Monthly Archives: November 2021

A Labor of Locks

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VIPs

  • Bankruptcy filings for companies with at least $50 million in debt hit three in the week ended November 12 vs. nearly 15 seen in June 2020; though the Fed’s credit backstop limited creative destruction, corroded supply chains are pressuring firms that survived the pandemic
  • An average of Future Inventories from regional Fed surveys suggests that panic buying by firms has subsided; the same message, which harms future GDP math, can be seen in the tightening of the 5s/30s curve corroborated by a decline in Google “Supply Chain” searches
  • Per Freightos, container costs from China to the US’s East and West Coasts have finally begun to turn; should the downward trend continue, prices may begin to fall back down to Earth for consumers as well as for businesses struggling to manage elevated input costs

 

We all managed (our sanity) throughout the 2020 lockdown differently. My mom, who turns 75 this Sunday (Happy Early Birthday, Nana!), was a Type 2 Diabetic when the pandemic hit Cross, a Texas town so small you can’t find it on a map. There, she gardens outside her home on a small ranch I gifted her in my early 30s when I was on Wall Street (an oil company later fracked underneath the property, so it’s a gift that returns monthly royalties). While she took comorbidity seriously enough to shed diabetes, one pound at a time, she isolated in Iola until her second vaccination. With all that time on her hands, and unable to “go to town” in College Station to her hairdresser, she performed a labor of love – she grew her hair. When she emerged from her cocoon in the countryside, she donated 13 inches to Locks of Love (LOL), a nonprofit dedicated to helping children and young adults up to the age of 21 who have lost their hair as the result of cancer, severe burns or alopecia, a condition which manifests in hair loss and is age agnostic. Per LOL, due to the media’s embrace, its locks have reached thousands across “all 50 states and Canada.”

As a former central banker, I approach this Thanksgiving with utter humility and a sad sense of helplessness about the inflation my former employer has amplified by turbo-charging cruel fiscal largesse. You know I’ve been on a bacon shunning bandwagon, disgusted as I am by its in-your-face gaudy prices. Upon the occasion of visiting a Tom Thumb, a big Dallas grocery in the Safeway brand – I ended up in front of the bacon, chatting with the loveliest woman. We were both just staring at the prices. The best that can be said is that competitor, Kroger’s charges 50-cents more for a pound of Oscar Meyer; it was “only” $9.49 a pound at Tom Thumb. Her eyes full of sparkle, she said, “You know, I was talking to a friend of mine a few days ago. We said to each other, ‘Pretty soon, the only thing you’ll be able to walk out of Tom Thumb with, if you walk in with $10, is a half-gallon of milk.’” We chuckled at the truth of the matter, and I wished her a Happy Thanksgiving, and she me, as we pushed our carts past one another to move to the next source of sticker shock. But the brief exchange left me embarrassed to have dedicated nine years of my career to working for the same Fed that’s hurting such a large percentage of the American public. Powell et al have backed themselves into such a tight corner that they’re damned if they do and damned if they don’t tighten. Lower for longer had never failed them…until now.

Today’s duo of charts hints at relief on the inflation front. In the “there’s no such thing as a free lunch” department, the graphs also suggest the demand side is cooling as pressure on the supply side begins to abate. The inspiration for the depictions du jour was a lonely Bloomberg headline from last Friday: “Default Threatens Companies Reeling from Frayed Supply Chains.” Default? Didn’t the Fed outlaw creative destruction on March 23, 2020?

For those of you unfamiliar with the term, in 1942, Joseph Schumpeter introduced the world to the idea of a “gale of creative destruction” unleashed by capitalistic forces which threatened the world Karl Marx idealized. The “process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating the new one” ensures fresh, fertile ground is laid such that there are more jobs created by new entrants vis-à-vis the now bankrupt entities.

In his quest to kill capitalism, with grit equal to George C. Patton, one Jerome Powell spearheaded Operation Kill Creative Destruction in March 2020. It worked. At its apex in June 2020, weekly bankruptcy filings by companies with at least $50 million in debt neared 15. In the week ended November 12, 2021, weekly filings had fallen to three, following a muted trend that’s emerged since last September. Creative Destruction appears to have been destroyed via fiscal and monetary stimulus joining forces.

