You will recall that the rally late last week was driven by Walmart's "better than expected" earnings. Most importantly to Wall Street was the fact that eCommerce sales were up 40%. Why? Because now ALL retailers are being judged based upon the Amazon standard - online revenue growth. There is only one problem with that fantasy, which is the fact that Amazon doesn't turn a significant profit.
Which means that none of these companies morphing into online retailers will turn a profit either. Instead of one Amazon, there will be a hundred Amazons, all by-passing the U.S. economy to make zero profit. How great will that be?
Here below, we see that in pursuit of ever-greater online sales growth, Walmart's operating profit has been cut in half in five years. A collapse covered up solely by ongoing share buybacks to prop up earnings per share:
Which gets us back to the longest con job in human history:
"[Post-2008] Companies moved fast to adapt to the post-financial-crisis world of sluggish U.S. growth. They slashed costs and kept wage growth low, squeezing profits out of barely growing sales. They bought back huge amounts of their own stock and expanded their sales overseas, particularly to China's booming economy. Profit margins reached record levels, as wages sunk to record lows as measured against the size of economy."
"What people missed was how quickly U.S. corporations were restructuring and right-sizing themselves to regain profitability. It was really a catalyst for turning things around."
...Several dangers threaten the rally."
Really? Like what?
Earlier today I showed some other global casinos on the verge of joining the Emerging Market meltdown, specifically, Germany, and the UK.
What I didn't show is that there is one stock market that is outperforming the entire world: India.
Today it made a new high:
In 2007 India's market also peaked last:
However, in dollar terms, the gains are unfortunately not as impressive:
As I said in a previous post, Trump's understanding of Globalization is that of a third grader. Meaning, he's in good company. Picture what happens to USDJPY carry inflows when yields collapse amid human history's biggest (Treasury) short squeeze:
