>Two months ago, Goldman's Prime Brokerage desk observed that hedge funds were quietly liquidating their consumer exposure, prompting the bank to ask "did something change?" As it turns, following several notable blow-ups in the consumer discretionary space, the answer was a decisive yes, because one look at the XLY consumer discretionary ETF shows that it is flat on the year, dramatically underperforming the broader S&P which continues to plows higher, and is now up some 15% on the back of literally just five stocks. >Then, one month ago, Goldman's formerly euphorically bullish consumer specialist Scott Feiler wrote in a follow up note, "the title of my morning note yesterday was “Glass Half Empty?” The only thing we are doing this morning after watching the price action in the group yesterday is removing the question mark from that title and going to “Glass Half Empty.” >The reason for that is that, as of mid-May, investors were suddenly freaking out that overall "strong spending growth" could mask substantial weakness under the surface, especially since "companies increasingly called out a weaker lower-end consumer in Q1 earnings calls", or in other words, mentions of low-income consumers are at record levels, and matching the post-covid crash. >In particular, Goldman warned that many companies suggested that higher rates and price levels have "forced consumers in lower income strata to make increasingly difficult trade-offs that could eventually lead to a pullback in spending" a view now validated by the surprisingly poor April and May retail sales reports, and the drastically slowing labor market driven by illegal aliens and part-time workers. . . [Archive](https://archive.today/i0lKs)