Per Bloomberg, however, “A growing cohort of smaller companies that survived the cold depths of the pandemic say now they’re in danger because the economy is too hot. Mattress sellers, flooring manufacturers and makers of clean energy equipment are warning that stretched supply chains
and runaway freight bills have pushed them to the brink of ruin.”

The funny thing that happens when inflation becomes so debilitating it starts to put companies into bankruptcy is that it starts to fix itself. Companies are also telling us they’ve begun to replenish their depleted stocks. An aggregate of Future Inventories gauged from the regional Fed manufacturing surveys (yellow bars) tells us the panic buying has subsided. That same message, which negatively harms future GDP math, is being broadcast by the spread between the yields of the 5- and 30-year Treasuries (purple line). Validating this soft data is the lessening in Google Trend searches for “Supply Chain” (green bars).

Though the March 1st Texas primaries are technically three months away, incumbents are already on the stump. Carping about debilitating inflation will thus prevent the good news in the red and blue lines from being well broadcast – that freight costs have finally begun to turn. We can only pray that lower prices swiftly follow for the most vulnerable the Fed has left behind.

 

Please join Quill Intelligence this holiday season by giving to your local food bank, church or charitable organization that directly helps the needy in the next month.

 

Inflation Re-Harkens the Specter of Bankruptcies

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QI TAKEAWAY —   “Transitory” inflation is now catalyzing bankruptcies in America. As much as we hear about the bravado of job hoppers, job losses necessarily follow companies going out of business. The ‘stag’ in stagflation is rearing its ugly head. We know we’ve been swimming upstream for months against the tide of buyside and sell-side steepening calls. We remain comfortable with our call.

  1. Bankruptcy filings for companies with at least $50 million in debt hit three in the week ended November 12 vs. nearly 15 seen in June 2020; though the Fed’s credit backstop limited creative destruction, corroded supply chains are pressuring firms that survived the pandemic
  2. An average of Future Inventories from regional Fed surveys suggests that panic buying by firms has subsided; the same message, which harms future GDP math, can be seen in the tightening of the 5s/30s curve corroborated by a decline in Google “Supply Chain” searches
  3. Per Freightos, container costs from China to the US’s East and West Coasts have finally begun to turn; should the downward trend continue, prices may begin to fall back down to Earth for consumers as well as for businesses struggling to manage elevated input costs

Households Hitting Budgetary Breaking Point

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QI TAKEAWAY —   Consumer Discretionary has been on a tear, fueled by aspirational buyers and those on the receiving end of the Fed’s trickle up policies. Taking some profits in the sector could prove prudent.

  1. Per Bank of America, the percentage change in inflation-adjusted grocery spending on a 2-year basis slipped further into contraction in October; while food inflation appears to be leveling off at high levels, per the CRB, higher prices are driving nominal gains in card spend
  2. On an inflation-adjusted basis, growth in goods spending reached a massive 40% last spring, while a third stimulus check helped boost services spending 20%; against the current pricing backdrop, UMich Real Household Income Expectations in 1-2 years are now at 5-year lows
  3. The aggregate of Current Inventories from the NY, PHL, and KC Fed’s manufacturing surveys, as a z-score, is just below a 20-year high; meanwhile, Current Prices Paid continue to push upward as demand pulled forward exacerbates ongoing supply chain challenges

Danger, Will Robinson!

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  • Per Bank of America, the percentage change in inflation-adjusted grocery spending on a 2-year basis slipped further into contraction in October; while food inflation appears to be leveling off at high levels, per the CRB, higher prices are driving nominal gains in card spend
  • On an inflation-adjusted basis, growth in goods spending reached a massive 40% last spring, while a third stimulus check helped boost services spending 20%; against the current pricing backdrop, UMich Real Household Income Expectations in 1-2 years are now at 5-year lows
  • The aggregate of Current Inventories from the NY, PHL, and KC Fed’s manufacturing surveys, as a z-score, is just below a 20-year high; meanwhile, Current Prices Paid continue to push upward as demand pulled forward exacerbates ongoing supply chain challenges

 

The date more than 30 years into the future was October 16, 1997. The United States was in it to win it – the Space Race, that is. The means by which to launch this effort was the Jupiter 2, a saucer-spaced spacecraft that was to transport a cryogenically frozen family on a 5 1/2 year journey to colonize an earth-like planet orbiting the star Alpha Centauri. Such was the space craze that captured the imagination of a nation in the early 1960s Sputnik era. What started with the 1812 novel Swiss Family Robinson and inspired the comic Space Family Robinson culminated in the CBS science fiction TV series Lost in Space that ran all of 83 episodes in the three years through 1968. The original intention was to dramatically depict the trials and triumphs of a family whose spaceship had been thrown off course landing them on the wrong planet at the wrong time. The devolution to satirically silly was swift as the evil and hapless character of Dr. Smith endlessly battled the equally distracting Robot, a pricey cast addition who flailed ceaselessly shouting, “Warning, Warning!” into a vacuum bereft of cataclysms. The one catchphrase that withstood the test of time, however, was “Danger, Will Robinson!”

