Joining me now is Bill Simon, former Walmart US president and CEO. Bill, it's great to have you here. Give me a little bit of your thesis on why you think the consumer is in control.>> Hey Courtney, good to see you again. Yeah, I mean, look, the consumer's, you know, pretty flush right now. Nominal wages are up 4%.The inflation report today was relatively tame. There's been a lot of, you know, dark news about tariff this and tariff that and, you know, it is a bit of a roller coaster. It's on, it's off, it's ...

Corporate Restructuring & Efficiency - Target is streamlining the organization to tighten things up and initiate change faster, involving approximately 1800 corporate jobs, including 800 unfilled positions [1] - The company identified bloat as an issue, a trend seen across industries post-pandemic [2][3] - Corporate headcount cuts are considered a normal course of business, with Walmart also announcing similar cuts earlier in the year [4] Holiday Season Outlook - Target's corporate restructuring won't impact client-facing operations, seasonal hires, or in-store employee numbers [5] - Retail success during the holiday season hinges on inventory availability, accurate product selection, and customer support/experience [6] - Most holiday goods orders were placed in January/February, with goods arriving in July/August, positioning companies well for the season [9] - Consumers are expected to seek value and spread out spending to avoid large credit card bills in January [10] Pricing & Tariffs - Retailers are prioritizing avoiding price increases, exploring options like negotiating with suppliers and sharing costs [11][12] - Lower order volumes and reduced expectations for quick refills impact supplier negotiations [12] - Certain product categories will inevitably be influenced by tariffs, leading to some price increases [11][12]

Economic Overview - The September consumer price index (CPI) report indicates inflation is slightly lower than expected, which may lead to a Federal Reserve rate cut next week [2][9] - The Dow is up over 400 points, with the S&P 500 and Nasdaq also showing gains, particularly in tech stocks [3][6] - Crude oil prices surged by 8% this week due to new sanctions on Russian oil companies [5] Federal Reserve Insights - The CPI report is seen as a potential one-off due to the ongoing government shutdown, which may limit future data availability for the Fed [2][4] - Analysts suggest that while a rate cut next week is likely, the Fed may not have enough information to continue cutting rates beyond that [4][11] Automotive Industry - Ford reported strong third-quarter earnings but noted a $1.5 billion to $2 billion cost impact from a fire at a key supplier [22] - Ford expects tariff impacts to stabilize at $1 billion in 2026, lower than previous estimates [23][26] - General Motors (GM) has also benefited from reduced tariffs, which may enhance competitiveness against foreign automakers [28][40] Technology Sector - Intel's stock saw a significant rise after beating earnings expectations, driven by increased demand for AI-related computing [57][98] - However, concerns remain about Intel's supply constraints and competition in the AI space, particularly against Nvidia [100][110] Consumer Sentiment - The University of Michigan's consumer sentiment index fell to a five-month low, reflecting ongoing concerns about inflation despite the CPI report showing moderation [96][97] - Consumers are reportedly cautious, reducing household inventory and being more selective in their purchases [84][85] Market Trends - A broad market rally is observed, with tech and financial sectors leading gains, while materials and consumer staples lag [6][12] - Analysts suggest a potential shift towards value stocks as growth stocks face high expectations [17][19]

Despite struggling for support till mid afternoon, European stocks edged higher on Friday after cooler-than-expected U.S. consumer price inflation raised prospects of an interest rate cut by the Federal Reserve next week. Investors also digested a fresh batch of corporate earnings announcements, and regional economic data, in addition to following the developments on the geopolitical front.Data from the Labor Department showed the U.S. consumer price index rose by 0.3% in September after climbing by 0.4% i ...

Core Insights - The latest inflation data indicates a continued rise in prices, with headline inflation increasing by 0.3% in September, leading to an annual rate of 3%, the highest since the beginning of the year [2][3] Inflation Trends - Essential categories such as food and shelter are contributing to persistent inflation, with shelter costs rising by 0.2% in September and 3.6% year-over-year, while food prices increased by 0.2% in September and 3.1% annually [4][5] Consumer Behavior - Consumers are adapting to inflation by trading down to store brands, cutting discretionary spending, and strategically using credit cards to manage cash flow, with elevated debit card use as they try to stay within budget [8][10] Consumer Sentiment - The University of Michigan's Consumer Sentiment Index indicates that inflation remains a significant concern for consumers, with expectations for a 4.6% rise in prices over the next year, slightly down from previous expectations [11] Spending Patterns - Despite rising prices, spending activity shows resilience among U.S. consumers, who are adjusting their spending habits to cope with higher costs, indicating that inflation is more of a backdrop than a barrier for many [12]

