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Don here...
Gianni told a story in today's session that perfectly captures what's happening to the American consumer.
He used to order Chipotle regularly. Two burritos, large chips, delivered to his house.
Cost? $80.
So his wife started making burritos at home. Gianni grills the meat. She assembles. Total cost significantly less. Quality significantly better.
That's substitution. And it's destroying entire sectors of the market right now.
In today's free session replay, you'll discover:
- Why restaurant stocks are setting up for catastrophic breaks. Starbucks, Chipotle, Dutch Bros all sitting at multi-year support from when consumers weren't tapped out. Blake explained if they break through, there's nothing underneath.
- The Airbnb disaster nobody's discussing. Thousands of inexperienced buyers purchased multiple properties following influencer advice. Now travel spending is declining. These amateur landlords are about to flood the housing market with inventory.
- How Costco adapts while Starbucks dies. Costco moved food items into main displays instead of high-ticket goods. Starbucks kept raising prices while quality declined. One company understands their customer. The other destroyed their brand.
- Why inflation is actually worse than it appears. Oil declined four years from $80 to $58 yet inflation still runs 2.5-3%. Blake asked how high is inflation really if it's this sticky with oil collapsing? Any bounce in crude opens Pandora's box.
- Blake's gold prediction that sounds insane until you hear the thesis. Gold to $4450 by year-end. Silver to $60. Central banks are revaluing gold reserves as a soft default mechanism. This is how sovereign debt crises play out in modern times.
- The gold miner opportunity hiding in plain sight. Silver miners haven't made new highs despite silver near records. Gold miners operating at peak margins. Every ounce extracted prints maximum profit yet stocks trade well below previous peaks.
The substitution effect is real and accelerating.
Gianni's $80 burrito story isn't unique. Everyone is making these decisions. Cook at home instead of Chipotle. Make coffee at home instead of Starbucks. Drive the car longer instead of buying new.
These individual decisions aggregate into sector-destroying trends.
Blake pointed out that Chipotle's entire brand was quality ingredients at slightly higher prices. Then they stopped using quality ingredients and kept raising prices. They destroyed the only reason people paid premium.
Starbucks claimed to be premium coffee experience. Their coffee isn't good. Never was. But people paid for the environment and experience. Now the stores are run down, employees aren't engaged, and it costs $7 for burnt coffee.
What exactly are you paying for?
The companies adapting recognize this. Walmart showing strength. Kroger making higher highs. Costco restructuring displays to highlight staples over discretionary items.
They're reading consumer behavior and responding.
Blake's inflation thesis was sobering. If we've maintained 2.5-3% inflation with oil down from $80 to $58 over four years, what happens when oil finds a bottom?
That means structural inflation is embedded in the system. Energy kept it from accelerating. Once energy reverses, the dam breaks.
The Airbnb comparison to crypto was particularly insightful. Same pattern. Retail participants following influencers. Maximum leverage. Zero experience. Declining demand.
Crypto liquidated thousands of accounts near all-time highs. Those people aren't jumping back in with full leverage immediately.
Airbnb property owners about to experience the same reality. Monthly payments don't stop when properties sit empty.
Blake's not predicting exact timing. He's identifying structural changes already happening. Consumer discretionary getting destroyed. Staples holding up. Industrials showing strength.
That's not random. That's the consumer making different choices.
→ Watch Gianni's complete session with Blake to see the consumer thesis, gold targets, and why certain sectors adapt while others die
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
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