The Consumer Goods Cliff, and also Elon Musk and Twitter

The Razor’s Edge

A lot has happened since we last published a Razor’s Edge episode: the outbreak of war, increased Fed hawkishness, and continued market volatility.

We pick up the thread we’ve been following for some time, though: how to understand ‘normalized’ earnings power and behavior amidst the Covid-19 pandemic, the global response, and all the knock-on effects. We focus this time on the consumer goods sector and whether the cliff facing companies like RH and Best Buy is buyable, and what it says about the current market.

We also, because how could we not, discuss Elon Musk’s investment in Twitter (though this was recorded a few hours before the news came out that he would not in the end serve as a director on Twitter’s board).

Topics Covered

• 4:00 minute mark – Recent ups and downs
• 7:30 – Whither online spending
• 13:00 – The Consumer’s health and the consumer goods cliff – BBY, RH
• 23:00 – How much has the market already considered this all?
• 36:00 – Backlogs to save us
• 40:00 – Dive in or stay away? Revisiting travel
• 49:00 – The complicated consumer picture
• 54:00 – Twitter and the Musk situation
• 1:03:00 – The value of a corporate jackhammer
• 1:09:00 – The security analysis challenge

Reading List:

• Akram's Razor's Edge: Covid Cliff Comes to Consumer and Fast's WeWork Moment
• Freight Waves' Why I believe a freight recession is imminent
• Stripe's Annual Report