💣 Walmart Drops BOMBSHELL: Americans Reached Their BREAKING Point!

Walmart just dropped a bombshell, Americans have finally hit their breaking point. I'll show you why this is an ominous warning for the U.S. economy. Now, let's turn to Bloomberg, where we picked today's story by the headline, as Walmart slips on rare profit myths, signing higher claims. And I want you to see how they're trying to bury the truth here. Because as we look at other companies who are admitting that demand is going down, their stock gets crushed. Now, Walmart wasn't immune to this, but they don't want people to know just how bad it is out there. Because as we look at the broad economy, the consumer is about 70% of that. So when they pull back their spending, well, it's a surefire sign. We're about to head right into a recession. Yet Walmart says claims were the issue with earnings, not demand, which include general liability and workers' compensation expenses that drag things down. And they think these things are going to get better as the year progresses. But the reality is why they might get better. There are very clear signs in Walmart's earnings reports that show Americans have hit their breaking point. And again, this is a broad warning for the U.S. economy. Because when this happens, again, a recession because of foregone conclusion. The world's largest retailer now expects net sales to rise 3.75 to 4.75% this year. Now, normally, when Walmart sales rise, it's a sign of financial stress. And let's dig deeper because we finally are going to start to get to the truth. CFO John Rainey said the consumer is resilient as he notes that they continue to gain market share across all income levels, especially wealthier shoppers. And that's the clear sign now that U.S. consumers are reaching a breaking point because wealthier shoppers don't want to shop at Walmart. They do it because their financial situation is getting worse. Now, you might recall recently we've had a report that showed wealthy Americans were falling behind. They were becoming more delinquent on their credit card and auto loans. And when that happens, well, retail sales start to drop, which, as we see on this slide, is very clear. Let's take a look at real retail sales in blue. Again, that's inflation adjusted against the delinquency rate on credit cards. And while Walmart says this is all about claims, their profit miss is only going to get worse in the coming quarters. You can see as the delinquency rate rises, retail sales fall. And we see this happen in every cycle, particularly going into recessions. Now, one of the risks we're facing right now is, again, more income classes are falling behind. And again, this is an issue because as you become delinquent on your loans, well, you can't get more credit. Now, remember, the American way is to buy things you don't need with money you don't have. And that's credit. Can't get it. Spending is going to go down. So you can see Walmart's trying to cover things up here because they don't want to see their stock price get hammered. But the reality is, it is. Because prices rose 1% in the U.S. during the quarter, with Walmart absorbing higher costs of some goods while raising the prices of others. Now, remember, Walmart is competing at the margin here. They're trying to steal customers from other people's business, which is exactly what they're saying. We're attracting higher income consumers because their financial situation is getting worse. Remember, yesterday we talked about Target. Their new CEO is focused on the experience. What he's missing out is customers don't want experience right now. They want lower prices. And we're trying to do our best to minimize the impact on the consumer from higher tariff costs. Again, indicating the issue going forward for Walmart isn't going to be the fact that their sales increase. It's going to be the fact that their margins are going to continue to get compressed. And you think about what Walmart's doing here by pulling in consumers from other parts of the economy. It means other businesses are going to see a bigger drop off in sales as Walmart, again, fights for market share. But again, the key points here is you're seeing U.S. consumers break. Their spending is going to go down. The linquency rate goes up. And this, again, it's a very obvious sign we're heading into recession. But for the stock market that everyone's bullish on, well, again, Walmart's trying to hide the truth. The reality is we're going to see a lot of sales misses in the future. But something you shouldn't be missing out on are gains in the market. Let's take a look at this trade we put on DBA. This is agricultural commodities. It first went out to our Momentum Timer Pro subscribers on the 7th. They're up 4.49%. A day later, the machine positioning trigger that went out to our CTA Timer Pro subscribers. They're up 3.07%. And this thing continues to move higher today. And we make it so easy. We don't ask you to look at charts. We don't wait till things hit some magical zone. We just very clearly tell you, based on our indicators, here's what you should buy. Here's your risk control levels. You decide if you want to trade. But in addition to that, we're changing the way people trade. We've launched our meta strategy. And right now, we're in the process of coming out with an optimized program that's going to optimize every single trading strategy out there in a way that people haven't seen. And you can get in on this right now at no additional charge. Grab those links in the description below. Sign up for either one of my programs. Use the coupon code for your free 30-day trial. Start changing the way you trade. Jump in on that meta strategy. And wait till we have those optimized trading systems out. Because a lot of people are going to be looking to make more money. And we can see that very clearly in the labor market. As U.S. jobless claims rise, adding to signs of slowing labor market. And again, you look at the situation with Walmart and why consumers have hit a breaking point. Because they still need to buy things, particularly groceries. Walmart being the world's largest, you can see consumers looking to save money anywhere they can. Because the situation with the labor market is starting to get worse. Initial claims ticked up slightly by 11,000 last week to 235,000. But the real