Chapter 1: What is the main topic discussed in this episode?
Welcome to another Friday. Apologies for those that were waiting and waiting for this morning's Wall Street Breakfast. We hope we can make it up to you with this extended version of Wall Street Roundup. So thanks for understanding and enjoy today's episode. Brian Stewart, Seeking Alpha's Director of News. Always great to talk to you on a Friday in these wonderful Wall Street roundups.
Great to have you.
Thanks. Great to be here.
So last week we were talking about Walmart earnings and how that was something to look forward to and perhaps a telling tale of what's going on in the broader economy. Is that a good place to start or would you want to start somewhere else?
No, that's good. I was trying to think of a metaphor for what the market feels like right now. And I was kind of thinking back. There was a story a few years ago, I don't know if you remember this, where there was a little kid at Disney World who got eaten by an alligator. I sort of picture the kid looking across the lagoon. The Magic Kingdom is sort of glimmering in the horizon.
And all of a sudden, a predator he didn't know was there gobbles him up. And I think that's the market we're living in is like AI and like a technological utopia is like just across the water, but there's things below the surface that we're afraid are going to attack us. I think that a lot of the stories from this week kind of underlying that.
And I think Walmart's there too on a very kind of, um, lower level. The stock didn't move much after earnings dipped a little bit. It was already down slightly going into the earnings report, had reached a new high not too long ago, became part of the $1 trillion market cap. It's a little below that now after its earnings report. Beat expectations in the holiday quarter.
So good news there, but earnings estimates were a little below expectations. So the company is trying to moderate expectations for this year somewhat. Also, the company's CEO, as part of the post-earnings conversation, said the pace of change in retail is accelerating. And then he added that it's exciting, this accelerated pace of retailing. And I think that could be brought to any sector.
It's the way technology is working now, the way AI is improving, the way companies are integrating it into it. It's probably exciting in any sector you're going to go to, but also exciting there's that danger.
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Chapter 2: What insights does Walmart's earnings report provide about the economy?
There's concern that there's a mismatch between the way redemptions work in these funds and the illiquidity of the loan. So you loan, a large loan to a company, it's hard to get that money back if you have sort of a run on the bank for these hedge funds. So it's been sort of identified as a potential weak place in the markets that are sort of offstage somewhat.
So you had that come back to the foreground. And then another kind of canary in the coal mine kind of stock that I wanted to point out was Carvana.
it dropped eight percent following earnings again pretty solid quarter um revenue was up 58 had 43 increase in the number of vehicles sold however the stock was down on the idea that it's making less per card sold so you have the sort of expense piece coming into it so you have a lot of um sort of nominally positive news.
I mean, Blue Owl wasn't, but Walmart and Carvana are sort of not only positive news, but you have investors approaching them with skepticism. I think that's part of the situation with valuations being what they are. You get to a point where just beating expectations isn't enough. The investors really get under the hood and sort of see what's going on in the smaller metrics.
Yeah, valuation concerns ain't no joke. It's interesting. Blue Owl Capital was, we did this Investing Experts Live event a few weeks ago, and that was Samuel Smith's contrarian pick for the year. So definitely emphasis on the contrarian. Interesting to see how that plays out. Samuel Smith had a lot of interesting and very compelling ideas.
Points to make about being bullish on that and Carvana, a while back, courage and conviction investing was talking about that turnaround in Carvana, trying to maintain his bullishness, even while everything was telling him not to be. So interesting when when you're well, I is, you know, really the contrarianness of going against what perhaps the market's telling you, but knowing better.
And it seems like there's a lot of places to know better than the market and the market's reactions these days, would you say? I mean, I know it's not I know it's not a black and white situation, and I know it's not like as easy as all that, but still to the point of there being this like conflict of sorts and it not always being obvious.
Yeah, I think back to the financial crisis, and I'm not trying to say this to be dramatic or anything or that I'm predicting something, but hyperbolic Stewart, here we go again. That's what they always call me. But, you know, like at that time, If you were to go like two weeks before the meltdown started, nobody had heard of sort of mortgage backed securities and things like that.
It was like a talking point on Wall Street, but not something that I think a retail investor was relatively aware of. And so in sort of like Black Swan or the alligator under the water kind of, idea, there can be these things that are sort of bubbling under the surface that only become relevant when they become relevant. And when they do so, it becomes relevant very suddenly.
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Chapter 3: What concerns are emerging in the private credit industry?
I think a lot of jobs that were considered kind of premier jobs are now going to be on the chopping block. I'm thinking of things like computer programming and things that for 20 years they said, if you want to be successful, just learn to code. That might not be as good advice anymore now that AI can do a lot of the lower end stuff.
as an economy, we're going to have to figure it out over the coming years, really. Because there might be a situation where if AI is taking over all these jobs, there might just be structurally higher unemployment. And we're going to have to figure out what that means as a society. What it means in the near term, we'll kind of see as the jobs number comes in.
But as it stands, it's sort of not great, but not horrible is where we're
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