Walmart's Poor Reports, Bank of Japan Statement, Corporate and Geopolitical News
Stock market news
• Wall Street was reeling from disappointing Walmart results, casting a shadow over American consumers, while more buoyant European markets looked ahead to this weekend's German elections.
• Global markets have been hit by another barrage of often conflicting influences from geopolitics, trade, monetary policy and corporate earnings over the past 24 hours. But the biggest blow for the retail giant was its failure to meet its sales and profit forecasts, driven by the volatile political environment and looming trade uncertainty.
• Walmart shares fell 6.5%, capping a more than 80% rally to record highs over the past year and a major outperformance since President Donald Trump won the election. After last week’s disappointing U.S. retail sales for January, the miss dragged other retailers down with Amazon, which also lost nearly 2%. The S&P 500 closed down nearly 0.5%, and futures struggled to hold a line on Friday. And more worrying was the corporate crisis over sweeping U.S. government cuts: Shares of Palantir, which provides government services such as software to visualize military postures, fell 5% after the Pentagon said it was considering budget cuts for fiscal 2026.
• Futures were trading steady after falling on Thursday as markets awaited cues from the Fed and tariffs. U.S. refiners are considering switching to alternative lighter grades of crude amid concerns about Trump's tariffs.
Brazil's Lula warns of inflation risks from Trump tariffs.
Bank of Mexico says it may cut interest rates again by 50 basis points.
EU trade chief says US shows willingness to work to avoid tariffs.
• The Philadelphia Federal Reserve's February survey of the Mid-Atlantic region also showed that manufacturing activity fell by the most in five years this month and jobless claims rose last week. Even as Fed officials remained cautious about further easing amid lingering uncertainty about inflation, Treasury yields fell amid the retail and business sector gains.
• Further dampening debt yields were comments from Treasury Secretary Scott Bessent, who said any move to increase the share of long-term Treasuries in government bond issuance was “still a long way off.” That was despite his long-standing criticism of previous Treasury chief Janet Yellen for loading up the debt with short-term debt. “We’ll see what the market wants,” he said. The decline in yields and stocks sent the dollar index back to its lowest level in a year, though the dollar regained some resilience on Friday and recouped some of its losses.
• The dollar's slide on Thursday was concentrated largely against the Japanese yen as speculation grew that the Bank of Japan would hike interest rates again as early as next month. Japanese inflation on Friday backed up the talk as annual price growth last month hit 4% for the first time in two years. Former central bank governor Sayuri Shira said March would be a "good opportunity" to hike rates again.
But the yen retreated, surprisingly, as Bank of Japan Governor Kazuo Ueda said on Friday that the central bank was prepared to increase its purchases of government bonds if long-term interest rates rose sharply. Ueda's comments helped push the yield on Japan's 10-year government bonds down to 1.42% from 1.455% earlier in the day, the highest since November 2009.
Whether Ueda's comments fuel speculation about a rate hike or signal its consequences is debatable. But Japan's Nikkei stock index ended higher.
• In Europe, the German election on Sunday is taking center stage, amid tensions over Trump's shock reversal on Ukraine this week and the still-looming threat of tariffs. At stake is hope that Germany's new government will gain enough support to lift its self-imposed "debt brake" after the election and boost defense spending and investment - a prospect that has driven much of the strong performance of European stocks this year.
Germany's benchmark DAX index rose on Friday, with domestically focused German mid-caps up 0.8%, hitting a seven-month high earlier this week, helped by the release of business surveys showing private sector activity in Germany picked up slightly in February.
• The euro retreated slightly from near three-week highs as the vote awaits. One key to the outcome will be whether smaller parties clear the 5% threshold to enter parliament - crucial to calculating whether a new coalition will have a two-thirds majority to reform the debt clause in the constitution. Sterling briefly hit a fresh one-year high against the dollar after an unexpectedly upbeat retail sales report for January.
• Chinese shares rose again, led by Hong Kong's buoyant tech sector, after Alibaba's profit beat estimates late Thursday.
• Strategy (MRST) Announces $2B Convertible Notes for Future BTC Purchases The company announced plans to privately place $2 billion in zero-coupon convertible senior notes due March 1, 2030.
• BOJ's Takata:
- Financial conditions remain easy after January hike
- Need to be cautious about possible acceleration in inflation due to weak yen and large wage hikes
- Inflation expected to approach BOJ's target due to domestic factors
- However, long-term inflation expectations are gradually rising
- Companies are likely to raise wages significantly this year
- BOJ should be cautious in changing policy due to uncertainty about the U.S. economy and difficulty in determining the neutral rate level
• Nikola (NKLA) filed for bankruptcy. The company's shares were worth $2,000 per share in 2020.
• DeepSeek is considering outside investment for the first time, with potential partners including Alibaba (BABA) and Chinese state funds.
• Rheinmetall has signed a contract with Germany worth hundreds of millions of dollars. The framework agreement will run for three years with the possibility of extension.
