Oh, what a tangled web we weave

05/15/25 Prospero.ai Investing (220th) Edition (Midweek

Walmart warns of higher prices due to tariffs, holds off on second-quarter guidance.

For those that aren’t that familiar with the history of Walmart. They are a pioneer of suppy chain efficincy. Said differently, they were using computers to maximize their profits before it was cool. So when they suspend guidance you have to take notice.

"We will do our best to keep our prices as low as possible but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren't able to absorb all the pressure given the reality of narrow retail margins," CEO Doug McMillon said in a statement.

We think this is especially relevant this morning because Alibaba also reported today and their Net Income Fell Y/Y by 86%. One reasons for this makes the Walmart story even more interesting. “After a rough year, Alibaba has focused on offering discounts and coupons to better compete against discount e-commerce company PDD Holdings (PDD).”

So let’s take these two stories together. One is saying we cannot avoid rising prices. The other is pointing to how much people are already tightening their purse strings.

We think it is important to keep this in mind even in the midst of a rally. We’ve been long recently, even having TQQQ in our portfolio this week. But if you want to navigate the volatile 2025 market it is essential to pick your spots. If get over enthusiastic about short term gains and ignore some of these macro storm clouds. It could bite you.

A WORD FROM OUR CEO

We have trimmed our portfolio because for a rare time this year we think the short term picture is rather simple. It has been a good strategy of stable gaines our paper trading portfolio is beating the S&P 500 by 86% annualized, with a win rate of 61% against SPY benchmarks.

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Oh, what a tangled web we weave

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