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Opinion from a Libertarian ViewPoint

Posts Tagged ‘Walmart’

Why the Excess “Savings” Ice Cube Is Coming Out of Cold Storage

Posted by M. C. on February 26, 2024

By David Stockman

David Stockman’s Contra Corner

Even if you put a lot of stock in government manufactured GDP owing to unhinged spending and deficits, which we most definitely do not, it would be wise to be careful about what you are applauding. The allegedly resilient US economy, which is purportedly defying the Fed’s interest raising campaign, isn’t nearly what it’s cracked up to be.

There was a hint of this in Walmart’s Q4 earnings announcement yesterday in which it noted a “choiceful consumer” was spending less per trip and curtailing outlays for discretionary items in favor of low-cost necessities. And that admission was more than evident in the steady deflation of its USA comp store sales trend.

The figures in the chart are in nominal dollars, which declined by more than 50% between Q4 2023 (+8.3%) and Q4 2024 (+4.0%). Admittedly, inflation has been coming down too, as reflected in our trusty 16% trimmed mean CPI. The latter posted at +6.6% on a Y/Y basis in Q4 2023 and +3.8% in Q4 2024.

Still, the math says constant dollar sales have slipped even more than the reported nominal figures. The inflation-adjusted Y/Y gain in Q4 2023 was +1.7% compared to just +0.2% in the period just ended (Q4 2024).

Both figures are on the punk side, but there is “no way, no how” that the core main street consumer, who is a Walmart shopper by necessity, is in the pink of health as the stock peddlers of Wall Street and the “Joe Biden” puppeteers of the White House would have you believe.

Moreover, for want of doubt it should be noted that these marginal real sales gains were not due to the mighty Walmart loosing market share, either. The company reported that its surging eCommerce sales passed the $100 billion mark last year and that consequently Walmart “is gaining share in nearly every category”, according to CFO John Rainey.

So, the more appropriate question is not why the American consumer has been so resilient, but why the clearly fading consumer has remained in the game even this long.

Actually, however, there is no real mystery about the US economy’s defiance of the long-predicted recession. Nor is the purported stay of execution evidence that the geniuses at the Fed have orchestrated a “soft landing”.

What is happening is that some of the massive amounts of government manufactured GDP which flowed from $6.5 trillion of stimmy spending during the 12 months after March 2020 got temporarily placed in cold storage at household bank accounts. And since then it has been slowly dribbling into the spending stream, thereby bolstering demand stemming from current period production and earnings.

We think a good measure of this delayed “stimmy effect” is captured by the relationship between high-powered consumer spending accounts—checkable deposits and currency—and national income. That ratio had varied between 4.0% and 6.5% during the two decades prior to Q1 2020 but took off like the literal rocket ship shape depicted in the chart below.

As of Q3 2019, these spendable cash balances totaled $938 billion and represented about 4.3% of GDP. But by the peak of the stimmy tsunami in Q3 2022 the figures stood at $4.8 trillion and 18.5% of GDP. In the graph this implicit $4 trillion surge in household cash balances looks like a big middle finger, and well it might be.

Households have told the Fed in so many words that interest rate increases or no, they are sitting pretty on an aberrational $4 trillion cash cushion. They apparently intend, therefore to keep on spending the usual 96% of what they are currently earning, thereby causing the Fed’s vaunted monetary brake to essentially fail.

See the rest here

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EconomicPolicyJournal.com: TODAY IN CRONY AMERICA: Biden and Yellen to Meet with Top CEOs to Talk Stimulus

Posted by M. C. on February 11, 2021

Bottom line: They are for big spending and more inflation because they know a good chunk of the money will find its way to their corporations first, long before it destroys the buying power of those on fixed incomes.

https://www.economicpolicyjournal.com/2021/02/today-in-crony-america-biden-and-yellen.html

Janet Yellen at Biden inauguration

President Joe Biden will on Tuesday meet with the chief executives of some of the country’s largest businesses in the Oval Office to discuss his $1.9 trillion Covid stimulus plan, reports CNBC.

