VALUE: After Hours (S08 E04): Why Consumer Stocks Could Rally: Tax Cuts, Wages, and the ‘Yee-Haw Economy’

During their recent episode, Taylor, Carlisle, and Unemployed Value Degen (Stephen Farrington) discussed Why Consumer Stocks Could Rally: Tax Cuts, Wages, and the ‘Yee-Haw Economy’. Here’s an excerpt from the episode:

[Steve] And the thing I’ve been trying to shout from the rooftops about, and I might still be early on it, is consumer discretionary, because you’ve got the interest rates, even if the 10-year treasury stays where it is, with the overnight rate coming down, there are aspects of the consumer economy that the overnight rate affects, like home equity loans. And I think you’re going to see, and now we’ve got $150 billion extra consumption coming in from these jumbo tax refunds. So you’ve got no tax on tips and no tax on overtime for 2025, shows up in this year’s tax return.

And for 2026, it’s not being withheld. So as we flip into January, those blue-collar people have higher take-home pay, and they’re about to get a huge fat tax refund. So I think one of the themes that has been so consensus might start breaking down, and that’s the K-shaped economy.

And you might see a return of the blue-collar wages had been suppressed with tens of millions of illegal immigrants. And so consumption was only on the high end. And now that you have 2 million self-deportations a year, and also the data centre build-out demand on blue-collar wages, you’ve got electricians in Texas making $200,000 a year now working in data centres.

So a rise in blue-collar wages and white-collar wages being suppressed by the AI revolution. I think the K-shaped economy, I want to start buying a bunch of consumer discretionary stocks that are exposed to the Yee-haw economy instead of the K-shaped economy.

[Jake] Yeah. What falls under that? Is it- Apple.

Yeah, right now. I was going to say Justin Boots, but Berkshire already owns them.

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