Do consumers care about the debt ceiling?October 15, 2013: 12:43 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
The government's in shutdown mode? The U.S. may default on its debt? Yawn. Get me another almond milk pumpkin spice latte and spelt blueberry muffin please! And I think I'll go grab some carnitas tacos and chips with guacamole for lunch.
For all the talk about how catastrophic it will be for the markets and economy if Congress doesn't raise the debt ceiling, consumers and investors seem to be taking it in stride. Just take a look at the stocks of several well-known brand name companies.
Yup. The sky may be falling in Washington. But Wall Street seems to think that consumers will continue to eat, drink and be merry. (Hopefully we'll avoid that whole biblical prophecy about dying tomorrow.)
What gives? Are traders making the erroneous assumption that Americans are still willing to shell out their hard-earned cash for somewhat pricey beverages and food? Perhaps. But it may simply be the case that a $5 cup of coffee, $7 steak burrito bowl or $20 bottle of Pinot Noir are still affordable luxuries, if you will.
However, not all companies with a huge consumer presence are doing well.
Shares of Whirlpool (WHR) tumbled 6.5% Monday after an analyst suggested in a report that demand for household appliances might be slowing. That sort of makes sense.
Consumers may not be so terrified about the possibility of a debt default that they are going to stop getting their daily caffeine fix. But they may be nervous enough to hold off on buying a new $900 Maytag washer from Home Depot (HD) or Lowe's (LOW).
Builder stocks have taken a dive this month as well. Lennar (LEN), Pulte Homes (PHM) and DR Horton (DHI) have all tumbled -- along with the S&P Homebuilder ETF (XHB) -- while the broader market has shrugged off the debt drama.
Again, this makes sense. Buying a six-pack of Corona -- or even a six-pack of organic wheat beer at Whole Foods -- is not a huge financial commitment, even with the U.S. inching close to default. But purchasing a new house? That's a little different.
Still, you can't help but wonder if investors in some consumer stocks are setting themselves up to be disappointed by glibly dismissing the debt ceiling and shutdown concerns.
After all, Starbucks CEO Howard Schultz has been pressing Washington to act sooner rather than later. He wrote in a recent open letter on the company's website that "the current stalemate ... threatens our nation" and that the government needs to "pay our debts on time to avoid another financial crisis."
Given how well his company's stock is doing, Schultz could be forgiven for not really caring one iota about the silliness in DC. But he's a good citizen -- yet another reason why I recently declared him to be the best CEO ever.
And maybe he's on to something. Wall Street may be misjudging the level of consumer apathy. Hopefully, we'll never have to find out if investors got this wrong.