The markets’ Robot is the bond market, warning for months of danger, which like the SciFi icon, has fallen on deaf ears. The Federal Reserve’s slowly sapping liquidity from the markets presents nary a threat to a stock market that only knows how to mount fresh heights. Chicago Fed President Charles Evans on Thursday further reinforced the sanguinity, assuring investors that he still saw 2023 as appropriate timing for the first rate hike (we’ll be able to easily identify one of the outliers on that December dot plot revealed in this year’s last Summary of Economic Projections).

If only he’d accept, I’d invite Charlie to join me down Dallas way for my next shopping run to Kroger’s. Perhaps then he’d have a better feel for what that upper righthand chart represents. It’s hard to describe the shock effect of squinting to see if the price was a typo when I went to grab a pound of Oscar Meyer bacon priced at $9.99, up a big smidge from 2020’s $5.83. Suffice it to say, I demurred. I did not bring home the bacon, not for that price.

The cost to put food on the table has become so prohibitively expensive that when adjusted for inflation, the percentage change in grocery spending (light blue line) on a 2-year basis slipped further into contraction in October, according to Bank of America. The best that can be said is that, in the same timeframe, food inflation (yellow line) appears to have leveled off, albeit at ridiculously high levels. The sell-side firm diplomatically noted that, “With rapidly rising inflation in the economy, we have to consider how much of the gain in card spending simply reflects higher prices.” A similarly depressed trend in real spending on furniture has emerged, while airfares are bucking the trend, seeing rising real spending.

Another report released Thursday by the Economic Cycle Research Institute further warned that, “Inflation is really cutting into consumer budgets. Consumer spending intentions for vehicles and appliances are now the worst in over 40 years. Let’s not pretend that won’t weigh on real holiday spending, adjusted for inflation.”

Some of what we’re witnessing is payback for the most ill-conceived fiscal policy in U.S. history. On an inflation-adjusted basis, growth in goods rose by a blistering 40% when it peaked last spring. Stimulus check 3.0 direct deposited into checking accounts of millions of Americans who didn’t need the money similarly stoked services spending, which skipped up by 20%.

As for those who protest the nasty pullback since then, the ECRI offered up two clarifiers: “While some may wonder if this is simply about base effects, it is not. We have ways to strip out the base effect, and the slowdown patterns shown still hold.” Moreover, while “Retail sales data is much narrower [than broad] consumer spending data. Yes, real retail sales growth showed a slight uptick in October, but the downtrend that began in the spring is very much intact.”

The upshot: The slowdown in consumption ain’t near over just yet. 

The demand pulled forward is still wreaking havoc on the supply chain the dash to relief-spend catalyzed. Today’s lower right chart depicts the aggregate of the manufacturing surveys of the New York, Philadelphia and Kansas City Feds’ Current Prices Paid and Current Inventories series (turquoise and red lines). When playing-field-leveled using our favored z-scores – deviation from the mean adjusted for volatility – you see that inventories are just off their 20-year highs while price pressures have yet to abate. Both gauges remain near record highs.

Even as profit margins remain pressured, Americans’ perceptions of their wherewithal to pay up is withering. Real Household Income Expectations in the next 1-2 years (green line), as surveyed by the University of Michigan, are at five-year lows. Little wonder that the Buying Climate (purple line) reported weekly in the Langer Consumer Comfort Index has also hooked back down.

Hopes are running high that a week from today, Black Friday will be one for the record books as U.S. consumers are compelled to buy early, or else. The risk is that the Robot that cried wolf is finally flagging a true warning.

Caveat Emptor: Keep Building

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QI TAKEAWAY —   Home builders have property appreciation at their back to mathematically justify keeping the building machine up and running. A shift to supply conditions north of long-run averages could, however, flag a move out of the right tail for pricing power after an impossibly long run of undersupply that’s left most investors in the sector vastly unprepared.

