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Podcast: GameStop Bears Beware

Consumer debt might reach a new record—but that’s probably not as scary as it sounds. What to expect for GameStop earnings. And how the inflation rate for August relates to potential Federal Reserve interest rate cuts.

3 numbers to help you navigate the market—in just two minutes.

Three numbers to start your day:

—in August, not counting mortgages. The Federal Reserve will report the final numbers today.

That would bring the total amount of consumer credit in the U.S. to $4.1 trillion. That might sound like a big number, and it is a new record. But here’s the thing: Consumer debt hasn’t grown very much— at least when compared with debt in other parts of the economy, like the federal government. Or, take the corporate sector as another example: companies have almost $10 billion worth of debt.

—when the company reports earnings on Tuesday. The video-game retailer has been struggling as gamers gravitate toward streaming. Its stock is down 66% so far in 2019, and the company’s first-quarter profits missed Wall Street’s forecasts.

But bears beware: Michael Burry is optimistic about the company. He’s the investor made famous by the book and movie “The Big Short” for betting against subprime mortgages before the financial crisis. He says GameStop stock has fallen too far, since most stores have good cash flow.

—according to economist forecasts. If those estimates are correct, that will mean inflation was pretty steady in August. This figure, by the way, excludes the cost of gasoline and energy, which can be volatile month to month.

The takeaway here is that inflation just isn’t that high. Because of that, the Federal Reserve probably has some room to cut interest rates later this month, as the market expects.

Numbers by Barron’s is our daily podcast. Find out more here.

Write to host Alexandra Scaggs at alexandra.scaggs@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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