Biden’s Misery – and Our Populist Solutions

As the economic carnage intensifies, Americans clamor for help.

American mothers increasingly trade down from full gallons of milk for their children to half gallons because of Biden’s inflation. How do we know? Well, the largest retailer in America, Walmart, described this trend in its dismal earnings report this past Tuesday. The Walmart CFO told Reuters that “ consumers are watching their spending closely and gravitating to private-label brands and half-gallons of milk.”

The dour results from Walmart underscore the material economic pain the Biden-Pelosi-McConnell inflation inflicts upon citizens, especially those of modest incomes. This news sent Walmart stock reeling. In fact, it was the largest plunge for Walmart shares since the historic 1987 crash.

This meltdown was not company-specific though, as a very similar pattern unfolded for another retail giant, Target stores, the very next day. Like Walmart, Target’s stock also crashed and produced its worst day since 1987, losing a staggering 25% of the firm’s value in a single session. Regarding the Target meltdown, Morgan Stanley research observed: “Consumers are pushing back...consumers are saying we're not going pay higher prices.”

Instead of seriously addressing inflation at four-decade highs and a trend that suggests even worse to come, Joe Biden jetted off to Asia, where he signed a gargantuan $40 Billion aid package to Ukraine. It was strangely appropriate that he signed this ‘America last’ largesse on foreign soil.

This lobbyist-directed boondoggle received the full bipartisan support of the Washington establishment and will surely exacerbate the existing economic stagflation in two ways. First, it massively escalates a regional conflict in which America has no vital national interest, accelerating the inflation inferno that already burned badly before the Ukraine crisis. Second, by borrowing and gifting money America does not have, Joe and Nancy and Mitch further accelerate the rise in unsustainable debt that fuels the worst inflation in over a generation.

Speaking of lobbyists -- and giant multinational corporate interests they represent -- consider the outcomes so far from Washington’s inflationary, globalist madness. Who benefits? Well, for starters the global conglomerates that produce the resources that soar higher in price. For example, this week Saudi oil giant Aramco surpassed American tech firm Apple as the world’s most valuable company.

Consider this chart below, which shows US Small Cap stocks, as represented by the Russell 2000, ticker IWM. This sector better represents the health of the Main St. economy compared to the S&P 500 or the Dow Jones Industrial Average, which are very global and dominated by a few mega-cap names.

Note the pronounced downtrend for the Russell and contrast it with the fabulous uptrend for Shell, the British-Dutch oil behemoth. It’s martini time at Shell’s headquarters in London, but misery for Main St., USA trying to cope with skyrocketing energy bills.  

Now consider another related comparison. Who else benefits from this American taxpayer mountain of money for weapons to secure Ukraine’s eastern border? Well, defense contractors, of course, hence the recent resilience of weapons giant Raytheon. But how about the Retailer sector, as represented by the XRT exchange traded fund? The 6 month return on the Retail sector plunges to -40%. For comparison, the 6 month performance of Raytheon RTX is +5%.