  1. New homes under construction rose to 1.451 million in October, eclipsing the 2000s peatilk of 1.426 million circa March 2006; the last time units under construction were higher was the 1970s, though the current boom critically lacks the same underlying population growth rates
  2. Unsold existing single-family home inventories sit at 2.4-months, a record low with no prior reading below 3 in data back to 1982; meanwhile, the undersupply of new single-family homes in 2020 has given way to prints closer to the long-term average of 6 months in 2021
  3. A record 28% of new single-family homes for sale are “Not Started” – a massive backlog of unbuilt homes; however, with buying conditions, per University of Michigan, inverted for the first time since the 1980s, demand will be challenged by the high pricing environment

Hysteron Proteron Club

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VIPs

  • New homes under construction rose to 1.451 million in October, eclipsing the 2000s peatilk of 1.426 million circa March 2006; the last time units under construction were higher was the 1970s, though the current boom critically lacks the same underlying population growth rates
  • Unsold existing single-family home inventories sit at 2.4-months, a record low with no prior reading below 3 in data back to 1982; meanwhile, the undersupply of new single-family homes in 2020 has given way to prints closer to the long-term average of 6 months in 2021
  • A record 28% of new single-family homes for sale are “Not Started” – a massive backlog of unbuilt homes; however, with buying conditions, per University of Michigan, inverted for the first time since the 1980s, demand will be challenged by the high pricing environment

 

“Life is short; eat dessert first” is a familiar mantra attributed to famed pastry chef Jacques Torres. But he wasn’t the first to suggest such turnabout in the daily ingesting process. That idea was championed by the Hysteron Proteron Club, a 1920s dining club at Balliol College, Oxford in England. The club’s name, of Greek origin, is a hysteron proteron – a rhetorical turn, which occurs when the first key word refers to something that happens later than the second. An example in everyday life would be “putting on your shoes and socks,” rather than taking the logical reverse route. At Balliol College, the Hysteron Proteron Club’s raison d’etre was eating meals, but backwards. For every term, there was at least one dinner that commenced with coffee and liqueurs and ended with the soup course. The Club’s activities ventured beyond flipping eating orders. As legend holds, one meal spanned 12 hours, from 9:00 a.m. to 9:00 p.m., starting with coffee and ending with a swim, usually a pre-breakfast activity, at Parsons’ Pleasure in Oxford’s University Parks.

History of unusual English eating clubs can be summed up in more common figures of speech such as “putting the cart before the horse” or “the tail wagging the dog” or, one of QI’s favorites, “getting over your skis.” As for the here and now, no references to another Englishman, ski-jumper and Olympian Eddie are apropos. Today, we reference the risk of overbuilding in the U.S. housing market.

Cue yesterday’s October housing starts and building permits report from the Census Bureau. Most of the focus from the Street is usually on the housing starts angle as it feeds directly into residential investment in the gross domestic product (GDP). Lags for housing starts are spread out over twelve months, with most of the new home building occurring in the first nine months. This means the latest reading on starts has ripple effects on future new residential construction activity.

Many rely on the National Association of Home Builders sentiment index for guidance on the near-term path for the single-family housing sector. However, this is of the ‘soft data’ variety. The short-run direction for home building of the ‘hard data’ class comes from building permits. This metric is a varsity leading indicator, one of ten to make the cut on the team of the U.S. index of leading economic indicators.

One measure from the starts/permits report that’s overlooked, however, is that of homes under construction. This indicator provides a snapshot of present activity that’s been permitted and started but not yet finished. ‘Under construction’ is one of the stages of housing production, with ‘Not started’ coming before and ‘Completed’ coming after.

Quietly and to little fanfare, new homes under construction in the U.S. rose to 1.451 million in October (blue line). Follow the dashed blue line from right to left and observe how the post-COVID boom in home building has now eclipsed the 2000s peak of 1.423 million reached in February and March of 2006. A further glance to the left lands the dashed line against the only other bulge rivaling the current one – that of the early 1970s.

Before you think of asking – YES, the 2021 run-up in house prices does resemble this era…sans the underlying demographic justification. Faster home price appreciation translates to higher margins and profits for home sellers. Home builders are incentivized to sail downwind and build more units to ‘answer’ the pricing environment. To that end, the average sales price for new single-family homes is roughly 14% above year-ago levels (yellow line) through the first nine months of 2021. Follow the yellow dashed line to the left from the latest plot and you’ll also land in familiar territory – the 1970s boom.