Among those expected to meet with Biden and Treasury Secretary Janet Yellen are JPMorgan’s Jamie Dimon, Walmart’s Doug McMillon, Gap’s Sonia Syngal, Lowe’s Marvin Ellison and Tom Donohue of the U.S. Chamber of Commerce.

Though the exact agenda of the afternoon meeting wasn’t immediately available, the White House said that the group will review the “critical need” for Biden’s massive rescue plan that’s currently making its way through Congress.

This should be consider a sit-down of Biden-Yellen with crony America. Josh Bolten, president and CEO of the influential Business Roundtable, told CNBC last week that business leaders generally do not support conservative efforts to “whittle down” the size of the Biden plan.

Dimon, McMillon and Synga are members of the roundtable.

Bottom line: They are for big spending and more inflation because they know a good chunk of the money will find its way to their corporations first, long before it destroys the buying power of those on fixed incomes.

RW

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Government Is No Match for the Coronavirus | The American Spectator

Posted by M. C. on March 17, 2020

The problems started in early February, at a CDC laboratory in Atlanta.

A technical manufacturing problem, along with an initial decision to test only a narrow set of people and delays in expanding testing to other labs, gave the virus a head start to spread undetected — and helped perpetuate a false sense of security that leaves the United States dangerously behind.

Tests begin with the CDC to ensure quality, which is exactly the wrong approach. It assumes the government can outperform the best medical industry in the world. Even at this hour the CDC has failed, shipping test kits that are defective.

The CDC does not have a solution, but it also becomes the classic blocker to progress.
Labs cannot act without a lengthy approval process from CDC and the FDA.

https://spectator.org/government-is-no-match-for-the-coronavirus/

The coronavirus is reminding everyone that you cannot rely on government and that ultimately it is the private sector that will provide the solutions. Many non-medical government officials and members of the media are predicting massive cases of COVID-19 and death, when in fact no one can predict the outcome. What we do know is that government has created a full-blown national panic, when at this point the normal flu season is far more deadly.

Decentralization is critical to a functioning society but often precluded by federal regulations.

The Washington Post reported the following about the Centers for Disease Control:

The problems started in early February, at a CDC laboratory in Atlanta.

A technical manufacturing problem, along with an initial decision to test only a narrow set of people and delays in expanding testing to other labs, gave the virus a head start to spread undetected — and helped perpetuate a false sense of security that leaves the United States dangerously behind.

Tests begin with the CDC to ensure quality, which is exactly the wrong approach. It assumes the government can outperform the best medical industry in the world. Even at this hour the CDC has failed, shipping test kits that are defective.

The CDC does not have a solution, but it also becomes the classic blocker to progress. Labs cannot act without a lengthy approval process from CDC and the FDA. These government controls violate the principle of subsidiarity (problems should be solved at the lowest level possible). Ultimately care is provided by local hospitals, care facilities, and labs.

South Korea’s rapid testing allowed for early treatment and containment of the virus. These test kits were created in three weeks. Many labs in the U.S. could have solved the test kit problem but were restrained by the FDA and CDC. The South Koreans offered to help us, but was the CDC listening? Evidently not.

At the president’s request on Friday, America’s robust private sector, including Walmart, Walgreens, CVS, Roche Laboratories, and LabCorp, came up with a solution for mass testing. Roche has received fast-track FDA approval for its COVID-19 diagnostic test. This testing will be done on a drive-through basis in parking lots. This minimizes contact and allows for mass testing of thousands across the country. The more Americans are tested, resulting in a lower death rate percentage, the more the testing will have a calming effect on our citizens.

Americans consider regulators and government to be sacrosanct, but in fact government agencies are slow and often fail us. Think of the Federal Aviation Administration (FAA), which allowed Boeing engineers to bypass basic engineering standards, resulting in the crash of two Boeing 737 Max airliners and the grounding of 900 planes around the world.

