When the price cut headline hit this morning, one might have expected bond yields would drop. Instead, they continued their May trend of higher yields.
Walgreens Joins the Price Cutting Parade
CNN reports Walgreens Is Cutting Prices on 1,500 Items.
Walgreens is joining other retailers in cutting prices across the board, from snacks to toiletries and even Squishmallows, in an effort to lure back inflation-weary shoppers turned off by high prices.
Prices are dropping immediately on more than 1,500 items online and at its stores, which include both name and store brands, Walgreens announced Wednesday. In the past few weeks, competitors including Target, Walmart and Amazon slashed prices on thousands of household goods to rev up consumer spending.
“Walgreens understands our customers are under financial strain and struggle to purchase everyday essentials,” said Tracey D. Brown, Walgreens’ retail president and chief customer officer, in a release. “We continue to be committed to our customers by lowering prices on over a thousand additional items, something we’ve been doing since October of 2023.”
Walgreens Boots Alliance’s (WBA) most recent earnings report, released in March, revealed that the retailers’ second-quarter sales beat expectations, but lowered its full-year earnings outlook because of a “challenging retail environment in the US.”
Shares are down 40% year to date and its next earnings report isn’t expected until June. Meanwhile, a host of other retailers report earnings Thursday, including Dollar General and Costco.
The Walgreens chart is an absolute trainwreck. I suspect something beyond a challenging environment. But weak sales sure don’t help.
Discretionary Spending Tumbles at Target, Shares Drop 10 Percent
On May 22, I noted Discretionary Spending Tumbles at Target, Shares Drop 10 Percent
Target CEO Brian Cornell said the results show “continued soft trends in discretionary categories.”
Who’s Next at the Confessional?
So its “continued soft trends” at Target and a “challenging retail environment” at Walgreens coupled with lower guidance. Who is next at the confessional?
Bonds Yields Jump Again Wiping Out the May Treasury Rally
Yield on the 10-year treasury is 4.59 percent on May 29, right where it started the month. A quarter-point rally on hopes of rate cuts vanished today.
This morning, I noted Bonds Yields Jump Again Wiping Out the May Treasury Rally
It’s been a tough year for US Treasury bulls. The rally that began in late April on hopes of Fed rate cuts is mostly gone. The continued rally into May is gone.
New Home Sales Huge Negative Revisions
New Home Sales plunged in April. And the Census Department completely revised away the fictional 8.8 percent rise in March.
For discussion, please see New Home Sales Sink 4.7 Percent on Top of Huge Negative Revisions
I see weakness on multiple fronts. The only contrary news was a string of hawkish comments from the Fed.
No Hurry to Cut Rates
Today, Minneapolis Federal Reserve President Neel Kashkari says he wants to see “many more months” of positive inflation numbers before interest rates start to come down — and refused to rule out a rate hike if needed.
I believe he means positive progress towards lower inflation readings.
Fed Minutes Show Willingness for Still More Rate Hikes
On May 22, I noted Fed Minutes Show Willingness for Still More Rate Hikes
It’s interesting that the Fed is finally talking tough just as the economy appears to be weakening on multiple fronts.
Target exists for people that can’t bring themselves to shop at Walmart. As if it’s any different just more expensive
Oh goody. The government and the corporations that it serves are screaming at us right now with this great news. All I can mutter is “Don’t piss on my savings account and tell me it’s raining dollars.”
My suggestion woulld be to take Klaus Schwab and the WEF at their word (the intention) that “by 2030 you’ll own nothing and you’ll be happy” and to check out “The Great Taking” by David Rogers Webb (the mechanisms).
Dollar Tree has acquired the rights to 170 of the 99 Cent Only Store locations. They will be reopening as Dollar Tree stores, possibly as soon as this fall.
Clearly bad for Biden.
Nice to see that aspirin is cheaper. Wake me when car dealerships cut prices by 10%.
…And house dealers, apartment and commercial buildings, and hospitals by 50% etc…., And “insurance” and stock dealers by 75%…
Scary thing is: They probably STILL would have to cut more; before “we”‘d have even a reasonable shot at reaching comparative competitiveness vis-a-vis China.
