The Refund Cuts Both Ways

Walmart beat on every line and the stock is down 5%. Revenue $187.9 billion, comps and the full-year outlook both higher. What got sold was the third-quarter guide, and the reason behind it is more interesting than the miss: Walmart is taking roughly $2.9 billion of tariff refunds and spending all of it on lower shelf prices rather than letting it drop into earnings. SPX closed 7,707.98, premarket 7,675.

Target reported yesterday, kept its refunds, and let them add $1.65 to earnings. Walmart hands the same windfall to its customers and gets marked down for it. What this tape grades is what management does with the cash rather than what the shopper is doing, and that is the same standard that rewarded SK Hynix yesterday for buying back stock instead of building capacity. The relief also keeps getting shorter. Soft payrolls bought a week, Tuesday's yield reversal bought an afternoon, and Treasury doubling its long-bond buybacks bought one session before the 10-year drifted back to 4.67 and Brent pressed toward $93. Claims and Philly Fed at 8:30.

We open 45 points under the flip, back in negative gamma after one session above it. Overhead repeats yesterday: the heaviest negative strike sits above price at 7,700, and the flip at 7,720 carries the 8-day average on the same number, which leaves a band of supply between here and neutral. Underneath there is no wall, only an even slope, and gamma first agrees with structure at 7,650 on the 21-day average.

I lean short against the 7,700 to 7,720 band and cover into 7,653. A reclaim of 7,722 is the only thing that puts me on the long side, and if 7,650 gives way I would rather stand aside than guess where a slope like this one stops.