The US is going to see a decline in consumer spending: Erin Gibbs
All right, so my next guest says before you get comfortable with the notion of inflation just kind of drifting down, take a gander to spike in natural gas. This is the chart here and obviously it has been up big time. I'm going to bring it on Main Street Asset Management chief investment Officer Aaron Gibbs. Aaron, first of all, this spike is mind boggling, right? Even if you don't fall in that gas, we know that three 3.05 is twice as much as 1.60. So that's 100% move. It's a lot. And let's talk about the implication because these are the cost of our monthly utilities and there's the part in that gas place, right? Right. And the other important thing, electricity. So a lot of electricity actually is powered by natural gas. So between this 35% and this 14%, you have a lot of exposure. And so most Americans don't realize that this is actually built into a lot of their household bills, both from electricity and directly from your heating work. I mean small businesses. I mean, and, and, and if it's built in, that means you've got to pay indirectly again, right? And so we, we tend to focus on oil prices. You know, we are always talking about 'cause you, you see the price at the pump, you're filling up every couple weeks. These are sort of your monthly bills. You don't necessarily recognize that this is coming directly from natural gases, but there is a lot of exposure to that. And that can certainly be built in to those inflation rating. But but the Federal Reserve says forget about food and energy though, right? The problem is that because this actually powers your electric, this gets built into everything until you'll see just like it'll be your operating costs and businesses that then have to pass on those increases. And so it may be energy, but it will be built in and and and ultimately lead to higher. One thing I love about your thinking, OK, it's a problem. So let's make some money from it. That's right, Dorian LPGLPG is your symbol court electric energy rather CHRD Full disclosure app subscribers in that one as well. But I want to ask you, I'm going to get back. So we're talking about energy, right? We're talking about the consumer. This is your retail index, your pure retail index, XRT folks, all these red every session, it's down, down, down, down. This is since these small retailers have begun to report, right and freefall in absolute freefall mode. I mean, I just, I've got to ask you about that because it's not just that was for the quarter. Look what's happening now. So more recently going this way is the daily spending on credit cards, right? Look at all the red, everything is red except transit. We don't control transit, right, right. And so furniture down, department stores down 14%, home improvement down. I, I think the consumers tapped out now and we've talked a lot about this is that the consumers fit up, they're shifting to smaller prices. And because this inflation has persistent wages haven't kept up. I think we are going to see not necessarily the consumer to stop spend, but certainly a decline as we're seeing right here where we're going to spend less or to find cheaper products. All right, I'm going to give you some props here. And the last quarter you gave us some great names, Poulti, EPITSM, Taiwan Semi. Are you still in these names? Not EPI and TSM profits on those. OK. And you've got one that's down the the forget it before I get to that one that's down McDonald's Big Mac Big Mac now is up 87% since 2019. Mcnuggets are up 69%. Medium French fries are up 134%. The cheeseburger is up 215%. Is this why you stopped going to McDonald's? It's, it's crazy, but it really is why people are saying listen, the day-to-day. This used to be where you want to to to to absolutely that they wanna spend their money on other things. There's McDonald's is also there's been some mismanagement. They're trying to play catch up on better tasting food, all that there's there's also, yeah, a lot of other same with Starbucks, a lot of problems with just trying to get the foot traffic back into the stores. You know what? But go back management and expensive. Yeah, go back, make the make the apple pies the way to use the make. And that's all I can say. Great stuff, Aaron. See you soon.