Episode summary
Walmart & Target Signal Consumer Stress as the 10-Year Yield Hits 4.6% | The Weekly Wrap
The Real Eisman Playbook
· · 20 min · Hosts: Steve Eisman
Summary
Steve Eisman said the week’s biggest macro signal was not earnings strength but rising inflation pressure and higher rates. He pointed to war-related oil strength, hotter-than-expected CPI and PPI data, and the 10-year Treasury yield moving to 4.6%, which he described as the level that makes him more cautious on risk assets. He also argued that recession fears are not his base case because first-quarter S&P 500 revenue and earnings came in well above expectations.
Consumer stress showed up, in his view, at Target and Walmart. Target’s same-store sales were strong, but management warned about tougher comparisons from fading tax refunds and higher fuel costs. Walmart met earnings expectations and guided below consensus, which Eisman treated as a more meaningful warning because Walmart usually beats. He linked both retailers’ commentary to weaker consumers and higher oil prices.
He was similarly wary in software and housing-linked names. Eisman highlighted a Bank of America analyst’s underperform call on Salesforce, Intuit’s slower growth and layoffs, and the idea that AI may pressure traditional software models over time. On the positive side, Nvidia again delivered huge numbers, with revenue up 85% and margins expanding, though the stock barely moved because guidance was not high enough for the market. In housing and home improvement, Home Depot, Lowe’s, and Toll Brothers all pointed to a sluggish backdrop with higher rates still weighing on demand.
Key takeaways
- Steve Eisman said 4.5% on the 10-year Treasury is his "Rubicon," and the move to 4.6% is why he lightened up on positions.
- He sees the economy as avoiding recession for now because first-quarter S&P 500 revenue grew 11.1% and earnings grew 28.3%, well above expectations.
- Eisman read Target and Walmart as consumer-warning signals, with Walmart’s below-consensus EPS guidance especially notable because it usually beats.
- He said AI remains a real threat to software, citing Salesforce and Intuit as examples of pressure on traditional models and slower growth.
- Eisman said Nvidia’s 85% revenue growth and expanding margins were remarkable, but the stock’s muted reaction showed how high the bar has become.
- He argued higher rates are still hurting homebuilders and housing-related retailers, with Home Depot, Lowe’s, and Toll Brothers all showing weak fundamentals.
Notable quotes
“For me, 4.5% is the Rubicon, and that is why I lightened up”
“With growth like this, a recession is just not on the horizon for now”
“Perhaps the most important news of the week was signs of consumer weakness, which showed up at both Target and Walmart”
“This was one more nail in the coffin”
“Just take a step back and consider the fact that the largest company in the United States by market cap grew its revenue by 85%. Amazing”
How the episode opens
Partially because of the war, inflation is rearing its ugly head. It also looks like the approaching inflation data reports are not going to be benign, so rates could march even higher. Perhaps the most important news of the week was signs of consumer weakness, which showed up at both Target and Walmart.
Salesforce stock is down 35% year to date on fears that AI can disrupt traditional software businesses. This was one more nail in the coffin. And finally, Nvidia reported.
Just take a step back and consider the fact that the largest company in the United States by market cap grew its revenue by 85%. Amazing. Now, let's get started on the rap.
Hi, this is Steve Eisman and this is another edition of the weekly rap. This is for Friday, May 22nd, but recorded Thursday night, May 21st. This will be a relatively short wrap because it was a light week for earnings.
However, before we get to the rap, I am flagging what's coming up on our premium service. On Wednesday, May 27, I will post an interview with Lakshmi Ganopathy of Unicus Research. Laxshmi is a recurring guest.
In the interview once again, Lakshmi highlights that people across the country use buy now pay later, which is a form of debt financing to pay for their Uber Eats Door Dash daily food deliveries. She refers to it as Uber Eats addiction. Lakshmi only does deep dive analysis supported by research.
Using bottom-up analysis techniques, she explains the health or lack of health of the consumer, the state of the auto market, the perils of private credit and commercial real estate, and the state of data center financing. Starting today, May 22nd, we have opened up our community board to allow our thriving community to share ideas and listen from each other.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- consumer stress
- ten-year treasury yields
- ai and nvidia earnings
- software stocks
- private credit
Companies and tickers mentioned
- WMT
- TGT
- NVDA
- NEE
- D
- CRM
- INTU
- HD
- LOW
- TOL
- Walmart
- Target
- Nvidia
- NextEra Energy
- Dominion Energy
- Salesforce
- Intuit
- Home Depot
- Lowe's
- Toll Brothers
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Inflation, The Deficit & Why the Dollar Stays King with Benn Steil | The Real Eisman Playbook Ep 81 -
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The Real Eisman Playbook, this episode and its artwork belong to Steve Eisman. Octagon is not affiliated with the show; this page is an independent summary.
