On this Labor Day weekend, I salute all of you who are working hard to understand the US economy and then assess what this could mean for stocks in the months ahead.
It’s a very tough program, and you don’t get a lot of day-to-day guidance (unless you join Yahoo Finance!). However, you get to react like a boss – so choose those stocks wisely.
I’ve been working double time to better understand where the consumer is at this point in time and what the economic outlook is. The headlines read that inflation is slowing down. Yet discount store executives tell me people are trading cheaper canned tuna from deli meats that are still battling inflation.
It appears teens are buying expensive Abercrombie & Fitch clothes, while their parents opt for shareable meals instead of single-serve soups to save some cash.
“The other thing that is definitely prevalent is that consumers are really looking to stretch that dollar. And so they are more inclined to buy what we call more stretchable food. allow that number to be maximized, so think pasta and pasta sauce, rice, thick soups and even broth,” Mark Claus, CEO of Campbell’s Soup, told me.
Klaus said that while those “stretchable” meals have grown in popularity, more single-serving categories like cans of ready-to-eat soup have been under pressure.
Wild Observation!
This week brought more wild news about a consumer conglomerate that most investors think is doing relatively well. Some:
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HP Inc executives said this week that many people are still not buying computers because they cost too much and they need the money for other things. Maybe it’s the soup?
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Best Buy executives spoke of rising credit card defaults this week, as did Macy’s and Nordstrom last week.
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Chewy noted on its earnings call that it is finding more “discerning” buyers.
Cheap cans of soup. One bone less for your dog. Back-to-school uniforms from Marshalls owned by TJX instead of Macy’s.
This is where American consumers are right now (inflation-fighting beasts), and where they are likely to be during the crucial holiday shopping season.
It remains to be determined whether investors pick it up and re-rate the stock.
As you read today, remember that the economy created a “solid” amount of jobs in August. There’s a lot more going on than the title suggests.
Brian Sozzi is the executive editor of Yahoo Finance. Follow Sozy on Twitter @bryansozzi and on LinkedIn, Suggestions on deals, mergers, active positions or anything else? Email [email protected].
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