Housing undersupply has become a battle cry of the realtor community, prompting the builder community to ultimately capitulate. At the current sales pace, unsold existing single-family home inventories sit at a 2.4-month supply (green line). At no point in pre-pandemic history, back to 1982, did single-family existing home supply register readings below 3 months.

The extended undersupply signals emanating from the home resale market have builders hungry to satisfy home buyers’ needs. At 3.5 months, record undersupply of new homes in 2020 (red line) have given way to readings closer to the long-run average of about 6 months (dashed red line) in 2021. But that doesn’t mean this is the new status quo.

A record 28% of new single-family homes for sale are in the stage-of-production bucket that’s furthest upstream, as in not started. In short, it translates to land acquired. Think of that as a proxy for the backlog of yet-to-be-built homes. These properties require prepping such as grading and laying infrastructure like sewer lines, etc. Once that process is complete, the builders can (and, critically, must) go vertical. There’s a unique inertia to finish the projects once they’re started.

Echoes of 1970s home price inflation and home building bulges don’t necessarily sound like the overbuilding of the 2000s. With home buying conditions inverted (more saying it’s a bad time to buy than good) for the first time since the early 1980s, demand for new shelter will be challenged by a persistently high pricing environment. The vulnerability of getting way over their skis could become nastily manifest as builder momentum leads to new home months’ supply running noticeably above the long-run trend. Better to eat dessert first.

Defense Wins Championships

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QI TAKEAWAY —   Retail sales are being inflated by pervasive demand/supply imbalances that could morph into challenged consumer purchasing power. We get that our call against consumer discretionary has been way too early, and therefore costly. But that can’t take away from the new element of a lack of stimulus spending coupled with the dual capitulations of rental evictions and inflation that’s choking working U.S. households’ budgets. And we’re only 17 days away from the McConnell debt ceiling moment even as Biden has announced he’ll name his choice for Fed chair on a Saturday, when markets are safely closed for trading. Paring more cyclical consumer positions might be a prudent course of action.

 

  1. October’s 1.7% MoM retail sales print was the largest since March and more than four times greater than the 0.4% long-term average; however, given these are nominal terms, deflating them using the CPI shows real retail sales remain 6% below March’s post-pandemic high
  2. At 1.09, September’s retail inventory/sales ratio hovered just above April 2021’s record low 1.07 print; prior to the pandemic, this metric had never fallen below 1.3, with fiscal stimulus helping to drive a persistent supply/demand imbalance and pull forward consumer spending
  3. PPI retail trade inflation, though off its June peak of 12.2% YoY, remained high in October at 8.2%; as z-scores, retail inflation is rising at above-trend rates in six sectors, notably autos, furnishings, general merchandise, clothing, miscellaneous goods, and recreation goods

 

 

King of the Catch Phrase

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  • October’s 1.7% MoM retail sales print was the largest since March and more than four times greater than the 0.4% long-term average; however, given these are nominal terms, deflating them using the CPI shows real retail sales remain 6% below March’s post-pandemic high
  • At 1.09, September’s retail inventory/sales ratio hovered just above April 2021’s record low 1.07 print; prior to the pandemic, this metric had never fallen below 1.3, with fiscal stimulus helping to drive a persistent supply/demand imbalance and pull forward consumer spending
  • PPI retail trade inflation, though off its June peak of 12.2% YoY, remained high in October at 8.2%; as z-scores, retail inflation is rising at above-trend rates in six sectors, notably autos, furnishings, general merchandise, clothing, miscellaneous goods, and recreation goods

 

Daniel Pugh was born in Zanesville, Ohio and raised in Mason, about 30 minutes north of Cincinnati. One of six children, he played basketball at William Mason High School and leveraged his court skills to a basketball scholarship at Eastern Kentucky University where he majored in communications. After college, he was an on-air radio personality at WTUE in Dayton from 1979-83 and moved on to CNN as a sports reporter from 1983-89. His big break came at ESPN, when he dropped his surname for his middle name ‘Patrick.’ The rest, as they oft say, is history. Fans of ESPN’s SportsCenter remember Dan Patrick’s pairing with Keith Olbermann, which elevated the program to star status. But it was Patrick’s catch phrases that are the stuff of legend. Who can forget “The WHIIIFFFF!” or “NOTHING but the bottom of the net!” or “We’re going to ooooovertime” or “You can’t stop him, you can only hope to contain him”?