Core Insights - Target Corporation announced unfavorable news just before the holiday season, which is typically a critical time for retail sales [1] Company Summary - The announcement from Target Corporation comes at a time when consumer spending is crucial for the company's performance during the holiday shopping period [1]

Workforce Reduction - Target is reducing its workforce by approximately 1,800 positions, representing about 8% of its total workforce [1] - This marks the company's first major layoff event in a decade [1] - The layoffs will not affect employees in stores or the supply chain [1] Strategic Context - The company is implementing these changes to revitalize growth following a period of weak sales [1] - Target is preparing for a new CEO to assume leadership in the coming year [1]

Group 1 - Target Corp is laying off 1,800 corporate employees, which is 8% of its workforce, in an effort to rebuild its customer base amid ongoing sales struggles [1] - The stock is currently trading at $95.42, up 1.2%, after hitting a five-year low of $85.36 on October 10, and has a year-to-date deficit of 30% [1] - The stock is facing resistance from the 126-day moving average, indicating a challenging recovery path [1] Group 2 - The call options for Target Corp have seen increased popularity, with a 50-day call/put volume ratio of 1.83, ranking higher than 86% of readings from the past year [2] - Short interest in the stock has risen by 27.6% over the last two reporting periods, accounting for 4.5% of the total available float [3] - It would take nearly three days for short sellers to cover their positions based on the current short interest [3]

Core Insights - U.S. companies are experiencing a divide in consumer behavior, with lower-income households cutting back on spending while affluent consumers continue to support overall spending levels [1][2][4] Consumer Behavior - There is a noticeable bifurcation in consumer behavior, with financially secure consumers opting for larger pack sizes, while those living paycheck to paycheck are actively seeking discounts due to persistent inflation above the Federal Reserve's 2% target [2] - Consumer sentiment surveys indicate growing pessimism regarding future economic conditions, with inflation currently at a 3% rate. Nearly two-thirds of consumers plan to delay holiday shopping until Thanksgiving weekend to take advantage of discounts, an increase from 59% last year [3] Company Strategies - Companies like Procter & Gamble and Coca-Cola are adapting by introducing smaller-sized products aimed at lower-income consumers, such as Coca-Cola's mini single-serve cans [4] - Coca-Cola's CFO highlighted the importance of affordability and value for lower-income consumers, indicating a dual strategy to cater to both ends of the market [5] - Target is responding to changing consumer dynamics by cutting approximately 1,800 jobs as part of a turnaround strategy, focusing on its non-essential product offerings that lower-income consumers have been avoiding [5] Market Performance - Despite the S&P 500 gaining nearly 15% this year, the SPDR Consumer Staples ETF, which tracks basic consumer needs, has seen only a marginal increase of less than 1% [6] Credit Market Concerns - The credit market is facing challenges, highlighted by recent bankruptcy filings from lenders serving lower-income groups, such as PrimaLend Capital Partners, which finances car purchases for customers with limited credit [7]

Economic Impact of Immigration Policies - Immigrants constitute nearly 20% of the U.S. labor force and are crucial for economic growth, driving over 75% of U.S. population growth [4] - The current business cycle has seen average annual productivity gains of 1.8%, attributed to automation and AI, which may offset some negative impacts of immigration policies [5][6] - Companies are increasingly able to generate growth with a static or declining workforce, making slower population growth more compatible with economic growth [7] Tariffs and Globalization - The U.S. has seen a decline in tariffs since the 1970s, leading to low-cost manufacturing in countries like China, which has resulted in stagnant wage growth in the U.S. [9][10] - Trump's tariff policies are unlikely to reverse the trend of offshoring, as tariffs are paid by U.S. companies and can lead to inflationary pressures [11][12] - The U.S. manufacturing PMI has been in contraction for seven consecutive months, indicating no evident benefits from tariffs [12] Federal Reserve Independence - The independence of the Federal Reserve is critical for economic stability, and recent attempts by Trump to influence Fed policies have raised concerns [17] - Chair Jerome Powell has resisted political pressure, maintaining the Fed's independence [18] - The structure of the Fed, with long-term appointees, protects it from significant political meddling [20] Secular Trends and Investment Opportunities - Focus on high-quality companies benefiting from secular growth trends such as AI efficiency and near-shoring/deglobalization [21] - Key areas for investment include cloud computing hyperscalers, advanced semiconductor companies, and data center construction [23] Macroeconomic Indicators - U.S. real GDP grew at a 3.8% annualized pace in the second quarter, with unemployment at 4.3% and manageable inflation at 2.9% [22] - Corporate profits have increased, with third-quarter growth at 8% year-over-year and projected earnings growth of 11% over the next twelve months [22]