• Newly formed chip design startup AheadComputing said Wednesday it has raised $21.5 million in seed funding. The company, co-founded by several former Intel CPU engineers and executives, plans to build technology and chips based on an open-source architecture called RISC-V, pronounced “risk five.”
• Microsoft (MSFT) unveils Mojarana 1 quantum chip as quantum computing wars heat up.
• X in talks to raise funds at $44 billion valuation - Bloomberg.
• Europe, Asia face $130 billion in listing outflows as US appeal grows - Bloomberg. European and Asian companies could soon flood the US market with new listings as the lure of higher valuations and greater liquidity drives capital out of their countries.
• On February 19, total net outflows from spot BTC ETFs were $64.1 million:
Fidelity = $(48.4) million, Ark = $(8.7) million, Valkyrie = $(2.2) million, VanEck = $(4.8) million
Total net inflows into spot ETH ETFs were $19.0 million:
Fidelity =$24.5 million, Greyscale ETHE =$(5.5) million.
• Dollar transfers exceed 50% of all international currency traffic for the first time - SWIFT
The US dollar strengthened its position in global trade in January 2025. Dollar transfers exceeded 50% of all international currency traffic sent via SWIFT for the first time.
The share of payments worldwide involving the dollar rose to 50.2% in January, up from 49.1% the previous month.
• The German car industry has called on the EU to make concessions to the US on tariffs. The head of the German automobile industry association (VDA) has called Trump's plan to impose 25% tariffs on car imports into the country a "provocation". According to Hildegard Müller, such a measure would hit EU exports to the US and harm the well-being of both continents.
• Amazon (AMZN) surpassed Walmart (WMT) in quarterly revenue for the first time since 2012, becoming the world's largest company by that metric.
Amazon's Q4 revenue: $187.8 billion.
Walmart's Q4 revenue: $180.6 billion.
• Musk and Trump have had a rare rift over Tesla's plan to expand into India. Building a Tesla factory in India would be "unfair" to the U.S., Trump said in a joint interview with Musk this week.
xAI has made its Grok 3 chatbot free. Elon Musk says it is the world's smartest AI.
The AI was previously only available to X Premium subscribers for $8 a month.
Grok 3, the "smartest AI," won't be free for long - Musk
• ChatGPT developer OpenAI told Reuters on Thursday that the number of weekly active users exceeded 400 million in February.
• The SEC is actively studying staking. A source who spoke to the SEC recently told FoxNews that the agency has a “very strong interest” in staking. The SEC even asked the industry for a memo explaining the different types of staking and their benefits.
The SEC is creating a division on cybersecurity and emerging technologies to protect investors.
The main goal is to strengthen the protection of retail investors in the context of the increasing digitalization of the financial sector.
• New Instagram ad format lets creators get paid for reviews in comments. Instagram is rolling out a new way for brands to make money by recommending products. Meta unveiled an addition to its affiliate program on Thursday.
• China's Alibaba (BABA) is seeing revenue growth thanks to artificial intelligence and e-commerce. BABA shares rose 8% yesterday.
• Palantir (PLTR) shares fell 10% after reports that the Trump administration is planning significant defense budget cuts. PLTR shares fell 5% yesterday.
• Gold pares gains as Bessent plays down chances of U.S. reserve revaluation - Bloomberg. Carvana (CVNA) reported higher fourth-quarter sales and profit, but shares fell on a lack of specificity in guidance.
CVNA shares fell 12% yesterday.
• Rally in Eastern European assets stalls. President Donald Trump's attack on the Ukrainian government destroys bets on a smooth peace process - Bloomberg
• U.S. new-vehicle sales will rise 8.1% in February, a report shows - Reuters. However, the sales gains are not enough to offset a decline in overall per-unit profits for retailers, which are forecast to fall 11.8% from February 2024.
• Walmart (WMT) shares fell 6.5% after the retail giant issued cautious guidance. Walmart's quarterly profit and revenue met high expectations, but the company's 2025 outlook weighed on the stock Thursday morning.
For fiscal 2026, Walmart issued conservative guidance, as it has for the past two years. The company expects net sales to grow between 3% and 4%.
• Along with Walmart, other consumer stocks fell, including Target (TGT), Costco (COST) and BJ's Wholesale (BJ). EPAM shares fell 12% yesterday after the company gave weaker guidance than Wall Street expected.
Stocks in premarket after earnings
BKNG +4%
MELI +12%
NU -9%
NEM +2%
XYZ -7%
The US stock market was under pressure yesterday. The sales were especially strong in the cyclical sectors XLF, XLY, XLC, and also due to the weak WMT report in XLP. Today, everything is calm. Bitcoin is $98 thousand. Gold is consolidating under $3000. EUR/USD is exactly 1.05.
Today is the monthly expiration of options on the US stock market and so far the expiration core is still holding near 610. But sometimes such days are interesting.
