Higher transport and input costs threaten US stock margins and demand. The PPI surprise shows the oil-cost pressure described in March playing out: headline rose 1.3% monthly versus 0.6% expected, and core 0.7% versus 0.3%. The March scenario put logistics costs at 3-6 weeks and consumer prices and weaker demand at 1-3 months; margins could shrink 100-300 basis points if costs cannot be passed on. The full scenario was not expected to play out. x.com  x.com 

Plummeting base costs and weaker demand from struggling economies abroad should push crude oil lower next year. The same forces will also weigh on many other commodities and services. x.com 

US consumer staples look good here as a safe-haven play. x.com 

Consumer staples are a lose-lose here because they are already overvalued at 26x forward earnings versus a 22.7x five-year average, the highest since just before the tech bubble burst. With stocks this richly valued, there is little left to rotate into if the economy weakens next year, and the healthcare rotation is well under way. If the economy holds, high rates hurt staples; if it weakens, they are too expensive to hold up even with rate cuts, except perhaps Campbell's. x.com  x.com 

Kroger's push toward lower everyday prices and private label will squeeze legacy food brands from both sides: pressure on wholesale prices and lost share. Its three-year plan targets about $5 billion in customer-value investment and $4 billion in annualized cost savings. Retailers control shelves and consumers; weaker brands, neglected in favor of buybacks and M&A, may surrender more of the profit pool. Kroger itself risks pain from price wars. x.com  x.com  x.com  x.com  x.com 

Consumer staples should eventually pay off despite going nowhere since their 2022 all-time high. There is no lack of institutional investment in these stocks, just no hype, and the current correction is a time to add. x.com 

Rising gasoline prices are short-term bearish for Lululemon, e.l.f. Beauty, Celsius, Nike, Ulta Beauty, Target and Deckers. Consumers squeezed at the pump spend less on discretionary items, while businesses face higher freight and logistics costs that pressure margins. Long term, the weakness should offer a chance to accumulate great brands at cheaper prices. x.com 

Oil at its highest since May and a market selloff that could pressure spending if it persists make Kohl's 50% one-month rally hard to justify. Shares rose another 8% today as the market sold off AI stocks. x.com 

Health care and energy are among the best places to be in a midterm year, with AI keeping tech, industrials and utilities stronger than usual. Since 1994, health care has beaten the S&P 500 by nearly 17% on average in midterm years, averaging 10.7% versus energy's 8.9%. The playbook favors health care, energy, staples and utilities into the vote, then tech, industrials and growth names such as Nvidia, Microsoft, Tesla and Amazon after it, with AI infrastructure the new post-midterm rotation. … Show more

Falling real wages and rising gas prices explain why retail stocks have been sold off indiscriminately. @EdwardConard notes real wages fell for the first time in three years as April CPI rose 3.8% year over year. With Minneapolis gas near $5 a gallon, every further 50-cent rise could mean about another 2% off retail stocks. The S&P 500 is not that dependent on consumer earnings. x.com  x.com