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

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

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

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

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

Key Points: We’ve refined our models to incorporate new data on the distribution of income, spending, and savings. Overall, we think that the consumer will continue to power through, but we remain concerned about the low-end of the income distribution. The question we seek to address in this report though, is whether the market has already braced for that outcome. Stocks that cater to the low-end consumer have taken a beating – they’ve underperformed a

Key Points Investors seem to have accepted the notion that the consumer is resilient. Our sense though, is that this new-found optimism is tenuous, and if consumers tap the brakes for one reason or another, it won’t take long for skeptics to come out of the woodwork. This report seeks to address the most common concerns we are hearing from our clients. Q: Is excess savings still a thing? The concept is an abstraction that

Key Points Our firm’s mission is to connect top-down themes with bottoms-up analysis. This report is a bit different in than it fuses learnings across sectors. We analyzed seven companies that hail from six different sectors – media, industrials, leisure, apparel, staples, and financials. Our goal is to provide an alternate lens through which to view your core holdings. Starbucks and Sherwin Williams hail from two very different sectors, but they are two peas in

Key Points: Our mission is to surface compelling investment ideas for our clients by connecting top-down themes with bottom-up analytics. For the past year and a half, our top-down view of the US consumer has been more optimistic than most, and that’s underpinned our pro-cyclical bias for the stocks. We’ve been particularly keen on the leisure names that stood to benefit as spending shifted back to services. There’s still a long way to go before

Key Points: The Fed has raised rates 10 times and the consumer has yet to flinch. Real PCE has come off its post-COVID peak, but for the past 18 months it’s been growing at a ~2% pace, almost like clockwork. Rate increases have derailed the consumer in the past, but this time could be different. This report assesses whether the consumer will remain impervious to rate hikes, or if a shoe is about to drop.