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Broad Insights. Deep Analysis.

All Reports

The Consumer: Slower Spending, Shifting Priorities

Key Points: Companies have begun to signal that 2025 is off to a rough start. We’ve heard rumblings of a weaker consumer before, but our math said they would power through, and they did. This time feels different. The effects of immigration and DOGE on the job market have yet to take hold. We see a (0.5)% headwind to PCE from immigration and a (0.2)% impact from DOGE. On a probability-weighted basis, we see a

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Amazon: Do Retail Margins Have Room to Run? Do AWS Data Centers Pencil Out?

Key Points: A year ago, we penned a report on Amazon called “Squeezing Blood from a Stone”. The implication was that after years of spending aggressively, Amazon was determined to increase the productivity of its existing asset base. The theme applied equally to the retail business and AWS, but Amazon now appears to be embarking on a new investment cycle. We dive headfirst into the fundamentals of Amazon’s retail business and its AWS arm to

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The Consumer: How Will They Fund Future Spending? A Look at the Credit Impulse, Among Other Things

Key Points: Over the past five years, the consumer has been unflappable. After such a strong showing, we might expect fatigue to set in, but the spending data is actually getting stronger, not weaker. We want to know if this performance is sustainable. To that end, we analyze how consumers might fund future spending growth. We dig into their sources of funds, including labor income, savings, and wealth, but our focus is on the credit

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The Labor Market: Navigating the Noise

Key Points: Assessing the labor market has been like nailing Jell-O to the wall. Revisions, immigration and falling survey response rates have confounded the data, making the task of forecasting even more complicated than normal. In this report, we aim to navigate the noise using unconventional analyses and a ton of academic research. Our first task is to determine the underlying trend in monthly payrolls. Without that, it’s hard to anchor a forecast. We use

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Leisure Stocks: Experiences Outflanking Things. Will it Last?

Key Points: Consumers have been prioritizing experiences over things. The pandemic upended everything, but that theme is now back in full swing. Leisure stocks have been on a roll as a result. They’ve outperformed the market by 15% over the past year and 60% over the past two years. This report explores the fundamental and tactical appeal of those stocks. The secular outlook for leisure demand is strong. Leisure spending over-indexes to high-end consumers, and

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The Consumer Feels a Little Off Kilter Heading into 2025

Key points: It wasn’t long ago that economists were bracing for a hard landing. Today, the markets are having a party. The consumer accounts for 70% of GDP, and we think they’re a bit off kilter. While growth has been good, we find that gains in both the labor market and PCE have been narrowly focused, and that doesn’t inspire confidence. Labor markets are in flux – demand for labor has already slowed and immigration

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"UP-TO-DATA" PODCAST​

The Consumer’s Vital Signs. Tail Risk?

We hosted a timely webinar that outlined a few tail risks.  Employment growth is being driven by acyclical sectors like government and health care.  Both of these are under a microscope.  Job gains are heavily skewed to large firms with over 500 employees.  That adds risk to the equation.  Immigrants have also been driving the train, but for how long? Tail risk is also discernible within PCE.  Obscure categories are growing twice as fast as “bankable” categories.  Have a listen!

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Tractor Supply: Without Peer. Insights from Hal Lawton, CEO

Hal Lawton joins a growing list of CEOs that’ve graced us with their presence.  He shared key insights on our podcast.  We talked about how a tight housing market pushed Millennials into TSCO’s catchment area.  We talked about TSCO’s 7% market share, and the fact that outsized comps were driven by transactions, not ticket.  TSCO has no direct peer — that means it doesn’t have to share its slice of the market with “like” competitors or fall prey to their mistakes.  Give a listen!

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Webinar: The Consumer Could Surprise in 2025

We hosted a webinar to review the state of the consumer and to detail why 2025 might hold a few surprises.  We dive into the labor markets with a focus on immigration; we assess the implications of other policies such as tariffs and taxes; we explore household balance sheets to understand how wealth and leverage might influence consumer spending.  Our take is that a softening consumer will impact the interest rate environment, and that in turn, can have meaningful implications for stock selection.  The slides…

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Brinker’s Secret Sauce. Insights from the CFO

Brinker has been on a tear.  Same store sales have been ripping even as other restaurants are struggling.  We talk with CFO Mika Ware who has a unique perspective on the company’s turnaround.  It’s a classic case of blocking and tackling — slimming down the menu, simplifying recipes, improving standards, and killer marketing that’s informed by insights and data.  It sounds like Brinker has more work to do at Chili’s, and it might be able to replicate that success with other banners.

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The More Things Change, the More They Stay the Same: Our Interview with Bill Rhodes of AutoZone

Bill Rhodes led AutoZone for nearly 20 years.  Over that time, the auto parts industry faced major change — auto cycles have come and gone, the industry has consolidated, e-Commerce has altered the landscape, and vehicles have become laden with technology.  So far, it seems that the more things have changed, the more they’ve stayed the same — AutoZone has remained relevant to its customers and its business model has stayed the course.  More change is on the horizon — EVs are making inroads, etc. …

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A Moving Target: Making Sense of the (Newly Revised) Government Data

Friday’s revision to income and spending data has caused confusion.  We’ve prepared a 10-minute podcast to review the investment implications.  Some of the changes can be disregarded as noise, but there are three important takeaways.  First, the latest iteration of personal income is highly disconnected from labor market data.  Second, this is not the first time savings rates have been meaningfully revised, nor will it be last.  Investors should move on from using the savings rate as an investable data point.  Household balance sheets are…

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