🕹Target is sending a chilling message🧨

Consumers appear to be defensive, and investors have to ask if this is sufficient to cool inflation and how it will hit companies in their following fiscal reporting. It is the second time Target has been cutting their guidance in the past few weeks. 

Profits are expected to decline as they cancel orders and reduce prices to help offload the massive inventory. Indeed, it is not a rosy sign as the mega-retailer had warned that its inventory had risen by 43%, given that customers are shifting their spending away from goods and moving towards services more pronounced than they had expected. 

It keeps Pika World on the toes on any sign of further cool down in discretionary spending. After all, the US is primarily a consumer-driven economy.

💊The spiral effect from Target💣

Wall Street has been quick to reflect the problem of Target to other retailers such as Walmart, Costco and TJX Cos, which have underperformed during the trading days. Indeed, as these companies have rapidly built up their inventory, a genuine concern was slashing prices down to clear these stocks to hurt profitability and margin. Moreover, cancelling new orders may also signal a fall in further revenue and a general decline in consumer spending. 

On a macro level, global central banks are also pursuing a less stimulative stance on monetary policy and are likely to dampen consumers’ spending. 

🎙From the desk of Yellen: High Inflation is not acceptable!💰

You’ve heard her. Indeed, the Treasury secretary is loud in signalling that inflation remained stubbornly elevated and that the Biden administration is ready to battle the prices to protect Americans’ pockets. She also reflects on the supply chain problem and Russia’s war which had created a large imbalance in energy and food, contributing to the woes of inflation. 

Pika World will be focusing on Friday’s CPI data for further insight into the inflation narrative.