Posted by You can’t always get it right. My theory was that demand for consumer staples would recover in 2025. Stocks like Kraft Heinz and other packaged goods companies would show improving sales as interest rates started dropping. Well, that hasn’t been the case. Kraft beat their earnings estimate again today, but lowered expectations for the remainder of the year. CEO Carlos Abrams-Rivera stated that consumer sentiment was among the worst in decades and predicted these pressures would continue beyond the fourth quarter. On hearing that, I decided to sell my 100 shares at a 38% loss. I also sold 300 shares of consumer staples ETF (FSTA), which has been flat on the year. I hate selling at a loss, but hoping for consumer sentiment to improve next year seems unlikely.
All the money in the stock market is concentrated in the top six stocks. If you aren’t invested in them, your retirement accounts are probably not doing very well. I wasn’t expecting the DOW, S&P, and Nasdaq to be hitting new highs every other day. Consumer staple stocks are definitely not sharing in the euphoria. I think that tariffs and inflation have forced food companies to raise prices. As prices increase, consumers stop buying their products or buy a cheaper alternative. Wealthy people don’t buy enough groceries and poor people and cutting back on their spending. Now, food companies are concerned about the loss of SNAP benefits. Although, this would be temporary, it doesn’t help that it is happening near the holidays.
As an alternative investment, I am looking for sectors that will benefit from lower interest rates. I think there is pent up demand for housing, automobiles, and construction materials. Banks should benefit from more refinancing and mortgage & auto loans. Car companies will start offering more incentives to generate sales. I also think that AI and semiconductor stocks will continue to do well, but maybe less so than we’ve seen in the last year. Trump just announced a 12 month hold on Chinese tariffs. Although tariffs are still high, it will make it easier for companies that buy goods from China, to normalize their plans for the future.