Pugh’s indelible imprint on popular sports culture propted Sports Illustrated to create a dictionary of Dan Patrick’s terminology. Probably the most memorable and recognizable utterances was, “(Dare I say) En fuego.” This reference translates smoothly to yesterday’s U.S. economic calendar. October retail sales were en fuego. The 1.7% headline gain that includes food services bested the 1.4% consensus estimate, and was not only the largest monthly increase since the stimulus-juiced month of March 2021 (up 11.3% month-over-month), but was more than four times greater than the long-run average run rate (0.4% per month). This marked the third straight gain, and the longest winning streak for retail spending in about a year.

The good news prompted the Street to upgrade fourth-quarter consumer spending forecasts, especially with “control group” retail sales, the direct input into personal consumption, starting off the autumn quarter nearly 12% (annualized) above the third quarter average, following a 3.2% quarter-over-quarter annualized advance in 2021’s third quarter.

To say that retail sales were inflated is an understatement. Recall, the Census Bureau reports the data in nominal dollar terms; they are a product of price * quantity. The purer retail sales series that excludes food services ring-fences goods spending. Through this lens, nominal retail sales reached a record high in October, eclipsing the April 2021 level by 0.6%. Never more dollars in the cash register. Cha-ching!

Volume matters. However, when deflating these figures by the consumer price index (CPI) for goods, October real retail sales stood 6.0% below the March post-pandemic high point. Looking at the retail space from this angle flags significant ground to recover in this phase of a normalization after the last of the stimulus checks produced the bulge in spending earlier this year.

For perspective, CPI goods inflation rose to a 10.5% year-over-year (YoY) rate in October (blue line) a level last seen in the inflation mountain ranges of the 1970s and early 1980s. (An aside – it’s remarkable that President Jimmy Carter is alive to witness this phenomenon. One can only imagine what he thinks of “transitory”!)) Alternatively, the producer price index (PPI) has a similar measure from the retailers’ perspective. The PPI for retail trade inflation also has accelerated in tandem with the CPI measure, reaching double-digit territory – and a 12.2% YoY peak in June – before ebbing to a still high 8.2% in October (yellow line).

These parallel lines are the byproduct of the demand/supply imbalance in the retail sector. Yesterday’s U.S. business inventories report revealed that at 1.09, September’s retail inventory/sales ratio remained awfully close to April 2021’s record low of 1.07 (red line). The history of the series is critical to this discussion — prior to COVID-19, the retail inventory/sales ratio never fell below 1.30. Stimulus on steroids – 42.3% of GDP directly deposited into the checking accounts of millions who didn’t need the money — helped drive excess demand that fueled the persistence of the undersupply, which then drove the two legs down to record lows.

Pervasive retail undersupply. Note that low inventory/sales ratios spread far beyond the auto sector. Home goods, such as furniture and home furnishings; electronics and appliances; building materials; food and beverages; clothing and accessories; and general merchandise all face below normal supply conditions relative to the level of demand.

While prices are boosting top-line retail sales, stubbornly high and rising prices could act as a governor on future spending through hits to consumer purchasing power. The table above illustrates this by delving into the granularity in the PPI data.

Retail inflation in six categories color coded in red – autos, furniture/home furnishings, general merchandise, clothing, miscellaneous goods and recreation goods – is expanding at above-normal rates. This is depicted in the far-right column using z-scores, deviations from the mean adjusted for volatility. Those colored purple – building materials, auto parts, electronics/appliances and food and beverages – indicate inflation closer to normal rates. And the three in the green zone – nonstore (i.e., ecommerce), health and personal care, and gasoline – all sport price trends running at below-normal rates.

Dan Patrick should narrate the rest. Does diminishing purchasing power risk “Goodbye…Game over…Drive home safely” for the U.S. consumer? “Gone” is not how you would prefer to see your unrealized portfolio profits. Those long in the consumer discretionary sector might be wise to be “going against the grain” and pare positions. Remember “defense wins championships” and persistent purchasing power headwinds suggest performance in more cyclical spaces in retail could face more challenges. “Alongside my tag team partner, I’m merely Dan Patrick.”