…a couple of things
stock performance
The S&P 500 is ahead by +12.9% year to date through yesterday, a result that puts us deep in the bottom quartile of world stock markets. This compares, for instance, with an advance in $US by EAFE (=Europe, Australia and the Far East), the most commonly used benchmark for developed country markets outside the US, of +23.2%.
If we parse things a little finer, the US market ex IT (IT being a global sector not really reflective of how the US as a place is doing) has made a ytd gain of +8.7%. The IT sector, in contrast, is up by +21.7%–still lagging the non-US market performance, but not by much.
The euro has gained about +11% vs. the $US this year, meaning that a euro-based investor would have a small loss in the home currency from holding domestically-focused US stocks. A Mexican peso-based investor is considerably worse off than that.
Walmart (WMT) and Nvidia (NVDA)
Both (I own shares of each) reported quarterly results between yesterday’s close and today’s open. Both reported strong results.
–WMT. What I took away from the conference call is that economic conditions haven’t been as damaging to WMT as the company had feared. I interpret this as meaning that, among other things, the number of customers trading down from WMT to the dollar stores has been smaller than the number trading down to WMT from Target and/or supermarkets.
My guess–although it’s probably not crucial that I’m right–is this is more WMT’s skill in handling a weak economy than that the economy has shown more life than initially feared. Fees from membership in Walmart+ or Sam’s Club have been strong, as have convenience fees paid for faster home delivery service. Apparently, surprisingly so. More generally, WMT’s effort to build an online service to rival Amazon’s seems to be gaining steam. Unclear whether this is bringing in new, more affluent customers to WMT, although my guess–and one reason for my holding the stock–is that it is. All in all, a flatlining economy is, so far, surprisingly good for the company.
–NVDA. Basically, business is booming …but there’s nothing really new.
As I’m writing this, WMT is up by about 6% on its earnings news, and although NVDA was strong in the aftermarket yesterday, the stock is down by about 1% now. The difference I see the stock market making between the two is that WMT is a beneficiary of the economic damage created by a dysfunctional central government, while NVDA is arguably a victim by Washington’s barring sales to China.