Please continue consuming to prop up GDP and standard of living.
I did a quick on-the-fly COMPARISON check at Walmart last month. I needed a 32gig Micro-SD card with an adapter to SD combo. This is a common item.
I found one by chance at the CLEARANCE section at our WMT store. $11.99. PNY (Low cost).
I thought: HMM, seems high. I went to the Main Electronics aisle, and behind a locked case was the VERY SAME ITEM for $7.99.
This is what Walmart is now resorting to.
Shortages are the next step.
Walgreens is higher than hell if it werent for the pharmacy bye bye
Medicare prescriptions are the only thing propping up the pharmacy. A lot of insurance companies don’t cover prescriptions at Walgreens.
Every time I visit a Walgreens near me, the liquor dept. has gotten bigger.
Medicare pharmacy by day, liquor store by night.
100% this….☝️☝️☝️
“It’s interesting that the Fed is finally talking tough just as the economy appears to be weakening on multiple fronts.”
Higher For Longer. Learn it. Know it. Live it.
Markets are STILL geared for ZIRP & near-ZIRP conditions, seemingly convinced that ZIRP is the “norm” to which rates must revert. This is understandable, as markets were provided a free, spiked punchbowl @ their party for decades… an entire generation of traders/analysts/advisors know nothing but free money.
However, Powell & the Fed are committed to re-establishing $USD monetary policy sovereignty… IOW, the Fed does not care what markets want or think because they are engaged in a MUCH bigger & MUCH more important battle.
The Fed has telegraphed more/serious bank failures, and pre-emptively committed to FACILITATING these bankruptcies, not avoiding them.
The Fed has loudly & frequently declared it’s inflation target.
The Fed has defined it’s unemployment/recession thresholds.
The Fed has been consistently preaching “Higher For Longer”.
The Fed has been “talking tough” ALL ALONG.
What is interesting is the fact that nobody listens.
No one WANTS to listen – – they want ZIRP.
“Cuts prices”
Single bottle of water goes from $1.25 to $3.29 and now being “cut” to $2.69
Big Party sized chips are over $10. Call me when they are below $3
But you can eat three bags and pick up your Ozempic at the same time, let the good times roll …
The chocolate ration has been increased to 10 grams.
Add Walmart to the list of price cutters.
“We’re going to lead on price, and we’re going to manage our [profit] margins, and we’re going to be the Walmart that we’ve always been,” Walmart CEO Doug McMillon told analysts this month.
https://finance.yahoo.com/news/amazon-walmart-target-finally-realize-175823770.html
I don’t think this is a big deal at all. Stores reduce prices on some items all the time. I still think we are most likely to see Stagflation. Continued inflation (under reported) and continued real growth (over reported due to the inflation number).
Higher for longer and soft landing cannot co-exist. That is what the consumer is telling us. Look for the Fed to cut hard and soon.
Still not as much of a price cut as pulling it off the shelves and running out the door. Which has become a thing I’m told. Not Leonard Cohen. He sang the poor stay poor and the rich get rich.
“Not Leonard Cohen. He sang the poor stay poor and the rich get rich.”
As well as that the dice are loaded, the fight is fixed and the good guys lost.
And that everybody knows that. Which; in this age of lock limit indoctrination, is both obviously and unfortunately not even close to accurate.
Slashed prices? Slashed?
– CNN reports: Walgreens is joining other retailers in cutting costs: Prices are dropping immediately on more than 1,500 items at Walgreens, include both name and store brands. In the past few weeks, competitors including Target, Walmart and Amazon slashed prices on thousands of household goods to rev up consumer spending.
> What I hear in these announcements, is “Employee Cuts to continue, at many Retail Stores and Locations, across America” This is primarily due to the Reality of a Massive Recession at our feet, that is finally being allowed to be noticed by the MSM, and hence the people at large. This will have massive impacts on the bottom line to many, many retailers, and with no revenue generating plan in place to help, as consumers and the Feds are all tapped out of American Workers Tax $$$!!!
