From our internal morning note:
9/20/2024
While, based on the headline data of late, one might indeed criticize the Fed over its 50 bp cut, particularly considering how Powell cheer-leaded the “strong” economy (i.e., then why the double-cut??), our view (despite the recent less-bad reading from our own index) remains that the under-the-surface indicators point to not-small odds of recession in the not-too-distant future. So, frankly, I have no problem with the double-cut.
Noting that higher-income/asset-holding folks have been doing virtually all of the heavy-lifting for months, here’s yet another sign that we may be onto something:
emphasis mine…
Interesting commentary from Darden yesterday on 'fine dining' where they own The Capital Grille, Ruth's Chris and Eddie Vs: (Peter Boockvar)
"Same restaurant sales at both Capital Grille and Eddie Vs were negative, as the Fine Dining category as a whole continues to be challenged." The CFO said, "it seems like there were other places where the luxury consumer was spending dollars on, especially the summer months. So, we do expect a gradual build back. I don't know that we have an exact timing of when that's going to happen, but there is a clear difference between suburban markets and urban markets. We are still operating close to that mid-70s of pre Covid levels in the urban markets, while suburban markets are in the more of the 90s in terms of retention of pre-Covid."
Also, "and then when we look at income, people all the way up to $200,000 and below we're seeing pull back. And so that's the other part of the Fine Dining impact. And they did get a lot of people, more aspirational guests maybe, and those we are really losing them pretty fast. And that's part of the reason why you saw Fine Dining decline."
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