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Tuesday, 26 July 2022

Is Walmart a sign of things to come for the US economy?

Walmart is expecting terrible earnings ⁠— and that’s not great news for the US economy: The company’s share price fell as much as 10% in after-hours trading yesterday after it cut its profit outlook for the year due to the impact of surging food and energy costs on consumer demand. The retailer, which will publish its 2Q earnings in three weeks time, is now predicting earnings per share to fall 11-13% for the year, just two months after forecasting a 1% drop. (CNBC | FT | Reuters | Wall Street Journal)

A strong USD has been bad news for some American corporations: The surging greenback has been one of the culprits behind the slowdown in earnings at US multinationals in 2Q, the Financial Times writes. With the greenback at a 20-year high, American companies with large global operations are facing lower international revenues and slowing demand abroad, prompting many to lower their earnings forecasts for the rest of the year. “Even if the rise of the USD was to stop here, the strengthening we’ve seen over the past 12 months would be enough to prompt further downgrades to earnings estimates just because of the foreign exchange headwinds,” said an HSBC strategist.

The 60/40 portfolio split isn’t dead yet? A common portfolio strategy where investments are split 60% in stocks and 40% in bonds is losing its appeal amid market turmoil that has seen both stocks and bonds plunge amid rising interest rates and rampant inflation. But Morgan Stanley thinks it’s a matter of time before the split pays off once again: according to its chief cross-asset strategist, Michael Sheets, the approach could provide some of the highest long-term returns in the US and Europe seen in recent years, Bloomberg reports.

Down EGX30 9,238 -0.4% (YTD: -22.7%)
None USD (CBE) Buy 18.89 Sell 18.97
None USD at CIB Buy 18.91 Sell 18.97
None Interest rates CBE 11.25% deposit 12.25% lending
Down Tadawul 11,874 -0.8% (YTD: +5.3%)
Down ADX 9,589 -0.8% (YTD: +13.0%)
Down DFM 3,236 -0.7% (YTD: +1.3%)
Up S&P 500 3,967 +0.1% (YTD: -16.8%)
Up FTSE 100 7,306 +0.4% (YTD: -1.1%)
Up Euro Stoxx 50 3,604 +0.2% (YTD: -16.2%)
Up Brent crude USD 104.92 +1.7%
Up Natural gas (Nymex) USD 8.73 +5.2%
Down Gold USD 1,737.10 -0.5%
Down BTC USD 22,026 -3.3% (YTD: -52.2%)


The EGX30 fell 0.4% at yesterday’s close on turnover of EGP 842 mn (2% above the 90-day average). Foreign investors were net sellers. The index is down 22.7% YTD.

In the green: MM Group (+13.8%), Ibn Sina Pharma (+6.5%) and Abu Dhabi Islamic Bank Egypt (+2.9%).

In the red: CIRA (-3.9%), GB Auto (-3.3%) and Ezz Steel (-2.9%).

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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