Yesterday we talked about the setup for Walmart, to positively surprise on earnings. They did. The stock was up 5% today.
As we've discussed here in my daily notes many times, never underestimate the appetite of corporate America and Wall Street to set the bar low, so they can beat expectations.
What's the perfect time to dial down expectations? When the broad market is suffering, and broad confidence is low.
Walmart used that playbook in late July, just two days ahead of a Fed meeting, where the Fed was expected to raise rates another 75 points, and was expected to continue hammering home the vision of "aggressive" rate hikes.
What is the perception that comes with this Fed outlook? Higher and higher rates => more restrictive economic activity and less risk taking => lower stock market.
So, on July 25th, just three weeks before their scheduled Q2 earnings release, Walmart decided to "provide a business update," and "revise the outlook."
They blamed inflation (food and fuel costs), an easy culprit to place blame, for what they warned would be lower margins. And they updated their guidance to an EPS decline of 8% to 9% for Q2 (compared to the same quarter last year).
The stock did this …