Starbucks set to report tonight and if you aren't nervous you haven't been paying attention. 

Shares of the worlds largest coffee shop are trading at levels first hit in 2019, a depressing run of mediocrity that has included 4 CEOs, a national controversy over the use of store bathrooms and the COVID lockdown. The lockdowns were particularly notable for Starbucks because ~20% of its revenues (and much less of its earnings) are generated in the Chinese market, which was something of a career-long hobbyhorse of longtime leader Howard Schultz. 

The company pulled all guidance last fall, one of the first orders of business under CEO Brian Niccol. Suffice it to say the business outlook hasn't gotten more transparent since October.

Same store sales were likely down in the US last quarter, though likely with improved tickets but weaker traffic. FWIW analysts are looking for EPS of 50c on about $8.8b of revenue. There will be currency noise and, as just mentioned, Starbucks itself isn't giving any guidance and has no particular incentive to stretch numbers or paint a rosy international picture. Niccol arrived with a well-earned reputation and he's...

Spotify is down 8% pre-market on missing the EPS estimate for Q4. The subscription numbers were good with monthly usage and premium subscriber numbers coming in better than expected. The guidance for FY subs was light, which seems more on the side of prudent than a red flag.

As I wrote about ahead of earnings, $SPOT had become a crowded long as shares tacked on 20% and $100 heading into the earnings release.

There are companies you want to own for a steady earnings stream. Spotify isn't one of them. 

SPOT into the quarter with too many people needing a huge beat. I was hoping for something more like this. 

Here's how I'm planning to trade it for the Macke Consumer portfolio.

Spotify ("The Swedish Netflix") reports, essentially while we are sleeping tonight. The Podcast King is expected to to report revenue growth of about 20% at $4.6b and earnings of $2.52-ish or more, which is a growth rate too large to really delve into here. Not because it isn't impressive but  because I don't think it matters all that much what Spotify reports as much as how they guide.

Spotify isn't cheap for the best reasons. 1. The company is now printing money and utterly indispensable to ~265 million people worldwide. 2. There isn't (yet) a tariff on steaming stuff 3. Spotify is a global brand, generating more than half its revenues from "other countries" (there are apparently consumers in non-America, I'm having a team look into it).

While we're pie-charting let's add this:

That's Spotify's revenue breakdown on advertisements vs subscribers. Combine those two ChatGPT-generated charts and my hand-written efforts and you know why Wall Street was comfortable bidding SPOT up 33% YTD while the rest of the world burns:

• Ads are flaky but Subs stick around. This is a big part of a lot of my investment thesis this year. I think...

As the dust settles on Liberation Day the Street is starting to pick through the rubble and getting long stocks just in case the world doesn't end.

Consider On Holdings, the Swiss shoe and athletic concern. Shares are popping on a down day thanks to a couple upgrades. The gist of both is something I wrote about the company last March; On is taking market share, expanding across the globe and generally speaking the hottest brand going, at the moment.

That's the view of me, Citi, UBS and about 75% of the fashionable people I run into at our over-priced health club. It's also something noticed by Mrs. JC Parets, and Mrs Jeff Macke; two solid sources on such matters.

On vs Skechers

Being hot is the ultimate tailwind for a consumer brand. Given the headwinds of the moment (tariffs based on trades between the US and anywhere else), it doesn't hurt On to be a Swiss based company doing a lot of business in Europe and on the other side of moving a good portion of production from China to Indonesia and Vietnam.

Skechers,...

Below is my weekly video for members of Macke's Retail Roundup. 

We're into earnings season. Thank the lord...

For the next few weeks, we'll hopefully learn how these retailers are preparing for a world with(or without) tariffs. Maybe it will give us something to focus on other than the soap opera out of the White House. 

These tariff shenanigans really couldn't come at a worse time for retailers—they're doing their holiday season ordering now. And without clarity on tariffs, it's awfully hard to plan ahead. 

So I'm looking forward to hearing what these execs have to say. This week we've heard from HAS, CMG, and SKX. I discussed these reports, as well as my Macke Retail Portfolio, in this week's video.

Watch the video below.

Getting our first look at consumer-facing outlooks now that we've gotten through the tedious Banks portion of earnings season.

Notable takeaways:

• Hasbro was surprisingly good but it's not really "game on" until Q3 and Q4. Gets 50% of Toys and Games from China but has a reasonably flexible supply chain. Says earnings hit from tariffs will be $60 - $180 million hit to net earnings (LY net was only $385mm). Helped by digital focus. 

• Pepsi seemed pretty resigned to consumers being too price-conscious to buy snacks. 

• Chipotle has first negative comps since COVID. Said business fell off in late February and has continued worsening since. More people eating at home (but not buying Pepsi(?)). Fired shots at the entire outlook for QSR by insisting execution is great and the company is taking share.

