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

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

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

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

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

Key Points: It used to be that investors could buy the best global brands, close their eyes, and watch their gains compound over time. That strategy hasn’t been working well, at least not in consumer land. Estee Lauder, Gucci, Nike, Disney, LVMH and Lululemon have each underperformed the market by (15)% or more over the past three years. The aim of this report is to assess what – if anything – is amiss with global

Key Points: Staples have underperformed the market on a one-, three-, five- and ten-year basis. They were paragons of pricing power for much of the 80’s and 90’s, but the group has fallen from grace. This report analyzes the stocks from both a fundamental and a tactical perspective. We also seek to understand what makes the stocks tick.

Key Points: After being steadfastly bullish on the consumer for two and a half years, we became more cautious back in July. We don’t see a major problem ahead, but our forecasts call for a considerable slowdown in spending growth. We think we’ve got the general direction right, but there’s plenty of uncertainty to go around. The data have also been a moving target, so we think it makes sense to be prepared for a

Key Points: For those interested in the distribution of things, there’s been a treasure trove of data released over the past few weeks. In this report we analyze trends using the American Time Use Survey, the Fed’s Distributional Financial Accounts, and the Consumer Expenditure Survey. We tease out important trends by age, income and generation from each of those data sets.

Key Points: This report introduces a new framework that we call “In the Weeds”. By dissecting business models into their component parts, we can understand what makes companies tick. The first iteration of the framework focuses on dollar stores, home improvement stocks, specialty retailers, and mass merchants. Over time, we intend to add other industries to our arsenal. We analyze ~25 companies on traditional metrics that include sales per square foot, operating margins, inventory turnover,