Walmart’s pain could be the consumer’s gain

Plus: The Fed gets an E for Effort. [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a hobgoblin of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Inflation pain may be [easing for some Americans](. - Maybe the [Fed’s doing things just right](. - Europe’s [unity is an illusion](. - Luxury shoppers [are still shopping](. The Bright Side of the Upside Down Regular readers of this newsletter — all of whom are intelligent, sexually desirable and in no way susceptible to cheap pandering — will likely recall that just 24 hours ago [we said]( Walmart’s profit warning was bad news for the economy. But a foolish consistency is the hobgoblin of little minds, as Ralph Waldo Emerson, or maybe Boris Johnson, once said. Let’s also keep in mind that ever since the pandemic started, we have been living in the economic Upside Down, where what seems like bad news is often good news, and vice versa. So consider for a moment the potential benefits of the world’s biggest retailer and its rivals having mountains of stuff they’re trying to unload cheaply. That sounds … deflationary? Along with plunging gasoline prices, writes Conor Sen, [lower-income people are lately enjoying some brisk tailwinds](, and the labor market is still giving them opportunities to trade up for better wages. Do those wages fully keep up with inflation? Perhaps not! Are they still better than having no wages at all? Perhaps! All of this could change quickly, for better or worse. Today the Fed [jacked up]( interest rates by 75 basis points again, continuing its harshest economy-wrecking campaign since the days of Paul Volcker. The yield curve has seldom been more [inverted](, suggesting a recession is imminent. You will always sound smarter being the voice of doom, especially in a world without the [Choco Taco](. But sometimes you’ll find wisdom looking on the [bright side](, too. Maybe the Fed’s Doing the Best It Can It’s conventional wisdom that the Fed is now frantically trying to flush the economy down the toilet like [Karen]( at the end of “Goodfellas” only because it waited too long to fight inflation. But Nir Kaissar argues [the Fed has behaved responsibly all along](. When inflation first came back to life in the spring of 2021, nobody in the bond market expected it to last, judging by fed-funds futures and Treasury yields. As soon as inflation went ham last fall, the Fed began threatening it with the rate-hike stick, and financial conditions began to tighten. Many argue the Fed took too long to finally use its stick. But the market had already hiked borrowing costs aplenty by the time the real thwacking began. And now, given the supreme weirdness of this economy — GDP is shrinking, but unemployment is near a record low — the Fed should be careful [not to blindly commit to going Full Volcker](, warns Bloomberg’s editorial board. It’s entirely possible we’ve already seen the worst of the inflation and are now knee-deep in a recession. Or maybe it’s a soft landing. Or maybe it’s a stagflationary nightmare. With the Choco Taco gone, all bets are off. Bonus Central-Banking Reading: A Fed-fueled strong dollar [slams emerging markets](. Always has. — Stephen Mihm Europe’s Potemkin Kumbaya Moment One of the few silver linings to the dark cloud of our grim timeline has been the apparently united European response to Vladimir Putin’s invasion of Ukraine. But rub your thumb on that silver lining, and it smudges like so much cheap paint. Take the new plan for everybody in Europe to commit to using less natural gas, in response to Putin giving Europe less natural gas. Andreas Kluth points out the [swath of Europe that doesn’t use as much gas takes issue]( with the scheme, especially considering it’s being pushed by Germany, the country that thought it was a good idea to make Europe helplessly dependent on Russian gas in the first place. This seems like a reasonable objection, but then it’s always something with these crazy European kids, forever squabbling over space in the back seat of the car.    [One scary potential weak spot is Italy](, which Maria Tadeo notes has long been Russia-curious and could soon be led by Kremlin-friendly right-wingers. We’re gonna need a bigger paint bucket. Bonus European Misery Reading: Boris [Johnson will apparently keep lurking around](, waiting for his chance to return. — Therese Raphael Telltale Charts While Walmart shoppers pinch pennies, [luxury shoppers are still spending](, which Andrea Felsted notes helps LVMH Moet Hennessy Louis Vuitton Chuck E. Cheese Stone Island Ferrari. Credit Suisse will soon have a new boss and [all of its same deep-rooted problems](, writes Paul J. Davies. Further Reading [Brazil’s fragile democracy is under threat]( by Jair Bolsonaro. — Bloomberg’s editorial board [Forecasting the midterms is nearly impossible](, given the extreme weirdness of the economic and political context. — Jonathan Bernstein The US is [not ready for a confrontation with China]( over Taiwan. — Hal Brands Other countries need to [step up and join the EV supply chain]( so China doesn’t hog it all. — Anjani Trivedi Extreme reactions to capitalism’s flaws such as [DeFi and degrowth will only make things worse](. — Lionel Laurent Banks [shouldn’t cut the bonuses of junior bankers]( to save cash. — Jared Dillian ICYMI Meta had [a messy quarter](. The US may [narrowly avoid recession]( (by one definition). Donald [Trump teamed up]( with the new Saudi golf league. Americans are [buying cheap property in France](. Kickers Turns out [Covid came from that seafood market]( after all. Maybe don’t accept an enemy’s [invitation to hike in Yellowstone](. (h/t Scott Kominers) So it begins: [Monkeys are attacking babies, adults]( in Japan. [AI successfully impersonated]( a philosopher. Notes: Please send French property titles and complaints to Mark Gongloff at mgongloff1@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022