– “Walgreens Shares are down 40% year to date and its next earnings report isn’t expected until June.
> Well this doesn’t paint a very pretty picture now does it? Will June Finally Be the time, that they announce the recession we have been in for roughly 2 years now? “Hunker Down” People…
– It’s been a tough year for US Treasury bulls. The rally that began in late April on hopes of Fed rate cuts is mostly gone. The continued rally into May is gone.
> Rally When again? Fed Rate Cut When again? New Home Sales plunged in April. Is this a trend now? And the Census Department completely revised away the fictional 8.8 percent rise in March. All rises are fictional, as they are tied to specific cherry picked Data, that only represents what they want it to, and to keep you believing things are getting better, when they are truly getting worse.
– It’s interesting that the Fed is finally talking tough just as the economy appears to be weakening on multiple fronts.
> That’s common place now, and by no means a reflection of what is actually occurring in the U.S. and around the Globe. Gotta keep the party music playing, and hope the Peasants keep rushing onto the dance floor…
This is good marketing and good PR, nothing more.
All these stores carry 50,000+ SKUs (products) or more, meaning 1,500 is only 3% of products available. The chains (amazon, target, walmart) carry far more than 100K SKUs, but individiual stores might only carry less than half the items depending on regional preferences etc.
Under normal circumstances, 5-10% of products fail. They get produced once, end up in the discount rack for liquidation, and do not get reordered. This happens even when the economy is booming, even when store traffic is high and growing.
To say they are cutting prices on 3% (or less) of items is business as usual. It cut be argued that, under normal circumstances, they would be shifting more than 3% to the discount rack
Anecdotally, a gallon of 2% milk at my local Walmart jumped from $2.31 to $2.73 over the span of the last two weeks. That’s roughly an 18% increase.
Anyone struggling to pay for necessities shouldn’t be shopping at Walgreens. All these stores cutting prices just confirms we’re in a recession and things aren’t getting better any time soon. Insurance (healthcare, auto and homeowners) along with labor costs will keep prices elevated.
ObamaCare radically increased demand for hospital services, as 30 million additional people demanded care.
ObamaCare significantly reduced supply of hospital services, as thousands of doctors opted for early retirement as payment rates were cut, or shifted into concierge medicine where they could get paid.
What happens to a good or service when demand radically shifts up, while supply shifts down? This on a product type where price increases were already a problem. How many Obama supporters were expecting a different outcome?
How many Americans were told to get an mRNA shot (costing $800 a pop, even if you paid via insurance premiums instead of paying out of pocket — you still paid either way).
According to the fraudsters at NIH and CDC, the number one driver of bad covid outcomes (besides old age) is obesity. Getting off the couch, getting exercise, eating healthy food instead of high fructose corn syrup … all changes people should be doing anyway. But instead, government policy was to push an unhealthy lifestyle and paying for multiple $800 shots.
Government policy is pushing people to make horrible decisions. That is not inflation per se, its really really really bad leadership
Its equity!
Agree. I never go to Walgreens. I can get the exact same stuff at Walmart or Amazon way cheaper.
The spending, the debt created by the US government, is unsustainable, even the Fed chairman stated this last year. That’s about as strong a statement as the Fed gets.
We are financing the country with a Ponzi scheme, and once the buying of new debt dries up, where will rates go? I think the market is starting to realize this.
This is just the latest phase in the desperate battle to fend off total collapse and stimulate growth as headwinds of expensive energy destroy growth.
Initially they purposely pumped up the housing market in the US … all the peripheral industries (e.g. furniture… appliances…) were supported…
Then China was asked to pull the train — Ghost Cities etc…
And I think the final phase is involves the US piling up obscene amounts of debt… without this the train goes off the tracks and piles into the rocks below…
I’d like to think the central banks have more can kicking ideas… but I don’t think so… there are far too many holes in the dam now … and they have run out of fingers.
The pressure fuelled by a couple of decades of stimulus is immense…
This thing is going to shatter into a billion pieces.