risk is with continued claims. They're now up 30,000 to 1.972 million. Remember, we've been talking about that. I think the critical line to stand is 2 million. You get over 2 million Americans on long-term unemployment. And I think everything starts to fall apart. And we start to look at Walmart again. They're saying, look, we think things are going to get better because there was just these one-off claims issues. But the reality is, when consumers trade down to Walmart and they say they can't raise prices, well, now you have an issue. Because they did try to sneak in price increases somewhere. Home Depot is trying to copy them. But the reality is, as consumers find themselves on the unemployment line for longer periods, you're going to see profits get crushed. And the evidence is clear if we look at corporate profits after tax in blue against continued unemployment claims in red. You see, all the way back into the 1980s, as profits decelerate, well, Americans hit the unemployment line. And that does not bode well for equity prices. You can see it happen again going into the dot-com bubble, the global financial crisis. And you can see it happening now. Profit margins did increase briefly. But we know they're rolling over. They're going to likely head lower, being into further contraction. And as companies do that, they're going to have no choice but to lay people off. But at the same time, consumers are going to continue to spend less. So you can see very clearly that Walmart's saying Americans have now reached their breaking point. Because of sustained pickup and new filings, added risk to concerns about the labor market after the most recent jobs report showed subdued hiring and higher unemployment. The latest rise in continuing claims indicate out-of-work Americans are finding it increasingly difficult to find another job. Again, this is a major problem for the U.S. economy because what we're hearing from Walmart and Home Depot and other companies is the trend in the economy continues to go the wrong direction. And again, you look at consumers. They're starting to realize that. This is what we see in those surveys. And now we're seeing it happen with their spending. They've reached that breaking point. But one thing Goldman disagrees with is they say, well, look, just because consumers may have reached their breaking point doesn't mean it's a good time to buy stocks. I'll show you why I think they're completely wrong. And Goldman Trader says it's time to buy the dip in momentum stocks. Could be a good entry point because, well, stocks have now gone down for five days in a row. When that happens, people are historically rewarded unless tech earnings next week drive a prolonged AI sell-off. But you might recall over the past several weeks, I've been showing you on my Sunday show, and I showed you in yesterday's show, why market breadth is indicating that stocks are likely to continue lower. So while Goldman is telling retail to buy the dip, it's likely because they're looking to sell. And here's the evidence. Let's take a look at the percentage of Nasdaq stocks above their 50-day moving average. Continues to move down, now only 48%. And remember where breadth goes in red, stock prices in black follow. That's why you're seeing downward pressure on the market here because more parts of the Nasdaq are falling into bear territory, which is an indication when a stock trades below its 50-day moving average, it's setting up for a potential major market correction. And there's further evidence that consumers are hitting their breaking point. And now for a lot of businesses, it's got them worried and in a big way. Christmas decorations come with a higher price tag this holiday season thanks to tariffs they're saying. Jared Hendricks, founder and chief executive of Village Lighting, says that he had to leverage his house and office to help cover the $1.5 million in extra tariff costs. This is the most stressful year I've had, he said. Over the last 20-some-odd years, we've been through a lot. I'm just kind of operating on faith that we'll find a way. And this is something I think is going to be a huge problem for a lot of businesses because they don't have an answer. They're seeing the economy slow down. They're seeing consumers hit a breaking point and cut back on their spending. But as a business, they have no choice but to go out and finance these tariffs. So you look at Jared's situation here. If he doesn't get the sales he needs and he can't cover those loans, well, that means he's going to be forced to lay off. It's going to have a major impact on his business and his spending as he's going to add debt service costs now. This is, again, going to be a big issue because I think a lot of businesses are going to have to borrow to get through the second half of the year. Another business owner added the line items to his invoice called Tariff Impact, but he said he can't pass the entire cost of the duties on because it would raise prices too high. And again, it's all signs that paychecks continue to shrink. You know, we talk about how if corporate profits go down, companies lay people off. They cut hours. They cut back on pay increases. And the issue you're seeing here is for a lot of seasonal businesses, they're waking up to the reality is that this is where they make most of their money. The problem is this year, it's not going to be good. We're taking a hit, hoping that our existing inventory that got pre-tariff helps offset the sticker shock. But the problem is if the economy continues to trend lower, if Walmart's warning about Americans hitting their breaking point is right, what it suggests is this holiday season is not going to be one to remember. At Balsam Hill, one of the leading companies in the holiday decorations business, the tariff bill is expected to come to about $15 million this year, up a million from last year. To preserve cash and pay tariffs, the California firm scaled back on orders. That's a big issue because, again, you cut back on orders. What does that mean? People are going to lose their job, but they're not the only ones. They also cut 10% of their global workforce of 350 employees and froze raises and travel. None of these actions come even close to covering the cost of the tariffs. So despite the fact that they got the tax cut passed, and a lot of businesses