We all know that any time we expect service from the government, it will be slow and painful as compared to the private sector, which is mostly fast and courteous. In spite of some minor shortages, due to hoarding, the private sector is supplying us with gas, food, prepared meals, medical supplies, and health care.

The coronavirus crisis must cause us to rethink government. The Trump administration has restricted new regulation and reduced arcane strictures, which has resulted in a booming economy. It is absolutely true that most private industry can be trusted because the alternative for poor or unscrupulous providers is failure. Private industry can be sued and suffer financial decline, unlike government, which simply demands more money for poor performance. Business or individuals that commit fraud are subject to civil and criminal penalties.

The federal government spends 21 percent of our national GDP. All federal spending comes from business and citizens. This restricts their ability to allocate those funds to their families and to spur economic growth. American entrepreneurs are excellent capital allocators, creating the jobs and technologies that keep us safe and allow a very high standard of living for most citizens.

In spite of enormous federal deficits, every protected class of workers and business expects the government to bail it out during a crisis, from airlines and cruise ships to government workers. We will now witness a litany of spending, beginning with $8 billion for the coronavirus, moving to a $50 billion pork-laden House bill, and a third spending bill coming from Treasury.

This system is grossly unfair, as working-class individuals and small businesses do not get paid when businesses shut down.

It’s time we heed the advice of President Ronald Reagan: government is the problem, not the solution.

The welfare-warfare state is not only consuming a large portion of our national income, but, worse, it is also spending far beyond its means, creating debt now surpassing $23 trillion, compared to under $6 trillion in the year 2000.

The solution is to reduce federal spending to 18 percent of GDP, which will downsize or eliminate many counterproductive agencies and allow American business and individuals to perform and innovate.

If you are unconvinced, think of Walmart now offering ultra-low-cost medical services, along with a host of competitors, including CVS and Walgreens. Gas is very cheap because of our fracking industry. An abundance of high-quality food is available from thousands of grocery stores, restaurants, and now there is home delivery from many sources.

Americans are hard-working, resilient, and innovative. The time has come to unleash this talent to create a higher living standard and solutions to the most perplexing national challenges.

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FckdEx 🚚 | No Mercy / No Malice

Posted by M. C. on December 22, 2019

Will Bezos run his package delivery service better than his news delivery service WaPo?

https://www.profgalloway.com/fckdex

Scott Galloway
Scott Galloway

In the next 24 months, FedEx will either be acquired or lose an additional 40%+ in value. The likely acquirer is Walmart. The gangster move: a merger with Shopify.

In July 2017 we predicted, “If Bezos tomorrow said, ‘We see overnight delivery as a huge opportunity,’ the $150 billion of market cap of DHL, FedEx, and UPS would begin leaking to Amazon.”

This has happened. Since the launch of Amazon’s delivery service in February 2018, FedEx has lost $25 billion (39%) in value, despite the S&P’s 24% gain. Amazon has added $240 billion (33%). In less than two years, Amazon captured nearly one-fifth of the market for e-commerce deliveries in the U.S.

Since 2014, U.S. e-commerce has increased 84%, creating a massive opportunity for the delivery industry. But instead, there has been a transfer of wealth from FedEx, UPS, and the U.S. government to Amazon. Amazon enters high-friction, low-margin businesses as a means of differentiating low-friction, high-margin businesses (AWS and AMG).

How We Got Here — Featurizing 

Network effects, cheap capital, idolatry of innovators, and a feckless DOJ/FTC have resulted in a monopoly era where a wildly profitable business (phones, digital marketing, loyalty programs, cloud, Yoda dolls) can generate such staggering value (“antimatter”) that entire industries become loss leaders (“features”) to differentiate and protect the antimatter. Netscape, the fastest-growing software firm in history, went from antimatter to feature when Microsoft began bundling Internet Explorer with Office.