No. Way. Out.
Better jump off a Bridge then…
Woe is You!
Why would I do that? I want to be around to see what the end of civilization looks like….
It didn’t have to be this way… as I point out … if only we’d killed the innovators… https://fasteddynz.substack.com/p/the-dumbest-species-ever
What is better?
Living the life of a hunter gatherer…
Or living in a civilized world taking the subway to work… going through spread sheets… reporting to head office… watching Tee Vee… obsessing over social media and Taylor Swift… while inflation rages and slowly the stress of this techno bullshit world slowly overwhelm you?
Given the choice I’d opt for the life of a hawk…
Not even hunter-gatherers want to live like hunter-gatherers because it is very hard work, mostly feast or famine and you have to fight off neighboring tribes.
Depends on location. Many Pacific Islanders, and North American natives for a while pre Europeans’ westward expansion, were so soaked in immediately available resources per capita there’s no way they were not better off then than now. I mean, look at the Bikinians, for a corner case example….
I would like to put in a request to Mish to consider doing a piece which would examine 1970s energy price increases and the high interest rates to fight that inflation, versus today’s world of cheap energy prices, high insurance premiums, food and car repair inflation, and the large numbers of government people retiring and needing pension payments (via property taxes) — can manipulating interest rates work in the 2020s the same as the 1970s.
You might like this paper – the head of research for a large global energy trading firm penned it https://fasteddynz.substack.com/p/the-perfect-storm
Excellent read, thanks for the link.
If you are going to read the PDF (it’s 60+ pages) it’s the last part that matters.
Page 59 is worth a look.
The thing about that paper… is that it goes into great detail about the problem — but also it outlines the response of governments the world over….
I read this when it came out after the GFC… still remember … I was in a hotel in Edinburgh Scotland… I found it late in the evening and read the entire document…
And it was like a diamond bullet hit me in the head… finally I understood why they approved Liar Loans… they had no choice.
I realized we were f789ed… and I’ve been on a massive bucket list ever since…. pretty much retiring at 42 and handing over whatever it was I did … to others…
The study is dated January 2013. That’s a bit old I think. The study doesn’t even mention the shale oil revolution.
It doesn’t. But that also doesn’t invalidate it and in fact reinforces the last part where it talks about return on energy. The return for shale is much lower than conventional oil all of which reinforces the idea that energy costs are eating up an ever bigger piece of GDP which therefore lowers standards of living.
Nailed it.
Are you suggesting that the formula no longer applies? That when the price of oil increases … that does not hammer growth?
Ah yes the shale revolution … As Art Berman the oil geologist refers to it ‘sucking spilled beer out of the carpet after a roaring party’…
The shale revolution (like the tar sands) is an act of desperation — https://markets.businessinsider.com/news/stocks/us-shale-has-lost-300-billion-in-15-years-1029335848?op=1
And it is coming to an end — I will refer you to a veteran of the Permian for comment on this :
The Precarious State of the Shale Oil Industry:
Try to get your head around the idea that by 2027, US tight oil production might be 12 MM BOPD, not the 9 MM it is now, which is what cheerleaders say it will be, and that means we’ll actually have to find and extract 12 MM BOPD… before we can ever grow the new 3 MM. Man, that is a slew of new wells!
Thats gonna take like…four times the HZ wells we’ve already drilled in the US.
Where? https://www.oilystuff.com/single-post/the-hamster-wheel
The only thing that has prevented us from crashing into a deflationary death spiral — because oil lifted off of $20 a barrel at the turn of the century…
Is stimulus.
Gargantuan amounts of stimulus … easy money … debt… low interest rates….
Without that – I would not be typing this comment … civilization would be over long ago….
Stimulus is not a fix … it just kicks the can … and we are fast running out of road
The stimulus … is now poisoning the global economy
I’ve stated many times that we are going to revisit the 1970s – 80s inflation paradigm. While the causes are slightly different this time around I think it will still play out the same. We will have inflation come down, everyone will cheer, Fed may cut, then inflation will explode again. This will play out over 2025 thru 2030 so don’t think we’ll be out of this next year.