Key events that should provide more guidance for U.S. markets on Friday:
- S&PGlobal's February U.S. business survey data, January U.S. existing home sales data, and the University of Michigan's final consumer survey for February.
- Federal Reserve Vice Chairman Philip Jefferson and San Francisco Fed President Mary Daly to speak; European Central Bank Chief Economist Philip Lane to speak; Bank of Canada Governor Tiff Macklem to speak
Fundamental news
• Fresh US labor market and economic activity data.
Unemployment Claims 219K (exp. 215K/per. 214K adjusted).
Philadelphia Fed Manufacturing Index (Feb) 18.1 (exp. 19.4/per. 44.3).
The monthly US manufacturing business activity index in the Mid-Atlantic region slows due to rising input prices.
• “Everyone will come to us”: Trump said he is waiting for Xi Jipping’s visit to the US. The goal of the meeting, according to the Republican, will be to conclude a trade deal.
Trump announced a large-scale tax cut for Americans and businesses./ But a decision by Congress is required.
• Washington spent millions of dollars to interfere in elections around the world - Trump.
• The US President cited data according to which $21 million was spent on voter turnout in India alone.
• NATO expects that US President Donald Trump may withdraw some American troops, AFP reports.
The alliance is talking about part of the 82nd Airborne Division. According to NATO, Washington may withdraw 20,000 troops - these are the forces that Biden sent to Europe because of the war in Ukraine.
• Polish Prime Minister Tusk has proposed his three-step plan for Ukraine and Europe.
1. "Let's finance our aid to Ukraine with frozen Russian assets."
2. "Let's strengthen air patrols, Baltic patrols and the EU's borders with Russia."
3. "Let's quickly introduce new financial rules for funding EU security and defence."
• The EU has experienced its "darkest" week since the fall of the Iron Curtain - The Economist. Ukraine is being given up, Russia is being rehabilitated, and under Trump it is no longer possible to count on the US coming to Europe's aid in wartime, the publication sums up the last few days.
• Scholz asked for weapons for Ukraine, but Brazil does not sell them to those who kill Russians - Brazilian President Lula da Silva.
• G7 countries intend to abandon the call to tighten the oil price ceiling with Russia - BBG.
• The European Central Bank has recorded record losses in 2024 as a result of its own monetary policy.
According to a press release from the regulator, its loss amounted to 7.944 billion euros, compared with 1.3 billion euros a year earlier.
• US CEO confidence hits 3-year high amid optimism in jobs market and economy
• The United States tested a Minuteman III intercontinental ballistic missile at a military base in California,
noting that the test launch was “part of routine and periodic activities” designed to demonstrate that the CIF nuclear deterrent remains safe, secure and effective.
• Trump has signaled that he is ready to abandon allies and team up with Putin, - The New York Times. This became clear during the first talks between the US and Russia since the start of the war. Trump has signaled that he is ending Putin's isolation and seeking to bring Russia back into the international community, making it a strategic partner of the US.
• Trump's approval rating has fallen in recent days as Americans worry about the economy and Trump's threats to impose tariffs on many countries, a Reuters/Ipsos poll shows.
• The US has a new Commerce Secretary who supports cryptocurrencies. The Senate has confirmed Howard Lutnick as the US Secretary of Commerce. He is known for his pro-crypto stance and has investments in the crypto industry.
• Elon Musk has revealed that the US Treasury Department sent money without the TAS identification code, which links a Treasury payment to a budget item.
Without the code, it is “virtually impossible” to track about $4.7 trillion in transactions.
• James Fishback, CEO of the hedge fund Azoria and former Greenlight Capital employee, has proposed paying a “DOGE dividend.” That would be about $5,000 per tax-paying household. Fishback has proposed taking 20% of DOGE’s projected $2 trillion ($400 billion) in savings and paying it out as tax refunds to about 79 million U.S. households.
Elon Musk has promised to discuss the idea with Trump. But it would also require congressional approval. Fishback Proposed Cashback?
• Nice, but unlikely to pass Congress. Defense Secretary Pete Hegseth has instructed the military services to identify $50 billion in programs that could be cut in fiscal year 2026. To redirect the savings (about 8% of the defense budget) to fund President Donald Trump's military priorities. Including Iron Dome and border security.
• Polish President Andrzej Duda, after a meeting with US President Donald Trump's envoy for Russia and Ukraine, Keith Kellogg, said that the US will not reduce the number of troops in Eastern Europe - CNN.
• Merz: The decision to phase out nuclear power plants in 2011 was wrong.
• True, Hong Kong, which is under Beijing's control, increased its US national debt from $238 billion to $255 billion.
The largest holder of US national debt, Japan, also reduced its investments: from $1,115 billion to $1,060 billion.
Their place was taken by others, and the national debt in the hands of foreigners increased in 2024 from $7,939 billion to $8,513 billion. Moreover, official holders reduced their national debt (from $3,796 billion to $3,783 billion), while private investors significantly increased it.