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Today's big stories

Retail giants Walmart and Home Depot reported mixed quarterly results
Our analyst digs into a strategy that’s generated big returns over the last 50 years while sidestepping market crashes – Read Now
As Chinese firms bow to government crackdowns, tougher competition rules are on the way

Fixer-Downer

What’s Going On Here?

Home Depot announced record second-quarter sales on Tuesday, but the company might need more than a fresh coat of paint if it's to win investors over.

What Does This Mean?

Home Depot’s revenue and profit both exceeded expectations last quarter. The home improvement specialist’s shareholders still weren’t happy, however. That’s because it fell short on one of the most important financial figures for any retailer: “comparable sales growth”, which shows revenue expansion at pre-existing stores. If your old stores aren’t doing as well as hoped, then it’s probably only a matter of time before growth from new ones starts to tail off and the company as a whole disappoints.

Walmart gets it. Quarterly earnings at America’s largest retailer came in ahead of estimates, as did its forecast for the rest of 2021 – and Walmart’s comparable sales growth beat expectations too.

Why Should I Care?

For markets: The have nots and the haves.
Home Depot’s stock, having previously sat 27% up for the year, fell 5% on Tuesday. So too did rival retailer Lowe’s, with investors likely concluding what’s bad for the goose is bad for the gander. While the US housing market is as strong as it’s ever been – usually good news for home improvement demand – the reopening economy may be distracting shoppers from DIY. Walmart, meanwhile, saw its share price rise: selling just about everything should insulate it from individual shopping category trends.

The bigger picture: Shop till you drop.
Fresh data out Tuesday showed US retail sales fell by a greater-than-expected 1.1% in July compared to the month before. Investors will have taken note, given the likely effect on retailers’ earnings this quarter (tweet this). Analysts floated a couple of potential reasons for the drop: stimulus checks may now be spent, while the lifting of pandemic restrictions may have sent food and drink sales up last month at the expense of online shopping.

You might also like: Should you be buying or avoiding retail stocks right now?

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2. Analyst Take

Tactical Asset Allocation: Sidestepping Crashes

What’s Going On Here?

“Tactical asset allocation” actively adjusts a portfolio to target market trends, aiming to maximize returns while minimizing risks.

But there are thousands of tactical asset allocation strategies out there: some good, some not so good.

Enter Defensive Asset Allocation, one of the best-performing tactical asset allocation strategies over the past 50 years.

It’s generated an impressive average annual return of 15% – while simultaneously sidestepping market crashes.

So that’s today’s Insight: the Defensive Asset Allocation strategy explained, and how you can easily implement it using exchange-traded funds.

Read or listen to the Insight here

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