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Eurodollar University

Walgreens Sends Stark Warning About Consumer Behavior (Confirming CPI)

Thu Jun 13 2024
economypricesdisinflationrecession

Description

Walgreens cuts prices as customers struggle to buy essentials in a worsening economy. The May CPI report confirms declining consumer prices apart from food, energy, and shelter. Bond yields slide as the weak economy continues. Retailers respond to the weak economy with price cuts. Confirmation of the downside of the supply shock and inefficient economic system. Weak economy and recession signals persist. May CPI report confirms disinflation and recessionary signs. Disinflation and recessionary impact on the economy.

Insights

Customers are struggling to buy everyday essentials

Walgreens is offering more promotions and permanent price drops to help customers cope with financial strain.

Bond yields are sliding due to weak economy

The bond market is searching for entry points for the next leg in the rally as rates go lower.

Fundamentals drive interest rates

A webinar will discuss how fundamentals, not supply and demand, influence interest rates.

Retailers cut prices to offset declining sales

Retailers like Walgreens, Amazon, Walmart, and Target are responding to price-sensitive consumers by offering discounts.

Supply shock leads to large price increases

The imbalance between supply and demand caused by the supply shock resulted in significant price changes.

Inflation is not genuine in the current economy

The supply shock caused imbalances and large price changes, but it is not genuine inflation driven by an overabundance of money and credit.

Unproductive redistribution harms the economy

The supply shock redistributed funds in an inefficient way, leading to unproductive investment and a weak economy.

Weak economy and recession signals persist

The economy never fully recovered, with a shortage of jobs and income, indicating a recessionary environment.

May CPI report confirms disinflation and recessionary signs

Gasoline prices went lower, contributing to disinflation, and consumer prices outside of food, energy, and shelter declined.

Disinflation leads to struggling consumers and declining revenue

The weak economy and disinflationary environment result in struggling consumers and declining revenue for businesses.

Chapters

  1. Walgreens cuts prices due to worsening economy
  2. Bond yields slide as weak economy continues
  3. Fundamentals of interest rates and monetary plumbing
  4. Retailers respond to weak economy with price cuts
  5. Confirmation of downside of supply shock
  6. Inflation vs. supply shock
  7. Unproductive redistribution and inefficient economic system
  8. Confirmation of weak economy and recession signals
  9. May CPI report confirms disinflation and recessionary signs
  10. Disinflation and recessionary impact on the economy
Summary
Transcript

Walgreens cuts prices due to worsening economy

00:00 - 01:12

  • Walgreens is offering more promotions and permanent price drops in response to customers struggling to buy everyday essentials.
  • The May CPI report confirms the worsening economic climate, with consumer prices apart from food, energy, and shelter declining for the first time in three years.

Bond yields slide as weak economy continues

01:31 - 02:47

  • Bond yields are sliding again as the weak economy leads to lower rates.
  • The bond market is searching for entry points for the next leg in the rally once consumer prices prove to be disinflationary.

Fundamentals of interest rates and monetary plumbing

02:47 - 03:35

  • A webinar on interest rates and fundamentals will be held on June 28th.
  • Fundamentals drive rates, not the mainstream notion of supply and demand.

Retailers respond to weak economy with price cuts

03:36 - 06:34

  • Retailers like Walgreens, Amazon, Walmart, and Target are cutting prices to offset declining sales and attract price-sensitive consumers.
  • Price sensitivity is a kind way of putting a weak economy.

Confirmation of downside of supply shock

06:34 - 07:25

  • The downside of the supply shock continues with twists and turns.
  • The economy never recovered, and the imbalance between supply and demand led to large price increases.

Inflation vs. supply shock

07:26 - 08:49

  • The supply shock caused imbalances between supply and demand, resulting in large price changes.
  • The excess slowly drains away from the real economy, leaving a fundamental situation that looks nothing like inflation.

Unproductive redistribution and inefficient economic system

08:49 - 10:56

  • The supply shock redistributed funds and resources in unproductive ways.
  • Redirecting funds through the stock market and returning them to shareholders is an inefficient way to run an economic system.

Confirmation of weak economy and recession signals

10:59 - 12:22

  • The weak economy leads to struggling consumers, declining revenue for businesses, and recession signals.
  • The employment data shows that the economy never recovered and is short of jobs and income.

May CPI report confirms disinflation and recessionary signs

12:26 - 15:21

  • Gasoline prices went lower, contributing to disinflation.
  • Consumer prices outside of food, energy, and shelter declined for the first time since January 2021.

Disinflation and recessionary impact on the economy

15:37 - 17:46

  • Disinflation leads to struggling consumers, declining revenue, and potential further rise in unemployment.
  • The economy is in the downslope of the supply shock, and all evidence points in this direction.
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