Walmart(US:WMT) Orient Securities·2025-05-21 07:36Economic Performance - In April, the US PPI decreased by 0.5%, significantly below the expected increase of 0.2%, indicating a temporary absorption of tariff costs by manufacturers and service providers[13] - Initial jobless claims remained stable at 229,000, reflecting resilience in the US labor market[15] - Retail sales in April showed a marginal increase of 0.1%, lower than the expected 0% and a revised previous value of 1.7%[19] Inflation and Tariff Impact - The inflationary impact of tariffs is expected to manifest later, as April's economic data shows structural damage due to tariffs, but current economic activities are rebounding[5] - Walmart's earnings report indicated strong sales but warned of future price increases due to the inability to absorb tariffs long-term[5] Federal Reserve Policy Adjustments - The Federal Reserve is considering modifying its policy framework to adapt to changing economic conditions, potentially returning to a traditional inflation target of 2%[20] - The recent adjustment in the Fed's framework is not expected to significantly impact current monetary policy decisions in the short term[21] Credit Rating and Fiscal Policy - Moody's downgraded the US credit rating from Aaa to Aa1, citing rising government debt and interest payment risks, marking a significant shift as all major rating agencies have now rated the US below the highest tier[24] - The House of Representatives has advanced a tax reform bill that could increase the deficit by approximately $4 trillion over the next decade, further straining fiscal policy[25] Market Risks - The recent recovery in US equities faces skepticism regarding the sustainability of the dollar's rebound, with global funds yet to systematically adjust their positions in US stocks[26] - Rising interest rates are expected to limit further gains in the stock market, as the current environment pressures non-US markets and commodities[27]