The "Wal-Mart Recession Signal" (WRS), designed by former strategist Jim Paulsen, is at its highest level since the early pandemic days, raising questions about its reliability. The signal compares Wal-Mart's (WMT, Financial) stock performance with the S&P Global Luxury Index to predict recession risks. Recently, WMT shares have surged nearly 90% as the company expands internationally and enhances profitability. However, the index's diverse composition and the luxury industry's structural changes challenge its predictive accuracy. Meanwhile, traditional indicators like the "Sahm Rule" are also failing due to labor market shifts. These changes suggest WRS may no longer accurately forecast economic downturns.
Wal-Mart Recession Indicator Faces Challenges Amid Market Changes
Dec 12, 2024
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