Consumer demand destruction hits big-ticket retail
The bear case argued for consumer discretionary and appliance sectors is that a combination of rising gasoline prices and a deteriorating labor market is driving a GFC-level contraction in discretionary spending.
The argument
The host highlighted Whirlpool's 10% drop in March appliance demand and McDonald's warning of a worsening consumer environment as evidence that defensive value strategies are failing to offset systemic pressure.
The thesis, stress-tested
✓ What validates it
- ✓Whirlpool reporting further inventory build-up in upcoming quarters
- ✓National average retail gasoline prices sustained above $4.75 per gallon
▸ Risks discussed
- ▸A sudden drop in crude oil prices easing gasoline pressure
- ▸Government stimulus or rate cuts reviving housing and appliance demand
Hear it yourself
"the CEO McDonald said the current consumer environment is, in his words, certainly not improving and maybe becoming a little bit worse. That was after the company reported better than expected past results. Those from mainly before the full weight of the energy shock. Now over in big ticket items and appliances, Whirlpool, the the employer of the Maytag man, they compared the current environment to, not joking, 2008 and 2009 as the cracks of demand destruction get to be even wider and becoming even more noticeable."
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