I served on the board of a visual commerce SaaS firm (Olapic) until we sold for $130 million in 2016. There was a great deal of discussion on whether to sell. I urged the founders, naturally optimistic about the firm’s prospects, to sell. The difference between $1 million and $10 million in wealth is meaningful (go big), but the difference between 0 and $1 million is profound (sell). Every entrepreneur should bank enough money to provide economic security for their family … at any opportunity. For every CNBC story on Spiegel and Zuck turning down offers and going on to capture billions, there are dozens of founders who should have sold.

Pro tip: your VCs will encourage you to “be in it to win it,” and to keep going, as they are already rich. Assume you are not Mark Zuckerberg.

Speaking of Zuck, I think he’d be happier if he’d sold to Microsoft (I don’t know him, so this is pure speculation). A powerful algorithm for happiness is to be wealthy but anonymous. Perhaps as a coping mechanism for realizing the significant damage he levies on the world, Zuck has developed the attributes of a sociopath. At some point, he’ll likely be criminally charged. Instead, he could have worked in Seattle for 27 months, retired to Hawaii, invested in rockets, owned a football team, and produced Cats for the big screen.

With any software start-up, there is a non-zero probability that you wake up the next day and find that a better-resourced firm (Microsoft, Oracle, Salesforce, Adobe) has deployed 200 engineers to copy your product, bundle it with their stack for free, or near free, and … welcome to zero. I believe this is happening to Slack, but more slowly than Netscape, as Microsoft’s General Counsel has likely coached Satya to charge a nominal fee for Teams and let Slack bleed out, instead of putting a bullet in its head and stirring the DOJ from a 3-Ambien slumber.

FedEx is in the midst of being featurized by Amazon, who can make investments across their vertical stack that FedEx can’t match, as Amazon has antimatter (Prime, AWS, AMG). The Memphis firm’s most recent earnings were a sh*t-show with top- and bottom-line misses, drivel about a slowdown in air freight, and (my favorite) an unfavorable calendar — a Kabuki dance attempting to distract investors from the fact they’re being featurized by Amazon.

FedEx shareholders have woken up in an M. Night Shyamalan nightmare. Instead of seeing dead people, investors are haunted by Mercedes-Benz Sprinter vans with an arrow the shape of a smile on their side. Everywhere. They might as well be German Panzer tanks fighting a white-and-purple cavalry of FedEx trucks. There will be a lot of macho battle cries from FedEx, some heroism, and an increasing stench of death. (Can’t help it, I love WWII war metaphors.)

The Monopoly Algorithm: Innovation, Obfuscation, Exploitation

Innovation

To be fair, Amazon is a better-run company than FedEx,

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Businesses are Regulating Themselves Before the Government Gets the Chance | The Daily Bell

Posted by M. C. on August 26, 2018

So in that sense, if capitalism is just another word for corporatism or protectionism, then let’s hope it truly is dying off in favor of the free market.

That is what I see when Walmart beats the EPA to regulating its chemicals. And when cryptocurrency exchanges beat the SEC to regulating ICOs.

That’s free market regulation. And it is effective.

https://www.thedailybell.com/all-articles/news-analysis/businesses-are-regulating-themselves-before-the-government-gets-the-chance/

By Joe Jarvis

Is Walmart the evil harbinger of late-stage capitalism? Or is it the hallmark of a civilized society?

Walmart has been criticized for paying workers poorly. Then again, who else is willing to pay that 90-year-old above minimum wage to wave at customers as they walk in the store?

Because Walmart buys in bulk and uses cheap labor, it can keep prices ridiculously low. That provides a major service to poorer people. It increases their standard of living. Their money goes further. They can afford more of what they need…

Yet now they have voluntarily removed certain products because of the dangerous chemicals inside.

Walmart has banned two paint strippers from its stores because they contain chemicals believed to cause cancer…

The EPA has opted not to ban the chemicals, though at one point there were plans to do so. But this example suggests that even absent government regulation, certain companies are pro-active in protecting customers.

You might think Walmart only banned the chemicals to look good in the eyes of the public. And you might be right.

Who cares? Applying beneficial policies to satisfy the public is an effective form of regulation. Read the rest of this entry »

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