Key Points: Employment is the engine of consumption growth, and it’s shifted into low gear. The aim of this report is to determine whether monetary policy will soften the blow. We assess the effect lower rates might have on (i) the consumers’ P&L, (ii) the low-end consumer, (iii) spending on goods versus services, (iv) the housing market, and (v) home values.
After turning more cautious on the consumer, we’ve received a lot of questions from clients. This report seeks to address those queries while adding a healthy dose of micro analysis to our macro call. We share updated thoughts on autos, RVs, housing-related stocks, staples, and leisure. We also dig into historical return profiles of consumer stocks.
Key Points: Our optimism for the US consumer has been well placed. The consumer has been remarkably resilient over the past few years, largely due to strong labor markets and bulletproof balance sheets. The current year is off to a good start, but as we peer into 2025, we expect spending to slip into a lower gear.
Key Points: The low-end has been struggling for a while, but recent commentary from McDonald’s, Dollar Tree, Five Below, and others has fueled investor concerns. The aim of this report is to add clarity to the debate, and to determine whether a bet on the low-end makes sense.
Key Points: When it comes to the consumer, market participants spend a lot of time and energy studying the demand side of the equation. Supply dynamics often get short shrift. In this report, we analyze the supply of labor, the supply of fixed capacity, and the supply of inventory. Understanding the supply side can also tell us something about where inflation is headed.
Key Points: There were more than a few landmines in the consumer sector during Q1 earnings season, and lately, it’s been bellwether stocks like Starbucks, McDonald’s, Nike, and Lululemon that’ve been sounding the alarm. The aim of this report is to understand whether Q1 results signal a softening consumer, or if the issues are idiosyncratic in nature.
The consumer is in an awkward spot. Real disposable income is in negative territory — a rare sight. PCE has held up, however, due to OBBB benefits and a declining savings rate. Some think the savings rate is a red flag… we see it as yellow. Consumer stocks have been a minefield. The sector has felt irrelevant in an AI world, and sales and earnings trends have lagged the broader market… despite a shot in the arm from tax refunds. We think the consumer will…
The consumer is perceived to be the stalwart of the US economy, but it’s more nuanced than that. After all, the two largest consumer markets — housing and autos — have been floundering. Those pockets of weakness have given oxygen to other areas of consumption. So long as that’s the case, the status quo can prevail. To assess what lays ahead, we quantify the macro crosscurrents acting upon the consumer. We also offer an outlook for global brands, retail stocks, consumer staples, leisure, housing and…
Rubinson Research is now four years old. We were more optimistic than most for the first three years and we’ve been more cautious than most for the past year. We’re not betting against the consumer, but our sense is that companies (and some investors) are taking the consumer for granted. We always stick to the math, and absent a major uptick in employment, the outlook isn’t terribly inspiring. This 30-minute webinar is chock-full of thought-provoking data.
We’ve spent a lot of time trying to understand how the consumer will behave in 2026 and 2027. Population growth will be anemic, job growth is already weak, and the risk associated with AI is on the come. The OBBB will serve as a counterweight, but it’ll be more of a sugar high than a panacea. We think retailers are the best bet in consumer-land due to (i) elevated tax refunds, (ii) a rate environment that favors goods over services, and (iii) the global brand-emic.
The consumer has been a juggernaut, but the math doesn’t add up. Employment, the engine of consumption, has stalled. It’s not because of AI — that risk is still in front of us. The high-end has been driving PCE, but the “wealth effect” is probably not as durable as some suggest. Our math says a 2% change in home values is worth as much as a 10% move in the S&P. We are cautious on leisure. It makes sense to own retailers during a brand-emic.
We’ve been expecting the consumer to hit a soft patch, and recent employment data have made that outcome more likely. Fiscal stimulus and rate cuts will help stave off a bigger issue, but portfolios might still need to be reoriented. We think rate-sensitive names will continue to work — we’re especially fond of housing-related stocks. And, we built three frameworks to identify stocks that can bridge a gap. They identify issues with (i) pricing power, (ii) asset-light models, and (iii) good shock absorbers.