walmart Nation?
by Tyler Durden on August 18, 2019 at 5:05 pm
Via Global Macro Monitor, Not so much for Walmart shareholders after the company beat estimates late in the week helping the stock (WMT) to close on Friday 7.7 percent off its low for the week. MarketWatch notes the big-box retailer was helped by automation. Walmart talked about the significance of automation in an April post on its corporate site. “Smart assistants have huge potential to make busy stores run more smoothly, so Walmart has been pioneering new technologies to minimize the time an associate spends on the more mundane and repetitive tasks like cleaning floors or checking inventory on a shelf,” said Elizabeth Walker, from Walmart corporate affairs. – MarketWatch, Aug 17th Walmart Nation We don’t know how this helps Walmart nation, however. The company is the largest employer in many states throughout the country. When excluding public administrative bodies, Walmart is the largest employer in 22 states. – USA Today Walmart is also the world’s largest private-sector employer. The company has over 100k companies in its supply chain worldwide and according to its 2019 annual report, As of the end of fiscal 2019, Walmart Inc. and our subsidiaries employed more than 2.2 million employees (“associates”) worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. – Walmart 2019 Annual Report This compares to the 2018 Annual Report, As of the end of fiscal 2018, Walmart Inc. and our subsidiaries employed approximately 2.3 million employees (“associates”) worldwide, with 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good and are continuing to improve. – Walmart 2018 Annual Report Note the 100k year-to-year decline in employees, which appear to be the shrinking of their international workforce. We couldn’t find any more current data on employment from the company’s quarterly reports. Still looking, however. Jobs At Big-box & Supercenter Retailers Are Collapsing We took a look at growth in retail payroll jobs over the past few years, which has been absolutely dismal. Retail payrolls are down 176k jobs under President Trump while total private nonfarm payrolls are up 5.5 million. Some Good News The retail sector’s average hourly earnings (AHE) are up 9.66 percent during the Trump administration, an increase of over 70 percent from the prior 30-months (before Feb ’17) AHE growth rate. These data should be kept in context as the retail wage gains begin at a relatively low base of around $18 per hour. The data provides the basis to both those who argue pressuring companies to raise wages leads to layoffs whether it’s true or not, and to those who argue automation augments and makes labor more productive leading to higher real wages. We are at the beginning of our vacation and are still in a holding pattern awaiting medical clearance for a 15-hour flight given our little episode last Christmas, so we are not going to get into it at this time. Finally, the following is a chart of monthly and 12-month payroll changes for warehouse clubs and supercenters retailers, of which Walmart and Costco belong. Payrolls have been in virtual free-fall since 2017 as the warehouse clubs and supercenter retailers have lost over 40k jobs in the 12-month period since June. Our sense is that automation is going to accelerate and jobs in Walmart nation are going to continue to disappear at an exponential rate. We are not sure if the wage increases are sustainable without continued political and social pressure on management, which will probably lighten up as more and more jobs disappear. Life is cruel and unfair sometimes and it is clear, at least to us, in this sector technological change is going to hurt those most vulnerable. If you are reading this, you are part of the Lucky Sperm Club (LSC), and there but by the Grace of God go we. Very few politicians have a plan to deal with it and most have their heads in the sand or in the clouds, or blaming others, for that matter. Whatever the case, it is going to be complicated to resolve and class conflict will surely only increase. By the way, Costco and Walmart are on two entirely different planets as to how they treat their employees, in our superficial observation. That’s a start, at least, treat your employees better it is good for business. The commitment of executives is clear as well, as the pay ratio of W. Craig Jelinek, Costco’s CEO, to his median employee’s salary is far below that of some of his peers. In fact, only Amazon’s pay ratio is lower, with Jeff Bezos electing to take a lower salary given his already enormous wealth. – Real Money, March 8th Politics How this all plays out politically, we don’t know. The Democratic candidate, Andrew Yang, can probably get some traction out of it as he is the only one who seems to understand it and is at least trying to address it with the idea of a universal basic income(UBI). One thing is for certain, the administration understands the political blowback as it is taking place in many of the home states of their base and is blaming Amazon and their non-BFF, Jeff Bezos, for the Retailgeddon, which hardly applies to Walmart, in our view. US Treasury Secretary Steven Mnuchin said that Amazon “destroyed the retail industry across the United States” and that it’s appropriate for the attorney general to investigate the company alongside other tech giants in the sweeping antitrust review that the Justice Department announced yesterday. “There’s no question they’ve limited competition,” Mnuchin told CNBC’s Squawk Box. – The Verge, July 24th Stay tuned, folks, this is one to watch closely.
