The Fine, Important Details

Reading into Walmart's earnings report... Playing it safe... The latest on the labor market... One place where unemployment is rising... Trump on Ukraine, DOGE, and gold... Zelenskyy was sleeping?...

---

The 'Walmart gauge' came out today...

That refers to the latest quarterly earnings report from Walmart (WMT), the world's largest retailer. We always like to pay attention to it not just for the company's own performance, but also for signals about the economy in general.

The verdict this time: Things are OK, but uncertainties – like potential tariffs on Canadian and Mexican imports – are concerning for the company... just like for the economy.

Walmart topped earnings and revenue estimates for its fiscal fourth quarter, but its shares dropped more than 6% today on projections for slower profit growth despite increased sales.

The headlines today chalked the reasons up to tariff uncertainty.

While roughly two-thirds of what Walmart sells is produced in the U.S., Walmart Chief Financial Officer John David Rainey said in an interview on CNBC today that the company is "not going to be completely immune" from tariff impacts and it would "shift supply where necessary" to try to avoid passing on higher costs to consumers.

Rainey also said on a call with Wall Street analysts that while "we feel good about our ability to navigate the environment, whether it's tariffs or other macro uncertainty," the company also must "acknowledge that we are in an uncertain time. And we don't want to get out over our skis here. There's a lot of the year to play out."

Paying attention to the details...

Now, when I (Corey McLaughlin) hear comments like these, it sounds like an executive playing it safe with expectations. This isn't a bad strategy: "Under-promise, over-deliver."

That also said, things might not be as bad as mainstream headlines may suggest, at least yet...

There is this fine, important detail to consider: Rainey also mentioned in his TV interview that Walmart isn't sure whether tariffs on Mexico or Canada will take effect next month, so the company did not factor them into its guidance.

Walmart's U.S. CEO, John Furner also said on its earnings call that he is planning for a "normalized year" with inflation between 1% and 2%, and that his company is seeing a "consistent, resilient consumer." If that continues, it's good news for the economy.

Walmart shares dropped back to near their 50-day moving average today. But they're still just a few trading days removed from a new all-time high and are above their longer-term average. The same goes for the U.S. benchmark S&P 500 Index.

The latest look at the labor market...

The jobs market has taken center stage in recent months. Since maximum employment is half of the Federal Reserve's "dual mandate," any jobs data is going to be under the microscope for clues on whether the Fed needs to change its interest-rate policy, which the market is sensitive to.

One important indicator of job market strength or weakness is the Bureau of Labor Statistics' weekly unemployment-claims data.

In the week ending February 15, 219,000 Americans filed for unemployment insurance for the first time. And another 1.87 million filed for unemployment insurance for multiple weeks in the week ending February 8 (this data lags by an extra week).

Both of those numbers were slight increases from the previous week. But nothing in the release would force the Fed into action as it weighs inflation data along with employment numbers.

The weekly jobless numbers are volatile. Without huge spikes or established trends in unemployment claims, they don't tell us much. That's the situation we have right now.

Initial claims are bouncing around but remain near their long-term average. And continued claims – which measure unemployment filings – are up about 70% since their June 2022 low... But they've leveled off since last July.

One area is seeing a huge spike in new jobless claims, though. And it could spell trouble for the economy...

A jump in unemployment in our nation's capital...

Soon after the COVID-19 pandemic began – in May 2020 – the number of government employees hit an 18-year low of about 21.3 million. Then the number started a steady march higher to 23.6 million this past December.

That trend appears to be changing...

As the Kobeissi Letter shared on the social platform X on Sunday, unemployment claims in Washington, D.C. have surged since President Donald Trump took office. In the week ending February 8, jobless claims reached 1,682 in the city.

Through the first six weeks of the year, unemployment claims have jumped 55% over the previous six-week period.

Of course, we have the Department of Government Efficiency ("DOGE") to thank. As we wrote yesterday, DOGE's savings may not be as high as it claims... But it is having an impact on the federal workforce, with firings occurring across multiple federal agencies.

The trend continued this week...

In today's jobless-claims report, 1,695 people in Washington filed for unemployment for the first time. And the city's continued claims jumped to 8,960 – an increase of 9% from the previous week.

On a year-over-year basis, the change is even more dramatic... Initial jobless claims have more than quadrupled from the same week a year ago.

So while DOGE may be cutting funding and federal agencies to "return" savings to taxpayers, it's also having an impact on the labor market – especially in Washington, D.C.

Right now, these changes have led to a small change in unemployment in the grand scheme of things. But we're only talking about Washington, D.C. – and around 80% of federal workers live somewhere else.

Trump has also pushed to end remote work for federal employees, which will play a factor, too. And he paused federal hiring – which is a significant source of regular job gains in the U.S. economy.

Now, I'm not saying there isn't "waste" to be found in the federal government, but addressing it – especially through blunt force moves rather than potentially longer-lasting systemic changes – probably won't come without economic consequences.

In previous Digests, we've talked about how folks are having a hard time finding a job once they're unemployed. A rush of recently unemployed government workers will make it even more challenging.