were hoping for it, the tariff impact appears to be even bigger. And again, as businesses struggle to fight for survival, and other companies like Walmart are stealing market share, companies are going to have no choice to lay off just like they're doing. You're seeing it freeze travel, freeze pay raises. And again, this is something that a lot of consumers know is happening, and they're afraid because the next step down was right into another financial crisis. But let's take a look at corporate profits after tax against continued claims. Because again, you see very clear signs that as corporate profits get into contraction, you see exactly what they're saying here. We have to lay off. And again, that's the risk that I've been pointing out for the US labor market. This is why when we see Americans hit their breaking point, it doesn't mean they're just fed up. It means they're tapped out. And now you're seeing responses businesses are taking on a lot of loans. If the economy doesn't turn around, I want you to see why we're setting the stage for another financial crisis. Consumers are over leveraged. We have a massive problem with commercial real estate. Businesses have massive inventories, and now they're taking loans against them. What's going to happen? You're going to see a lot of companies like TJ Maxx who benefit by taking written down products and selling them at discounted prices. Well, they're going to have too much business because what we're facing here is businesses are going to end up going to delinquency. They're going to end up defaulting on that debt. It's going to hammer the banks. And you can see very clearly how this is playing out. But the problem is if you're looking for the Fed to do anything, well, we'll find out some more tomorrow from Fed Chair Powell. September is not the next meeting, but some are already saying that there isn't going to be a rate cut. But rates are a bit too high right now. I think we get down to about 100 basis points going into 2026. That would be a full 1% cut. And this is from Bullard. He says, I think I'll start with a rate reduction here at September meeting. Probably be followed up later this year. Now, what's interesting about Bullard is he's actually called Treasury Secretary Besent a couple of times and said, look, I want to be interviewed for the Fed chief. And he's playing this correctly. You go out and talk and not just about rate cuts, but a full 1% rate cuts. Now, remember, we talked about this in the show yesterday. If the Fed's cutting rates, it's not a good sign for the economy. But Federal Reserve Bank of Atlanta President Raphael Bostic said he still sees one interest rate cut as likely this year in line with this projection for June. But he added labor market trajectory is, quote, potentially troubling. Bears watching. Well, Raphael, I completely agree with this about the labor market is it's going the wrong direction. And while you shouldn't be watching it, one of the things we've talked about in the past, the rate cuts don't work when people start losing their job. It's very simple. Why? And I want you to understand why rate cuts don't work going into recession. It's because people that don't have jobs can't get loans. And that's what we're facing here. A slowing economy where more people are going to lose their jobs. That's why I'm saying the line to stand is 2 million on continued claims. When that hits, watch out. I think it starts to spiral out of the control. Meanwhile, Schmidt said as you get closer to the optimum dual mandate numbers, it actually gets more difficult to make decisions on the margins relative to where the policy rate should go. And what the Fed is afraid of here is they believe that this producer price inflation is going to continue to rise and producers are going to be forced to pass it on to consumers. Now, the challenge is, as we look back at Walmart, what they're saying is, look, we know we can't pass it on. Even Home Depot said that the other day. They said, look, we would love to raise prices, but we can't. So we're going to have to figure out where consumers are going to be able to absorb it because we've got to pass it on. And in the other sense here, they're worried that the labor market is going to unwind. So their fear is if we cut rates and inflation takes off, we don't look good. And that's why we may not see a cut in September. We'll see how the data plays out. Meanwhile, all eyes will be on Fed Chair Powell on Friday to see if he gives any indication of what the Fed might do at its next meeting in September. It may be hard for him to give a definitive signal, though, especially with some of his colleagues not yet in a hurry to lower rates. And that's right. He's probably not going to because, again, he doesn't want to be seen weak in front of President Trump. He's kind of been in opposition where the president's been saying, look, you need to lower rates, which, again, Mr. President, you don't really want that to happen. I know you think you do, but it usually means the economy is going the wrong way. The Fed doesn't want to lower rates just for any reason here because they know, they are going to need to cut rates if the economy slows down. If inflation takes off, they don't want to be the one that takes the blame for cutting rates and causing inflation. I don't think we're going to hear much from Powell other than say he's data dependent and we'll see what happens at the September meeting. That's my call, what I think is coming tomorrow. But if you look at what Walmart is saying, if you look at the labor market, if you look at what these small businesses are saying, the situation for the U.S. economy isn't going in the right direction. But something that could be going in the right direction, that's your trading account. Let's talk about our two subscriptions here. We have our CTA Timer Pro. Now, what we do with this is we look at machine positioning every day. But while machines only trade short windows of the market, we run a historical overlay. So we find out when they're offside and that gives our subscribers an advantage. We back tested all of our signals so we know which ones are our high probability ones. They show up on our hot list and then we review them every day and tell you which ones we think are the best. 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