The Factories Are Booming. Walmart Says Nobody Is Buying.

Every index red, with the Dow and small caps taking the worst of it, and bitcoin up 5.5% in the same 8 hours. The stock market and the crypto market did not attend the same Thursday.

Walmart beat on earnings, beat on revenue, raised full-year guidance, and closed down 9.15%. Read that again, because it is half the edition.

Adjusted earnings came in at $0.81 per share, against a $0.73 consensus, and revenue was $187.9 billion, up 5.9% and ahead of estimates. Then came the line that mattered. US comparable sales, excluding fuel, grew just 2.6%. Comparable sales strip out new stores to count only those open for a year or more, so it is the cleanest read on whether existing shoppers are actually spending more. The street wanted north of 3%. Zacks put the forward multiple going into the print at 37.6 times earnings, and a grocery chain priced like a software company has to be flawless rather than merely excellent.

The tape read it as a bulletin about everybody. Walmart traded 3.73 times its 50-day average volume, and the average is the honest denominator here because Wednesday was already busy. Retail as a group (XRT) fell 2.36%, Costco lost 2.45%, and Kohl’s dropped 8.01%. Target, which reported the day before, escaped with -0.47% and is presumably still avoiding eye contact. None of it came out of nowhere: Census Bureau retail sales fell 0.4% in July against expectations of a 0.3% rise, and University of Michigan sentiment printed 51.0 against 54.5 expected.

The same morning, the factories filed a completely different report. The Philadelphia Fed’s August manufacturing index came in at 47.4 against an estimate of 25, the highest reading in a 25-month pullback to August 2024, and the second month running that forecasters were left in the parking lot after July printed 41.4 against 13. Factory employment jumped to 27.9 from 10.0 while prices paid fell to 40.9 from 53.9, which is the exact combination that lets a hawkish central banker sleep well and everyone with a mortgage sleep badly. The Labor Department then reported 206,000 jobless claims against 210,000 expected.

So the bond market stopped hoping. The 10-year yield rose 5.6 basis points to 4.706%, and the 30-year rose 5.6 to 5.251%, a basis point being one hundredth of a percentage point, handing back most of Wednesday’s Treasury-buyback rally inside one session. TLT fell 0.82%, the VIX climbed 7.52% to 16.01, and the auction we flagged yesterday as the one thing that could ruin everyone’s day did precisely that: the 30-year TIPS auction cleared at a 2.973% real yield against 2.473% last time. TIPS principal adjusts with inflation, so that is the return buyers demand on top of whatever inflation turns out to be, and they just asked Washington for half a point more of it.

Bitcoin closed at $73,032.76, up 5.44%, its highest close since May 31, which makes it +12.91% across two sessions. The equity proxies went further still: MicroStrategy +7.81%, Coinbase +7.58%.

The catalyst was Wednesday’s White House event, where the President stood beside a room of crypto executives and pressed Congress to move on the Digital Asset Market Clarity Act, saying “we need Congress to take the next step by passing the Clarity Act, a fair version of the Clarity Act.”

Hold onto this part. The bill has not passed. It cleared the House, and in the Senate it has managed exactly one procedural step, a cloture filing on the motion to proceed, which is the parliamentary act of agreeing to maybe discuss the thing. The Senate left on August 8, returns on September 14, and the first real vote is set for September 15, with senators still arguing over ethics rules, law enforcement provisions, and whether stablecoins can pay yield.

Oil (USO) rose 2.77% on 1.01 times the prior day’s volume, which is the tell. It opened at 134.71 after a close of 130.91, traded about two dollars, and finished at 134.54. That is a gap, not a stampede.

The overnight news was the UAE, which announced Wednesday it is suspending all trade and financial transactions with Iran, after its defense ministry said two Iranian ballistic missiles were fired toward the country. Iran denies firing them.

8:45 AM CT, S&P Global flash PMIs for August. Composite expected at 53.2 against 54.5, services 54.0 against 54.6, manufacturing 53.9 against 53.9. Yesterday one regional survey said American factories are on fire; this is the national tiebreaker, and anything above 50 still means growth.

Before the open: BJ’s Wholesale Club ($1.16 expected) and Buckle ($0.83), which is the Walmart question asked at both ends of the income scale.

It is also monthly options expiration, the third Friday, when an enormous pile of contracts stops existing, and the tape gets amplified in whatever direction it already leans. Yesterday it leaned toward selling. Baker Hughes publishes its rig count at noon CT; last week, it was 455.

The one thing that could ruin everyone’s day: those PMIs confirming the Philly Fed. A hot national print on expiration Friday, with the VIX already up seven and a half percent and yields climbing, is how a sleepy August session turns loud.

And circle next week. Jackson Hole runs August 27 to 29, with Chair Warsh giving his first keynote there on Friday the 28th.

Walmart raised its own forecast and lost nine percent. Bitcoin gained nearly thirteen percent on a bill the Senate has not voted on yet. Thursday paid up for the promises and marked down the receipts, which tells you precisely what this market is currently in the mood to believe.

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