Merry Christmas. Happy boxing day.
Previously on Part 1 and 2 I showed how the bull market is supported by robust money market dry powder. However historically low savings rate and yield curve inversion snapback means cracks are starting to show.
In part 3, I give the play to hedge a potential downturn.
The market is currently treating Consumer Staples (XLP) like toxic waste because "Risk-On" is the only game in town.
XLP RSI is hovering near 40 in late 2025. MACD is bearish. Nobody wants boring dividend stocks when tech is ripping. It has been dead money in 2025.
What this means is we are getting a discount on insurance. If the savings rate reality hits consumption and consumers can no longer finance their consumptions, likely in the next Retail Sales print, the narrative will flip from "Soft Landing" to "Recession Scare."
I content accumulating Consumer Staples (XLP) is a wise move in the current climate.
If the Soft Landing happens, XLP is fine (people still buy toothpaste). If the Hard Landing happens (indicated by the Yield Curve un-inversion and Savings Rate collapse), XLP outperforms massively as capital flees to safety.
Position: I'm buying in the $78-$80 range for XLP.
The Bottom Line:
The consumer isn't dead, but they are exhausted.
The market is pricing in a marathon runner; the data shows a sprinter gasping for air. Position accordingly.