Kudlow "Doesn't See A Recession At All", Warns Full 10% China Tariffs To Go Ahead In December
by Tyler Durden on August 18, 2019 at 4:46 pm
Trump's chief economic advisor, Larry Kudlow, pushed back against fears of an economic downturn on Sunday saying, “I don’t see a recession at all" when asked by guest host Dana Perino whether the Trump administration is considering concrete steps to stave off a potential recession after the 2s10s yield curve inverted last week. As a reminder, every 2s10s inversion since 1956 has seen a recession follow, with the average length of time until a recession begins is 16 months. “The Trump pro-growth program, which I believe has been succeeding, we’re going to stay with that,” Kudlow told Perino."There’s no recession on the horizon," he added. "What’s wrong with a little optimism?" He then repeated for good measure that "I don’t see a recession at all," and added that there were no plans for additional fresh measures to boost the economy, and that the Trump administration would stay the course on its current agenda. Dana Perino asks @larry_kudlow if the White House is worried about a possible recession #FNS #FoxNews pic.twitter.com/694farlkST — FoxNewsSunday (@FoxNewsSunday) August 18, 2019 “Consumers are working. At higher wages. They are spending at a rapid pace. They’re actually saving also while they’re spending - that’s an ideal situation,” he said on a mirror interview later on NBC’s “Meet the Press”, which however begs the question: why is president Trump himself urging the Fed to cut by a 100bps, hinting at an imminent recession. Host Chuck Todd noted, however, that Kudlow made similar remarks in 2007, shortly before the Great Recession began, and wrote, “There’s no recession coming. The pessimistas were wrong. The pessimistas were wrong. It's not going to happen. ... The Bush boom is alive and well. It's finishing up its sixth consecutive year with more to come." “I plead guilty to that,” Kudlow responded on NBC. Chuck Todd reads Larry Kudlow his own quote from December 2007: "There's no recession coming. The pessimistas were wrong. It's not going to happen. ... The Bush boom is alive and well. It's finishing up its sixth consecutive year with more to come." pic.twitter.com/Q9Y3J0ebNz — Axios (@axios) August 18, 2019 Fox's Perino also pressed Kudlow on the ongoing trade war between the U.S. and China. Last week, the administration announced several categories of tariffs on Chinese goods would be delayed until December. “The goal here is very simple. We want to minimize any impact [of tariffs] on the American consumer. So far it’s been virtually zero,” Kudlow said, echoing comments by White House trade adviser Peter Navarro. And in a potential blow to any incipient trade deal optimism, Kudlow also admitted that the US and China are in "kind of a technological war", confirming that the feud between the two superpowers is about much more than just trade; more to the point, he also said that the delayed 10% tariffs on consumer goods imports are likely to go ahead after the Christmas relief period ends, explaining that the administration is giving companies time so they won’t “jack up prices,” he said. "On December 15, the 10% tariff on the rest of the $300 billion is likely to take place." .@larry_kudlow "We're kind of in a technological war with China" #FNS pic.twitter.com/7a7Lmrtfmt — FoxNewsSunday (@FoxNewsSunday) August 18, 2019 While Trump and his top aides have said repeatedly - and incorrectly - that Beijing, not U.S. companies or consumers, are bearing the brunt of the tariffs imposed on imports from China, the July CPI print jumped in July, driven by costs of shelter, apparel and used cars, and gained the most in a decade in the past two months, the Labor Department reported this month. This website, and other economists, said that the boost in inflation shows the tariffs are gradually filtering through. The tariff war has increased prices for goods, and U.S. companies are paying the higher levies, according to a survey by the Federal Reserve Bank of New York. The U.S. government collected $57 billion in customs duties in the fiscal year that began Oct. 1, according to the Treasury Department. * * * And while Kudlow was laying the party line on Fox and NBC, his fellow Trump advisor Peter Navarro, took to CNN, where he disputed that the U.S. had seen an inverted yield curve, often a forerunner of recession because it signals market expectations for weaker growth ahead. “Technically we didn’t have a yield curve inversion,” he said on “State of the Union.” “All we’ve had is a flat yield curve.” Well, technically, if one adjusts the yield curve for central bank intervention, for currency hedging costs, and for the shadow Taylor rate which is also affected by QE, the yield curve has never been more inverted. But we digress. Navarro also added to Trump's relentless criticism of Powell and the Fed on Sunday. “The Federal Reserve chairman should look in the mirror and say ‘I raised rates too fast,’” Navarro said on CNN, although if one listens to what Powell himself is saying these days, the China trade hawk is right. Which is why, Navarro added that additional Fed rate cuts beyond the quarter-point move in July will be a good thing - if not for America's yield starved savers and retirees - and a potential easing by the European Central Bank in September will help Europe’s struggling economy. Navarro also played the bad cop in the China trade war, saying the U.S. still has “significant structural issues” with China, while Kudlow was good cop, and said he was looked forward to a “substantive renewal” of talks with Beijing. However, he provided no specifics on the as-yet unrevealed “positive news” out of recent telephone talks between the two sides.
Three Things Gold Isn't
by Tyler Durden on August 18, 2019 at 4:15 pm
Authored by Mike Shedlock via MishTalk, Swings in the US dollar have no long-term impact in the price of gold. Nor is gold an inflation hedge. Three Points December 2004: US Dollar Index 108, Gold $435 April 2009: US Dollar Index 108, Gold $883 November 2014: US Dollar Index 108, Gold $1182 Gold vs Trade-Weighted Dollar Index 1973-Present While gold generally moves opposite the dollar in day-to-day fluctuations, long term impacts are nonexistent. Here is the chart with the index of gold and the dollar set to the same base year, 1997. Gold vs Trade-Weighted Dollar Index Gold vs the CPI Gold fell from $850 to $250 from 1980 to 2000 with inflation every step of the way. What happened? People had faith in the great "Maestro", Alan Greenspan. But, But, But But Mish, inflation is understated. Indeed it is. Central banks are clueless regarding how to measure inflation. Bubbles are a direct consequence of inflation. Note the implication: Because inflation is higher than reported, gold is even less of an inflation hedge! One Exception There is one exception to the rule gold is not an inflation hedge. The exception is extremely high rates of inflation, especially hyperinflation. In case of hyperinflation, nearly any storable physical asset is a hedge: cheese, cigarettes, gasoline, etc. There is nothing unique about gold as an inflation hedge in case of hyperinflation. Three Things Gold Isn't A function of the US dollar in any meaningful way A measure of inflation A good hedge against inflation, except extreme inflation and hyperinflation where any storable asset is a hedge. So What Is It? Measure of Faith in Central Banks In addition to being money for thousands of years, the price of gold is primarily a measure of faith in central banks. If you believe central banks have everything under control, don't buy gold. But Why Have Faith? "Zero Has No Meaning" Says Greenspan: I Disagree, So Does Gold 30-Year Long Bond Yield Crashes Through 2% Mark to Record Low 1.98% More Currency Wars: Swiss Central Bank Poised to Cut Interest Rate to -1.0% Inverted Negative Yields in Germany and Negative Rate Mortgages. Fed Trapped in a Rate-Cutting Box: It's the Debt Stupid If you believe monetary madness, negative interest rates, and negative rate mortgages prove central banks do not have things under control, then you know what to do. Buy Gold.
