Another “Tariffic Tuesday” dawns on Wall Street.
Whirlpool’s (WHR) crushing Q2 results and dividend cut have investors asking: Is this just a Whirlpool story, or a flashing red warning for the whole non-Tech side of the U.S. economy as tariffs bite deeper into their balance sheets?
WHR’s disastrous report: A big Earnings miss, a surprise Dividend cut, AND slashed Guidance hit like a bolt of lightning (we have WHR in our LTP and we sold short calls but it’s not going to be enough). The real gut punch wasn’t just WHR’s numbers – it’s what those numbers reveal about the broader landscape for U.S. Manufacturers and Consumer-Facing firms:
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Tariff Stockpile Fallout: WHR blamed imported rival appliances flooding the U.S. market ahead of new tariffs, flooding shelves, trashing pricing power, and temporarily erasing any supposed protection from trade policy.
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Margins and Cash Pressure: Revenue down 5%, net Earnings slashed 70%, and Free Cash Flow turned negative, forcing the Dividend cut that sent the stock reeling.
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“Protection” is Not Working (Yet): Instead of a bounce from tariffs, WHR is living through a Profit Squeeze, stuck with bloated U.S. Inventories and weak Global Demand.
- “It’s a volume game now—pricing isn’t offsetting cost inflation; global demand remains weak, and supply chain normalization will be slow.”
And it’s not just Whirlpool caught in this tariff web:
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Stellantis just warned of a $1.7B tariff hit, with Revenue and Profit guidance cut and North America deep in “Price War” turmoil, echoing Whirlpool’s complaints nearly word for word.
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Other industrials, auto, and consumer goods firms cite rising Input Costs, Margin Compression, and disappointing Demand as Supply Chain games and Global Uncertainty play havoc with forecasts.
- GM took a $1.1B (32%) pre-tax hit from tariffs in Q2 alone, with executives saying: “The adverse effects of tariffs are likely to escalate in the third quarter… trade challenges could adversely impact as much as $4–5B this year. We can mitigate about 30%, but margins will remain under intense pressure.” GM reaffirmed cautious FY guidance, explicitly warning the “full tariff impact is just starting to show”
- STLA CEO cited a €300M tariff hit in H1, warning the effect is “…not representative of what we expect for the second half. Tariffs only came in partway through H1, with the peak in Q3 and mitigation efforts at year-end. Europe remains tough—environment is challenging, headwinds persist.”
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- Ford (F – July 30th earnings) Revenues are expected to fall 6% YoY; Q2 profit forecast has dropped 27.6% from a year ago, with explicit warning that, “Tariff impacts and EV losses continue to pressure results despite some hybrid/professional segment strength. Competition and tariff-driven cost inflation cast a shadow.” Management has pre-signaled a more “cautious” full-year outlook than peers, citing persistent trade and cost headwinds
- MSC Industrial (MSM) showed Net income down 20.3% YoY; EPS fell to $1.02 from $1.28. Management attributed results to “tariff and commodity headwinds compressing margins,” with Q4 guidance “sharply cautious” due to expectations for continued Price and Demand Weakness.
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More Dividend Cuts and Guidance Misses? Whirlpool is first, but with so many non-tech firms seeing tariff-driven cost spikes and limited pricing power, capital return policies everywhere are under new stress. Expect more chaos ahead!
- Of S&P 500 companies offering Q3 guidance, 52% have issued negative EPS guidance. Almost all guidance downgrades are outside tech and financials – who reported earnings first last week, giving us a great impression but the follow-up is already lacking. Autos, Industrials, and Consumer-Focused Firms are dominating the Naughty List so far…
While the stated goal of these tariffs is to PROTECT Domestic Manufacturing in the long run, the IMMEDIATE consequence has been a chaotic flood of pre-buy Inventory and soaring Input Costs – as Whirlpool’s results clearly show us!
Why This May Be Just the Beginning
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Tariffs = Volatility, Not Clarity: The rush to front-load before tariff deadlines, followed by a demand air pocket and pricing slugfest, is starting to hit quarter after quarter. The Q3 and Q4 outlooks for many manufacturers are filled with similar warnings.
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Margin Erosion Infects the Broader Tape: Across the S&P 500, we’re seeing margin contraction wherever tariff/commodity pressure is high and global competition is fierce—tech and financials are the exception, not the rule. So far, for the S&P (including Big Tech), blended Net Profit Margins are 12.3% – down from 12.7% in Q1.
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Guidance Fog Rolls In: More CEOs are openly guiding cautiously, not just for tariffs, but for continued Global Consumer Softening and the next wave of Supply Chain Disruptions.
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GM does not expect improvements until Q4, at best.
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WHR says “It’s a volume game now, Pricing isn’t offsetting Cost Inflation; Global Demand remains weak, and Supply Chain normalization will be slow.”
- American Airlines (AA – July 29th) has warned: “While demand remains solid, we are issuing cautious guidance for Q3 due to softening international fares and Input Cost Inflation.”
- Moog (MOG-A) says: “While our order book and Aerospace remain strong, the Industrial Sector faces persistent Margin Pressure from cost increases and muted Demand Recovery.”
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Whirlpool’s results might LOOK like an outlier, but they’re really a symptom of a deeper, spreading “Tariff Disease” in much of the non-Tech Equity Market. While Tech and AI-driven firms (and buybacks) prop up the indexes, the real economy is struggling with Policy Shocks, Unpredictable Demand, and Squeezed Cash Flows. It’s no longer just about one company, or one sector. The recent wave of disappointing Industrial, Auto, and Consumer Reports should put ALL Investors on notice: Margins, Dividends, and Guidance are all at risk as the price of “Fair Trade” begins to come due.
Whirlpool’s pain isn’t just about dishwashers. It may be the canary in the coal mine, a warning that tariff-fueled trouble is about to spread across the real Economy – one earnings report at a time. Major Industrials, Autos, and Consumer Goods companies are starting to show Margin Contraction, slashing their Guidance, and issuing explicit warnings tied to Tariffs, Demand Softening, and Supply Chain Volatility – and this is all BEFORE 15-20% tariffs actually begin to hit us in Q3 (one month in, now).
We have WHR in our Long-Term Portfolio and we’re going to take a big hit this morning:
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- 25 long 2027 $70 calls at $22.90 ($57,250)
- 20 short 2027 $100 calls at $9.75 ($19,500)
- 10 short 2027 $90 puts at $18.50 ($18,500)
- 10 short Sept $90 puts at $9 ($9,000)
We were so pleased with the trade just two weeks ago, when I said in our Portfolio Review:
“WHR – Already at our goal at net $27,250 on the $75,000 spread so there’s $47,750 (175%) upside potential if they can get over $100.”
How quickly things change with WHR testing $80 this morning! Our $70 calls are still in the money and we still have faith in WHR LONG-term but, short-term, this will be painful. Still, $90 is a very fair target for the bottom (even though we’re below it now) and our nets are $71.50 on the 2027 $90 puts and $81 on the Sept puts – so the only reason we’ll roll them is if we have a great opportunity – there’s no rush at all.
The short 2027 $100 calls will probably be down around $6 but not worth buying back as they are still the right target 18 months from now but we MIGHT take the opportunity to buy another year on our longs – just in case – IF the price of the roll is right.
WHR did lower their guidance to $7 from $10 but $80 is only 11.4x $7 and this situation is unique and temporary as Americans bought foreign products ahead of the deadline and left WHR, who are HEAVILY dependent on North American sales, on the shelves – for now.
