Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / Why Consumer Staples Are Quietly Leading the June 2026 Bull Market
Transcript
- Lucas: So the S&P 500 hits a new record at 7,501 this week, tech earnings are solid, and yet the real story — the one nobody's shouting about — is that consumer staples stocks are quietly trouncing everything else. Luna: Trouncing? I look at Procter & Gamble or PepsiCo and I think 'boring.' What's the number? Lucas: The S&P 500 Consumer Staples sector has returned 8.9 percent since April 1. The S&P 500 itself? 5.2 percent. So staples are beating the broad market by nearly 400 basis points over the past two and a half months. Luna: That's significant. And this is in a bull market, not during a panic. Lucas: Exactly. And that's what makes it interesting. When defensive sectors lead during a rally, it usually means investors are hedging their bets. They're buying the index, but they're also piling into names that hold up if the economy slows. Luna: Right — so the market is pricing in some kind of slowdown, even as it pushes to new highs. That feels contradictory. Lucas: It is contradictory, but markets are allowed to be complicated. Let me give you another data point. PepsiCo hit an all-time high last week. Their last quarterly report showed organic revenue growth of 6.2 percent year-over-year, and they raised their full-year guidance. Luna: So they're actually growing, not just hiding. That's different from the 2022 playbook where staples were just a crowded trade. Lucas: Completely different. Back in 2022, staples rallied because inflation was surging and everything else was crashing. Now inflation is cooling — the Fed funds rate is at 3.63, down from its peak — and staples are still winning. That suggests real earnings momentum, not just避险. Luna: And yet the headlines this week are all about hawkish Fed rhetoric. Chair Warsh reportedly signaled he's not going to cut rates anytime soon, and Gundlach said he's not the 'easy money' chairman people hoped for. Lucas: Right. So you've got a Fed that's leaning hawkish, a market that's still climbing, and investors rotating into toothpaste and diapers. That combination tells me the market is not fully convinced the economy is out of the woods. Luna: It's like they're buying the rally but hedging with Kleenex. So which specific names are driving this? Lucas: Procter & Gamble is up about 12 percent year-to-date. They've been able to pass on higher costs through pricing power — people still buy Tide and Pampers even when prices go up. Coca-Cola is up around 9 percent. And then you have Walmart, which is technically a consumer defensive, up 11 percent. Luna: Walmart is interesting because it straddles the line — it benefits from both higher-income shoppers trading down and from its own grocery strength. Lucas: Exactly. Walmart reported same-store sales growth of 4.8 percent last quarter, and their e-commerce was up 22 percent. They're executing well regardless of the macro backdrop. Luna: So if I'm an investor looking at this rotation, what's the takeaway? Is it too late to buy staples? Lucas: I don't think it's too late, but the easy money is probably made. The sector's forward price to earnings ratio is around 22, which is above its five-year average of 20. So it's not cheap. But if you believe the economy is heading for a mild slowdown — a so-called soft landing — then staples still offer a decent risk-reward. Luna: And if you believe the economy accelerates? Then you'd want to be in industrials or tech, which are lagging this quarter. Lucas: Right. And that's the key debate right now. The Russell 2000, which is more domestically oriented, is actually down 0.9 percent over the past five days. So small caps are not participating in this rally. That's another signal that growth expectations are modest. Luna: So the bull market is real, but it's narrow and defensive. That doesn't sound like a roaring 90s-type rally. Lucas: It's not. It's a cautious bull market. And that might actually be healthier in the long run — less speculation, more fundamentals. Luna: Speaking of fundamentals, I want to circle back to PepsiCo's guidance raise. What specifically drove that? Lucas: They cited strong demand in their international snack business, particularly in Latin America and Europe. Their Frito-Lay division in North America also held up well despite price increases. So it's not just about pricing — they're seeing real volume growth in certain categories. Luna: That's a good sign for the consumer, then. If people are still buying Doritos and Gatorade, maybe the economy is more resilient than some fear. Lucas: Maybe. But you have to be careful — the consumer staples sector tends to lag late in the cycle. If we get a real rebound in tech or cyclicals, staples could underperform quickly. Luna: So it's a timing bet. Which is why diversification matters. Lucas: Exactly. And speaking of bets — if today's conversation helped you think about your portfolio in a new way, that's exactly the kind of value we aim for. Luna: Yeah, this show is completely ad-free, and we keep it that way thanks to listeners who find it worthwhile. Lucas: If today was worth the price of a coffee to you, the link is buy me a coffee dot com slash fexingo. That's all lowercase. No pressure, just a way to keep the conversations going. Luna: And we genuinely appreciate every single person who's done that. It makes a difference. Lucas: Alright — back to the staples trade. So where do we go from here? The next catalyst is probably July earnings. If companies like Procter & Gamble and Coca-Cola report another round of solid numbers, the rotation could accelerate. Luna: And if they miss? That would hit the sector hard, but it might also signal a broader consumer weakness that would be bad for the whole market. Lucas: Right. So staples are a window into the consumer psyche right now. And so far, the consumer is still buying — just more cautiously. Luna: Cautiously, but buying. That's actually a pretty good summary of the entire market in June 2026. Lucas: It is. And the interesting question for the next few months is whether this caution turns into confidence — or into retreat.