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Consumer Discretionary Sector Analysis - July 2007 Economic Insights and Market Valuation

This report provides a comprehensive analysis of the Consumer Discretionary sector as of July 2007, highlighting the S&P 500 composition, industry breakdown, and top holdings. It explores the sector's maturity, foreign influences, and economic factors such as changes in the Federal Funds rate, unemployment, and discretionary income. The financial analysis reveals higher-than-average valuations over the past decade, indicating the sector's current pricing is inline to slightly expensive. Recommendations suggest an even-weighted approach in investment strategies in light of the economic outlook.

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Consumer Discretionary Sector Analysis - July 2007 Economic Insights and Market Valuation

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  1. Consumer Discretionary July 17, 2007 Haixia Ji Jaime Nale Adam Robertson Hui Song

  2. S&P 500 Composition as of 07/06/07

  3. Industry Breakdown as of 06/30/07

  4. Top 10 Holdingsas of 07/15/07

  5. Select Sector SPDR’s Composition and Returns YTDas of06/30/07

  6. Business Analysis • Mature Sector • Foreign Influence

  7. Cyclicality

  8. Seasonality

  9. Economic Analysis • Changes in the Federal Funds Rate

  10. Economic Analysis • Unemployment

  11. Economic Analysis • Discretionary Income

  12. Economic Analysis • Gasoline Prices

  13. Economic Analysis

  14. Economic Analysis

  15. Economic Analysis • Mixed indications • Federal Funds Rate • Strong Unemployment Figures • Discretionary Income Growing • Gasoline Appears Overpriced • Encouraging Potential

  16. Financial Analysis

  17. S&P 500 Financial Analysis

  18. Income Statement Annual

  19. Income Statement Qtr.

  20. Cash Flow Annual

  21. Financial Analysis

  22. Valuation Analysis 10-years

  23. Valuation Analysis 10-years

  24. Valuation Analysis 10-years • Currently all measures of valuation is relative higher than the 10 years average • All five graphs show the same upward trend since 2000, but the plots do show the contract sign this year. • The whole sector is inline to overpriced relative to the market.

  25. Recommendations • Sector should be even-weighted instead of 100 Basis Points underweight • Currently inline to slightly expensive when compared to S&P 500 • Positive economic outlook

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