Wall Street Roundup: Supreme Court Rules
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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. An example from this week is Blue Owl Capital, the ticker is OWL, dropped after changing its policy regarding redemptions for a retail-focused private credit fund, also sold $1.4 billion of debt investments to institutional investors. This played into the concerns that have been rising about the private credit industry. Basically, it's it's hedge funds and other sort of private institutions that are giving out loans the way a bank would.
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.
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