Sure Doesn't Feel A Recession To Me -- July 26, 2022

Walmart: the experts tell us that the Walmart 2Q22 results suggest the American consumer is tapped out and inflation is taking its toll. And yet for the past twenty years, I've been told that Walmart is the defensive stock during a recession or during a period of stagflation. All of a sudden, not? It appears more and more it was due to a one-off in Walmart's inventory control and apparel. 

At the end of the day, Walmart is pretty much selling staples to the middle class. 

How do we know that Walmart consumers are not moving upscale? Perhaps Walmart is facing increased competition from all that free delivery by new web-based ghost stores. Perhaps Walmart is facing increased competition from Target and Amazon.

I believe the brand name cereal companies are doing just fine, passing their costs unto consumers and today both Coca-Cola and McDonald's reported superb quarters. My hunch, it's morn than just brand loyalty. It's how to manage inventory. 

Coca-Cola can price their products at a premium during the first two weeks of the month when consumers are flush with cash, and then bring down their prices at the end of the month when households are getting a little low on cash. Coca-Cola makes a profit at the end of the month, but really, really does well at the beginning of the month. "Low prices all the time" at Walmart provides minimum return throughout the month.

Regardless, if one is into retail, KO, MCD, TGT, WMT -- great buying opportunities.  For the record, KO raises annual revenue forecast. KO remains one of Warren Buffett's biggest holdings. My hunch: Warren Buffett is proving KO with lots of capital and lots of marketing advice. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. Full disclaimer at tabbed link.

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

Amazon. It's hard to put Amazon in the same "retail" sector as KO, MCD, TGT, or WMT. 

By the way, add another retailer. Polaris. If Americans are tapped out, if we're in the middle of a recession, if gas prices are too high, explain Polaris. 

GE? I have no idea what they sell any more. Aviation? Whatever. GE posts blowout earnings, and it remains on track for a 3-way company split. GE posting blowout earnings in the middle of a recession? Okay.

If investors aren't taking advantage of these buying opportunities ....

Recession fears and rising rates are a buying opportunity for affluent Americans: "This is when the wealthy make their money."

Why just the wealthy? Can't others -- the non-wealthy -- also invest?

In the big scheme of things, politicians are not paid much, but even Nancy Pelosi, took the opportunity to make a huge investment in tech.

The Apple Page: Apple had the M1 Mac Pro ready to ship a month ago but has reasons to wait: an M2 extreme Pro is just around the corner. The "extreme Pro" will have a price point that will seem ludicrous for many, but they will settle for the M1 Mac Pro, especially in light of the recent comparison of the M1 MacBook Air with the M2 MacBook Air.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. Full disclaimer at tabbed link.

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.