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Broad Insights. Deep Analysis.

All Reports

A Perspective on the Auto Cycle. Will Consumers Step on the Gas or Tap the Brakes?

Key Points: The auto industry missed out on selling 9 million units over the past few years. The question we have is whether that pent-up demand will ultimately surface, or remain latent. This report assesses demand trends, supply dynamics, and credit conditions with the aim of understanding where the auto cycle is headed. We suspect that usage will factor into the replacement cycle. Miles driven are still (5)% below normal, and by our count, the

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If the Consumer Is Strong, Why Are Credit Card Delinquencies Rising?

Key Points: The consumer has stood strong in the face of meaningful headwinds, and we think they’ll continue to hold up well in 2024. The uptick in credit card delinquencies seems to run counter to our thesis, so the aim of this report is to understand why delinquencies are moving in the wrong direction, and what that might mean for PCE in the year ahead. A little over a year ago, credit card balances eclipsed

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Housing: It’s Complicated. A Perspective on Homebuilders and Home Improvement Retail

Key Points: The housing market is typically the Fed’s most reliable transmission mechanism, and while housing activity has slowed markedly, the tack-on effects have yet to sink the economy or the consumer. Housing is a complex subject, and there’s no shortage of data to analyze. We focus our energies in this report on demographics, the normalization of pandemic effects, spending on home improvement, and the labor market. Housing turnover has reacted to rate hikes much

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Consumer Staples: Are We There Yet? A Deep Dive into Tactical and Fundamental Issues

Key Points: We’ve been bullish on the consumer and that’s created a bias for discretionary stocks over staples. Staples, though, have lagged the market by ~20% over the past year, and the aim of this report is to determine whether it’s time to buy this beaten-down group or if we should continue to tread lightly. The decision to own consumer staples stocks cannot be made in a vacuum. That’s because staples often act more like

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Consumer Stocks: Our Idea Generator Can Help Navigate a New Paradigm

Key Points: We’re often asked when the consumer will crack. We’ve been concerned about the low-end of the income distribution for some time, but when it comes to the aggregates, we don’t see red flags waving. The bigger question we have is how a shift from nominal growth to real growth will affect the stock selection process. We’ve modified our Idea Generator to emphasize business model dynamics like asset intensity and operating leverage. Our updated

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Consumer Stocks: Repositioning to Reflect the Shift from Nominal Growth to Real

Key Points: Consumer stocks had a rough third quarter. Staples continued their downward slide. Discretionary stocks tend to outperform when staples are cratering, but that’s not been the case this time around. We’re mindful of the fact that spending seems to have slowed post-Labor Day, but we think the consumer will regain their footing. We built a new interactive model that projects income, spending, and savings through 2025. We stress test assumptions to determine where

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"UP-TO-DATA" PODCAST​

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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A Conversation with Carol Tome, CEO of UPS

Yesterday, we caught up with Carol Tome, the CEO of UPS.  We covered a lot of ground … as UPS typically does!  We talked about the state of the global supply chain, the shift between goods and services, the de minimis rule, tariffs, UPS’ relationship with Amazon, the labor market, driverless vehicles, drones, AI, and more.  Click the link to view our 20-minute interview.  So far, we’ve hosted the CEOs of Delta, Home Depot, and UPS.  There’s more to come.  Sign up for our podcast…

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