I honestly don’t know if we do come out of it after 2030 though, by then we’ll be handing out $250b+ / month in free money to retired people with a severe shortage of labor. Mathematically, not enough labor + too many consumers = mega inflation.
Throw in de-globalization, tariff happy politicians, war, pirates, unions, and non-existent climate change (/s) and it’s going to be a world of hurt. Oh and don’t forget big tech will hog all the electricity for AI and robots.
All we can do now is position for profits to ride through the storm because no one will save us, no one!
“Walgreens understands our customers are under financial strain and struggle to purchase everyday essentials,”
More like they understand they aren’t going to get anything more from the stone, no matter how hard they squeeze. Wake me up when package sizes increase.
Deflation is going to take hold soon . Consumers are throwing in the towel. Now if derivatives markets were regulated at pre millennium levels, prices would fall further. If RFK Jr went after the banks and was on the ballot in enough states, there would probably no electoral winner come November. I’d vote for anyone who would wind down the Fed assets intervention in corporate bonds and ommercial real estate..it is high time.to start going after the deregulation that started this.inflationary cycle in 2000.
Deliciously counterfactual
https://fred.stlouisfed.org/series/CPILFESL
That’s not food and energy.
Yes the end game will be a deflationary death spiral.
Already the costs are destroying discretionary purchasing power… a lot of people are barely able to afford the necessities of life. As this bites deeper we’ll see many more companies collapse and large job losses. The unemployed don’t spend much… so that will lead to even more companies collapsing and layoffs…
The main thing that is impacting job growth are injuries and deaths from the Covid Vaccines… these are huge among working age people.
Heart damage, cancer, neurodegenerative diseases, strokes, blood clots… etc…
Boeser was ruled out of Game 7 on Sunday after a blood clot developed in his leg following Saturday’s Game 6 loss. According to hockey insider Frank Seravalli, Boeser was placed on blood-thinning medication and is not expected to play again this season.
Analysts are confused by the relatively strong job reports… they would appear to indicate a healthy economy… but obviously the economy is not healthy… but nobody wants to acknowledge that the jobs are mostly coming from positions vacated by the disabled or dead… and the balance are primarily made up by the govt.
The analysts ignore the elephant in the room … cuz they are all vaxxed… and don’t want to think that they might drop dead next (or their kids)
This is a sick and dying economy… in its death throes.
Put your tinfoil hat back on foolish person. There are MILLIONS of Baby Boomers Retiring. They have been and WILL be for years to come. There’s more jobs than people to fill them because lots of people have hit the age they can retire and get Social Security and pensions or have to start pulling out money from Retirement Accounts.
No conspiracies needed when the actuary tables told us this was the biggest retirement wave in history.
Go learn basic math.
Usually when someone attacks my logic like this … it means they are vaxxed… and the vaxxed don’t want to hear that Safe and Effective was actually Dangerous and Useless.
This is the CDC government reporting system for vaccine injuries.
Here are the reported injuries for the Covid Vaccines (most do not get reported).
https://openvaers.com/covid-data
Since you are so good at math add all those up … then keep in mind the massive spike in cancers caused by the vaccines are not included…
And that will give you some idea of the scale of this.
The math is already done for you:
VAERS COVID VaccineAdverse Event ReportsReports from the Vaccine Adverse Events Reporting System. Our default data reflects all VAERS data including the “nondomestic” reports.
All VAERS COVID Reports
US/Territories/Unknown
1,637,441 Reports Through April 26, 2024
Just checking back to see if you might have any feedback on the VAERS Covid vaccine injuries.
Feel free to retract your Tin Foil comment at any time
He just died suddenly.
Inflation causes depression. Immutable fact.
They have to sell that stuff for less or eat it. It’s not about profits at this point, but to try to stem losses as the inflationary depression pauperizes the masses.
Maybe I can finally afford suet.
I wonder if it gets to the point where they can only afford a bowl of salted rice for their single meal of the day … if they will rise up