Fisher Investments on Consumer Staples

3

CONSUMER STAPLES SECTOR DRIVERS

In this chapter, we’ll outline the most important macro drivers for the Consumer Staples sector. There are three categories of drivers you can use to examine the forward-looking prospects for any stock market sector. These include:

• Economic drivers

• Political drivers

• Sentiment drivers

We’ll start by assessing the economic drivers most applicable to the Consumer Staples sector. While much of this discussion will center on the US, the principles can be applied to any country.

ECONOMIC DRIVERS

Macroeconomic indicators take the pulse of the economy. Whether it’s jobs numbers, GDP, or the latest CPI report, these releases matter because to some degree they play a role in how most public companies perform. Astute investors follow macroeconomic data to gauge the current strength of the economy, as well as the direction it may head looking forward.

Deciphering economic data is not easy, however. The job is made difficult because many economic reports are volatile, contrast one another, and are subject to revision at a later date. Another problem with economic reports is they’re not particularly useful on a short-term basis since the market discounts economic news with astounding speed.

So how do you use macroeconomic data to your advantage? You start by staying abreast of the most important indicators as they’re released, constantly asking whether present conditions are better or worse than reflected by investor sentiment and market prices. Second, ...