We won't feel the impact overnight... But this is one area we'll be watching as DOGE's influence works its way through the economy. Shrinking the government could have huge repercussions in the labor market in the months and years to come.

Meanwhile, elsewhere in Trump World...

We're still waiting on that "common sense" around negotiations about ending the war in Ukraine. That is, mainly, having Ukraine included in the discussions with Russian and U.S. officials, or European ones, as we wrote on Tuesday.

In a social media post yesterday, Trump at the very least delayed and possibly derailed things when he referred to Ukrainian President Volodymyr Zelenskyy as a "dictator without elections." He was referring to the fact that the country hasn't held elections since 2022 after martial law was declared amid the war, prohibiting elections.

That post from Trump came after Treasury Secretary Scott Bessent traveled to Ukraine last week intending to formalize a deal for the U.S. to acquire a steady supply of Ukraine rare earth minerals and oil as repayment for money the U.S. has spent on the war. But Bessent left without an agreement.

Zelenskyy later made comments about not being included in talks with Russia and said yesterday a deal to hand over $500 billion in minerals was "not a serious conversation."

Speaking to reporters on Air Force One last night, Trump claimed when Bessent arrived in Ukraine he was told Zelenskyy wasn't even available to meet because he was... sleeping. (Somehow, this hasn't been reported widely enough.)

"He was treated rather rudely," Trump said of Bessent. "He traveled many hours on the train, which is a dangerous trip. We're talking about the secretary of the treasury. He went there to get a document signed and when he got there, he came back empty.

"I think I'm gonna resurrect [the deal]. We'll see what happens. I'm going to resurrect it or things are not going to make him too happy," Trump added about Zelenskyy, and said: "I think the Russians want to see the war end. I really do, but I think they have the cards a little bit, because they've taken a lot of territory."

Yesterday, Trump was also asked about the "DOGE dividend" proposal and didn't say he was against it... and in the middle of that answer, revealed that the next stop for Elon Musk and his crew is Kentucky, 35 miles south of Louisville.

"We're going to go into Fort Knox to make sure the gold is there," Trump said, referring to the more than 8,100 metric tons of U.S. gold reserves that are supposed to be stashed at the facility. "If the gold isn't there, we're going to be very upset."

If the gold isn't there, frayed emotions would be the least of the problems.

Bessent – there he is again – yesterday said "all the gold is present." And as the head of the U.S. Treasury, he should know. And all this noise about Fort Knox could remind people about the value in this centuries-old hard asset.

We'll close today with a special note from Austin Root...

Austin used to work with us at Stansberry Research... But these days, he's the chief investment officer at Stansberry Asset Management ("SAM").

SAM is a U.S. Securities and Exchange Commission-registered investment adviser that is separate from our Stansberry Research publishing business. But it uses our research, plus other sources, to help manage individual clients' portfolios. See the disclosure information below for more detail.

Today, Austin is sharing an opportunity to learn how SAM is positioning its clients for the current market conditions. I recommend you take a look...

New 52-week highs (as of 2/19/25): Abbott Laboratories (ABT), Automatic Data Processing (ADP), Alpha Architect 1-3 Month Box Fund (BOXX), Berkshire Hathaway (BRK-B), Blackstone Mortgage Trust (BXMT), Blackstone Secured Lending Fund (BXSL), Maplebear (CART), CME Group (CME), Compass (COMP), Simplify Managed Futures Strategy Fund (CTA), EQT (EQT), Expedia (EXPE), Fortinet (FTNT), Gilead Sciences (GILD), SPDR Gold Shares (GLD), Kellanova (K), Annaly Capital Management (NLY), Sprott Physical Gold Trust (PHYS), Invesco S&P 500 Equal Weight Technology Fund (RSPT), ProShares Ultra S&P 500 (SSO), United States Commodity Index Fund (USCI), Vanguard S&P 500 (VOO), Verisk Analytics (VRSK), VeriSign (VRSN), and Wheaton Precious Metals (WPM).

In today's mailbag, feedback on yesterday's edition, which included discussion of a "DOGE dividend"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"With a deficit of almost $2 trillion, DOGE is not saving money, it is showing where the government can reduce borrowing. There is no tax money to return to the taxpayers, it just means the government will not have to borrow as much (with interest) on their behalf." – Subscriber Patrick H.

All the best,

Corey McLaughlin and Nick Koziol
Baltimore, Maryland
February 20, 2025

---

Disclosure: Stansberry Asset Management ("SAM") is a Registered Investment Adviser with the United States Securities and Exchange Commission. File number: 801-107061. Such registration does not imply any level of skill or training. Under no circumstances should this report or any information herein be construed as investment advice, or as an offer to sell or the solicitation of an offer to buy any securities or other financial instruments. For more information on SAM, please visit here.

Stansberry & Associates Investment Research, LLC ("Stansberry Research") is not a current client or investor of SAM. SAM provides cash compensation to Stansberry Research for Stansberry Research's advisory client solicitation services for the benefit of SAM. Material conflicts of interest may exist due to Stansberry Research's economic interest in soliciting clients for SAM. Certain Stansberry Research personnel may also have limited rights and interests relating to one or more parent entities of SAM.

For important information about Stansberry Research's relationship with SAM, click here.