Trump Slams NYT After Leaker Reveals Pivot From 'Russiagate' To 'Racism Witch Hunt'
by Tyler Durden on August 18, 2019 at 3:49 pm
President Trump slammed the "failing New York Times" on Sunday after leaked comments from executive editor Dean Baquet revealed that the paper is pivoting from the Russia narrative (which he described as being "a little tiny bit flat-footed") to 'Trump is a racist.' "The failing New York Times, in one of the most devastating portrayals of bad journalism in history, got caught by a leaker that they are shifting from the Phony Russian Collusion Narrative (the Mueller Report & his testimony were a total disaster), to a Racism Witch Hunt," Trump wrote on Twitter, adding "‘Journalism’ has reached a new low in the history of our Country. It is nothing more than an evil propaganda machine for the Democrat Party. The reporting is so false, biased and evil that it has now become a very sick joke…But the public is aware! The reporting is so false, biased and evil that it has now become a very sick joke…But the public is aware!" .....”Journalism” has reached a new low in the history of our Country. It is nothing more than an evil propaganda machine for the Democrat Party. The reporting is so false, biased and evil that it has now become a very sick joke...But the public is aware! #CROOKEDJOURNALISM — Donald J. Trump (@realDonaldTrump) August 18, 2019 Trump has been dinging the Times all weekend over Baquet Monday comments, which were covertly recorded and sent to Slate. Talking about the pivot, Baquet said "I think that the story changed. A lot of the stuff we’re talking about started to emerge like six or seven weeks ago." "How do we cover America, that’s become so divided by Donald Trump? How do we grapple with all the stuff you all are talking about? How do we write about race in a thoughtful way, something we haven’t done in a large way in a long time?" he continued. Conservatives latched on to Baquet’s comments, suggesting the Times was deliberately trying to cast Trump as a racist in a pre-ordained storyline now that the Russia investigation was wrapped up. “The takeaway? The NYT says it is mapping out a narrative in advance of any naturally-occurring, true news events, and plans to shape all natural-occurring, true news events so that they are reported in the context of racism. This is what they believe their readers want,” tweeted “Full Measure” host Sharyl Attkisson, whose program runs on the conservative Sinclair television stations. Trump retweeted Attkisson Saturday adding, “such a disgrace.” -NY Post Such a disgrace at the once great @nytimes! https://t.co/UKjP6AU0hz — Donald J. Trump (@realDonaldTrump) August 17, 2019 Meanwhile, the Washington Examiner's Byron York wonders if the public should "still view the Times as a news outlet? Or as something else?" Question raised by leaked New York Times transcript, plus rollout of 1619 project: Should the public still view the Times as a news outlet? Or as something else? https://t.co/28AbrrPgnt — Byron York (@ByronYork) August 17, 2019
Bernie Sanders Vows To "Go To War Against White Nationalism" If Elected
by Tyler Durden on August 18, 2019 at 3:25 pm
Authored by Jake Johnson via CommonDreams.org, Speaking to the Black Church PAC Presidential Forum in Atlanta two weeks after a gunman opened fire in an El Paso Walmart with the goal of killing Mexicans, Sen. Bernie Sanders on Saturday said his administration will "go to war against white nationalism and racism" if he is elected president in 2020. Sen. Bernie Sanders (I-Vt.), a 2020 Democratic presidential candidate, speaks onstage at the Georgia International Convention Center on August 17, 2019 in College Park, Georgia. (Photo by Paras Griffin/WireImage) "I'm Jewish, my family came from Poland, my father's whole family was wiped out by Hitler and his white nationalism," said Sanders. "Too many people have fought over the years, too many people have died against racism to allow it to resurface and flourish in America. We will go to war against white nationalism and racism in every aspect of our lives." Sanders vowed to "throw the full force of the law" against those in the U.S. who harm or kill people on the basis of skin color, which the Vermont senator described as "domestic terrorism." Watch: We will go to war with White Nationalism. pic.twitter.com/HVtDI0eweQ — Bernie Sanders (@BernieSanders) August 17, 2019 In addition to fighting the white nationalist terrorism that is on the rise in the United States, Sanders said the U.S. must combat systemic inequities in healthcare, housing, and other facets of American society. "When we combat white nationalism and when we combat racism," said Sanders, "we are gonna use all of the laws in our power, including executive orders in every area, to make certain that we end the discrimination which now exists in healthcare, where black women are dying three times the rate of white women when they give birth." "We will end the redlining that exists in housing discrimination," Sanders said. "We will end the absurdity of black kids leaving school much more deeply in debt than do white kids."