This is my big picture idea about the second half of 2024…

The consumer is not dead - or even dying - the consumer is making choices.

From 2020-2023, nobody made choices. They just bought and did everything they wanted. Now they’re saying yes to this, but no to that, and that explains the selective outlooks we’re hearing from all the companies.

For a few years, people stopped making any choices at all. They were ready, willing and able to do all the things. Bank accounts were flush, labor markets were tight, wages were rising steadily and everything was a yes.

This is the big thing that I think has changed (is changing). It’s what separates last year from this year. We are hearing it from CEOs from McDonald’s to Walmart, Starbucks to Nike. Price increases have, in many cases, hit their limits and the consumer is saying no thanks on a regular basis. People are paying attention to what things cost now and it’s becoming more obvious.

Supermarkets are talking about trade-downs from brands to generics. One of the biggest trends on TikTok is teenagers filming the burrito-baristas at Chipotle to ensure a healthy glop of each ingredient down the line (the company has responded internally, instructing employees not to fuck around when a customer has their phone out). McDonald’s brought back the $5 value meal (which franchisees are screaming about, given what this does to their margins) and Howard Schultz wrote an open letter on LinkedIn to the company he used to run about responding to the consumer’s desire for value.

And then there are the canceled arena tours…

Jennifer Lopez canceled seven dates for her North American tour earlier this spring due to lack of demand and then today it was announced that the entire thing is not happening. Everyone knows why - the Ticketmaster seating screenshots are going viral, a sea of blue (open) spots. She hasn’t had a hit in 20 years and may have overreached. I think her movies are better than her music, but I’m not the core demographic they’re hoping for. J Lo is attributing the cancelation to her family / marital situation but the evidence is everywhere that there just wasn’t enough interest. The Black Keys canceled their entire North American arena tour last week. No one was buying the tickets. They booked larger venues than would be necessary and the consumer is just not saying yes to everything anymore. The Black Keys are awesome, but an arena tour was probably too ambitious given how long it’s been since they’ve had a big record on the charts. I predict more of this over the next few months as events that may have seemed like a slam dunk while they were being planned last year no longer seem as promising now as potential buyers ignore them.

No one is going to repeat what Taylor did last year. This doesn’t mean concert demand is falling off a cliff, it just means we’re normalizing. Eminem is out with a new single this weekend. Which means an album and a tour are coming. Eminem will sell out arenas (stadiums) within minutes. Unfortunately for other acts, people will be saying no to some of their shows in order to say yes to this. Completely fine, but different from prior years. BTW, if you haven’t seen the video for “Houdini” yet, it’s just absolutely epic.

There are reports of cruise operators launching discounts to fill berths. For the first time since the pandemic, airline tickets are falling in price - down 6% this summer versus last summer. None of this is catastrophic. Demand is healthy. It’s just not in Sicko Mode. That’s over now.

For every lowlight, there’s a highlight. Plenty of companies are selling products and services full speed ahead, but the spending has narrowed - some would say normalized. People are choosing again.

Take a look at Chart Kid Matt’s new one on the XRT ETF components - we used this on the show this weekend:

We’re showing you a massive amount of dispersion between the various retailers that make up the index ETF. The average retailer’s stock is up just 2.6% year-to-date but you can plainly see how wide the differences are for various stocks in the group. This is evidence of the newfound choosiness of the US consumer.

Yes we’re still shopping, no, we’re not buying indiscriminately anymore. That’s what’s changed. This is a preview of what the rest of 2024 will look like.

You’re going to be getting mixed messages about “the consumer” every single day this summer. I need you to remember that the plural of anecdote isn’t data. I just listed a bunch of anecdotes above because they’re illustrative of the whole painting coming into focus. Overall, the data is still holding up, but that doesn’t mean we should ignore the stories. The stories of consumers saying “no thanks” are growing in both volume and intensity.

Stephanie

Wherever I go people ask me about my castmates on The Halftime Report on CNBC. I tell people the truth - I get along great with everyone and it’s an honor to do the show with so many smart, entertaining and dedicated professionals. What sets our show apart from many other things on financial TV is that we all manage money and have actual skin in the game. I couldn’t be in a better situation on TV than I am with the Halftime regulars.

And when people ask me about Stephanie Link, without hesitation I tell them that she is the most well-researched and diligent person on the show. She knows more about her companies than anyone else I have ever met on set. If you ask her about 3M or GE or Citigroup or any of her current positions, she can tell you every single thing under the sun about it. You will run out of time before she runs out of details. Steph and I have been on the show together since the pilot episode thirteen years ago. She is one of my favorite people I’ve ever met in this business and I learn something new from her every time we’re on the air.

And so this was a very special episode of The Compound and Friends for me. Stephanie told us the story of her career, what’s she’s doing now and how she feels about the consumer, the economy, the inflation fight, the earnings outlook, the energy sector, housing trends and so much more. The time just flew as we were recording and the feedback we’re getting from fans of the show has been off the charts.

If you haven’t heard it yet, the podcast links are all here. Or, you can watch it via YouTube here:

The JPMorgan Corporate Challenge

On Wednesday night my firm fielded 20 runners for the JPMorgan Corporate Challenge in Central Park and I was (improbably) one of them. The Challenge is an annual summertime event in New York City where thousands of runners from hundreds of corporations participate to raise money for the park’s conservancy. The race is a 5k (roughly 3.6 miles) and everyone is timed electronically from the starting point through the finish line.

It’s an awesome team-building experience for a great cause. I last ran it in 2006 and forgot how hard the uphill climbs were. I started training for the race in March by running around the local nature preserve in my town. My training ground does have a mountain but it’s nowhere near steep enough to have prepared me for the grueling stretch of terrain in Harlem north of the Reservoir we had to scale shortly after mile 1. I finished in 41 minutes, which I was fine with. Three months ago I could barely run half a mile. Getting between 11 and 12 minutes per mile for this was a decent showing. Next year I will definitely improve now that I know better what I’m up against.

The fastest finisher at my firm was our COO Nick Maggiulli (Of Dollars and Data blog), who did it in 24 minutes and change. We had a bunch of people complete the race in under 30. Our team’s average time was 35 minutes, which put us in the top 200 globally as of that night’s tally (the Challenge happens in cities all over the world).

Okay, that’s all from me. Hope you have an awesome weekend and get some sunshine. Talk soon! - JB