On Monday afternoon, with US stocks off 3% and dropping the President concluded a meeting with top executives from Walmart, Target and Home Depot. According to Axios, executives told Trump supply chains were in a state of disruption and "shelves will be empty". This wasn't a hypothetical risk of the burgeoning trade war but an actual business fact, happening today. 

Almost immediately, there were whispers of a shift in strategy on the trade war front. More importantly, to our immediate financial interests, stocks started coming off the lows.

As the White House has continued to offer more measured thoughts on trade of goods not critical to national security, the stocks hit hardest by the relentlessly negative drumbeat of news since Liberation Day started to rally. 

Dicks, Gap, Lululemon, seemingly half the stocks in the mall are up 10% since the lows Monday, with some of our favorites leading the way:

 AEO and Gap, two companies which have spent the last 5 years building supply chains all over the world only to see more or less everything shut down by Draconian fees that were constantly changing, are in the...

Enough raging against the machine. In the 2 weeks since Liberation Day we've seen the stated rate of tariffs change at least 5 times. Just last weekend we saw a seemingly tech-saving exclusion on chips first announced then denied then largely just dismissed as more noise. From a 4% gap higher in the futures to a tepid Monday morning rally which has now given in to the endless pressure we've seen on the Consumer plays we've seen all year.

We're approaching acceptance. There's no one walking through that door to save companies relying on the kindness/ sanity of this administration. Earlier this week I pointed to Best Buy and Nike as two companies that should go higher on a deal. Both are now trading below the Friday close, down ~30% YTD and unable to hold a bid for more than a moment:

Recession is just an economic term. It's most useful in studying periods of history after the fact in search of clues as to timing the natural ebbs and flows of what used to be called the Economic Cycle but for the last 15 years is more accurately thought of as occasional world-threatening catastrophes and the stimulus that follows.

Downturns Cull the Herd when it...

A "tell" is an observable, consistent, unwitting behavior in reaction to a known stimulus. Which is a fancy way of stating something you already understand intuitively. 

Examples: You try on a new, hot outfit to model for your partner. You twirl before them, asking for an opinion. The love of your life looks you over squinches up their nose almost, but not quite imperceptibly. "You look amazing, babe" they offer with what is intended to be a sincere tone but is in the same tone they use to compliment your mom. This is the love of your life. The words mean nothing compared to the signals given off by the Tells of tone and expression. You change.

Example Two (The Point): Three stocks, all dominant in their respective corners of the consumer world, all beaten down mercilessly. All three had what should have been, could have been and in a better tape would have been bullish catalysts over the weekend.

Best Buy, Dicks and Nike are all down over 20% in the last 2 months. They are companies of varying quality in terms of execution but Supply Chain positioning but they dominate consumer segments which have been beaten like Government Mules over the ever-changing...

Below is my weekly video for members of Macke's Retail Roundup. 

My universe, the land of the consumer, has taken center stage. The eye of the storm, if you will. The center of the volcano. The hottest part of the mantle. 

And every tariff headline sends the market swinging. Last week, it was down. This week...down, then up, then down. We're stuck in a tariff circle of hell. 

So what does this mean for the portfolio? And what am I doing about it? I broke it all down in this week's video.

Watch the video below.

Seven days after Liberation Day things are working out just about as expected in the equity markets. Chaos!

Until this afternoon's 90 day delay announcement every rally met supply. Rumors were quickly squashed and the White House vowed to hold the line on anything other than full victory. And just like that, there was a 90 day delay. Would it have been easier to just delay the tariffs 90 days in the first place? Stop overthinking it.

We have 90 days and have undone a lot of the damage done over the last week. It's a welcome piece of new news and one of the items on the 3-step Wish List I shared with Spencer earlier this week. But it doesn't change much. If you were over-levered this morning it might be time to take a little off the table and give thanks. Uncertainty will be back but for now it certainly is nice for stocks to be irrational in the other direction. 

Long-term, China, Vietnam and Indonesia are something of the Big Three in shoes and apparel. I believe but am not sure China and the US are still pushing a combined 200% tariff level. Let's just say a lot of merchants and vendors doing business in the mall are rooting for the Vietnam...

Stocks are getting destroyed all over the entire world. Things could turn on a dime but, for the moment and for good reasons investors are selling risk assets.  The selling is global, the Volatility Index has spiked. Over the weekend social media was dominated by talk of the crash, the tariffs and the need to get off this path as fast as possible before we do more permanent damage.

As I discussed in real time last week ("Sound the Alarm") there was a single flash point for this crash: the ridiculous, clumsy, catastrophic moment the POTUS held up his chart.

Why was the placard so bad. Well, I wrote about it here and my friend @The-Real-Fly on Twitter rather neatly sums up the point here:

The Rules of the Casino

That about covers it. Trump changed the rules of the international finance casino. In markets of all kinds participants value "stable" over "fair". Meaning they'll deal with slightly...