Target ((TGT Quick QuoteTGT - Free Report) shares are down -7% in today’s pre-market, following an announcement that the company will take extra steps to move excess inventories off their stores’ floors. The big-box discount retailer, which saw its share price fall off a table last month directly following a disappointing Q1 earnings report, now plans price cuts that would squeeze margins to make way for new merchandise, affecting Q2 profits.

The company made big bets on a continued “stay at home” mode for the American consumer, when what it should have prepared itself for was more interest in outside-the-home activities. Target did not carry enough luggage, for instance, in the prior quarter, and is now expected to cut prices which will lead to squeezed margins, which has directly led to this morning’s stock selloff. Target shares are down -31% year to date.

So profit warnings are taking Target — as well as the overall Retail space — shares south, although there are two takeaways from this development which suggest things aren’t so bad as the headlines might suggest:

1.      This is what happens in the Retail space, period — at least among responsible actors in the sector. Inventory issues happen from time to time, and when stores are over-stocked, it’s actually a good opportunity for the consumer to pick up goods at lower prices, which leads to.

2.      This is the sort of anti-inflationary incident the Fed has been looking for since it began raising interest rates in early March. It is yet another indication that we may have already seen peak inflation in this economic cycle. We’ll know better as of Friday morning, when new Consumer Price Index (CPI) numbers are released.

This morning, we see a new report on U.S. Foreign Trade Balance for the month of April, with headline results reassuringly better than the record deficit recorded for March. The April print came in at -$87.1 billion, which is an improvement on the expected -$90.3 billion and the previous month’s revised -$107.7 billion, which itself was an improvement on the initially reported -$109.8 billion, but still a record deficit.

It’s a four-month low on foreign trade, with Exports reaching a record high $252.6 billion, +3.5%, while Imports came in at $339.7 billion, -3.4%. Our trade deficits with China and Russia, -$8.5 billion and -$2 billion, respectively, were only slightly offset by a +1.7% increase in trade deficits to Mexico. In any case, more figures to cool the burn of our recently inflamed inflationary picture.