On this Labor Day weekend, I salute you all out there working mad hard to make sense of the US economy and then assessing what it could mean to stocks months down the line.
It's a brutally hard gig, one you don't get a ton of guidance on day in and day out (unless you are plugged into Yahoo Finance!). You do get boss-like feedback, however — so pick those stocks wisely.
I have been working double time to better understand where the consumer is at this juncture and the economic outlook. The headlines read inflation is slowing. Yet execs at discount stores are telling me people are trading down to cheap canned tuna fish from deli meat that's still reeling from inflation.
Teens appear to be buying pricey Abercrombie & Fitch clothes, while their parents opt for shareable meals as opposed to single-serve soup in a bid to save some cash.
"The other thing that is definitely prevalent is consumers are really looking to stretch that dollar. And so they're more apt to buy what we call more stretchable meals. These are purchases that allow you to maximize the number of servings, so think of pasta and pasta sauce, rice, condensed soup, and even broth," Campbell Soup CEO Mark Clouse told me.
While those "stretchable" meals have gone up in popularity, Clouse added, the more single-serving categories, like a can of ready-to-eat soup, have been under pressure.
Wild observations!
This week has brought more wild reads on a consumer that most investors think is doing relatively well. A few:
HP Inc. execs said this week in not so many terms people are still not buying computers because they are priced too high and they need the money for other things. Maybe it's soup?
Best Buy execs called out rising credit card delinquencies this week, just like Macy’s and Nordstrom did last week.
Chewy on its earnings call noted it's seeing more "discerning" shoppers.
Cheaper cans of soup. One less bone for your pooch. A back-to-school uniform from TJX-owned Marshalls instead of Macy's.
This is where the US consumer is right now (inflation-fighting beasts), and where they are likely to be during the crucial holiday shopping season.
Whether investors pick up on this and rerate stocks is to be determined.
Just remember when you are reading today that the economy created a "solid" amount of jobs in August. There is more going on than the headline would suggest.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
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