Consumer stocks
Headlines
Writing once more about consumer discretionary stocks.
Detail
I think the outlook statements for a lot of consumer names are going to be a “rug pull” come August results.
They are trading fantastically (today, shown below) into what I’m reasonably confident is a weakening environment (based on monetary policy, interest rates, commodity prices, rising inventories and consumer preference shifts).
The handful of positive trading updates over the past few days (KMD, APE) is undoubtedly emboldening some investors today, alongside the recent pullback in yields.
But I think the headline multiples only appear cheap because they are overearning and have modest recent momentum (e.g. EOFY sales, min wage announcements).
We remain happily underweight the sector.
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