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Chapter 1: Why are investors shifting focus from AI to consumer staples?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Thursday, February 26th, and I'm your host, Kim Kahn. Our top story so far. Investors are going from AI to A1, steak sauce.
Looking at forward valuations, the premium investors were paying for the mega caps has faded, and they're now willing to pay up for household goods and pantry fillers.
Neil Seti of Seti Advisors flagged a chart from Matt Shermanaro showing that the average forward PE of the Magnificent Seven, excluding Tesla, that's Apple, Amazon, Alphabet, Meta, Microsoft, and NVIDIA, is now below the consumer staples sector.
Chapter 2: What factors are driving Krispy Kreme's recent stock surge?
And today's hardware-led sell-off, with NVIDIA sliding while staples hold steady, is only reinforcing that shift. Seti noted that the staples forward PE has climbed to its highest level in at least a decade, while the top six mega caps have fallen towards the low end of their range over the same period.
He added that a big driver is the Walmart and Costco effect, together about 20% of the XLP ETF and trading at PEs in the 40 and 50 range, but he argues that the broader stables group still looks stretched, and it's hard to see most of those names suddenly turning into big earnings compounders.
Chapter 3: How is Shake Shack managing higher beef prices and what are their future expectations?
Among active stocks, two guilty pleasure names are off to the races. Krispy Kreme is up more than 20% as investors reward its turnaround strategy. Revenue fell 2.9% year over year in Q4, with organic revenue down 3.9%, largely due to the strategic closure of underperforming locations, a move that reduced global points of access by 13.5%.
CEO Josh Charlesworth said the company is making meaningful progress, pointing to strong demand, profitable U.S. expansion, and capital-light international franchise growth. And Shake Shack is rallying after posting a double-digit sales jump in Q4, helped by promotions and new menu items, allowing it to offset higher beef costs and a challenging macro environment.
Looking ahead to 2026, Shake Shack expects pressure for beef prices to ease as supply chain initiatives kick in and cost pressures on food and paper products to moderate. And speaking of the races, Churchill Downs is trailing the field despite posting higher Q4 revenue in both its live and historical racing business and its wagering services and solutions segment.
Gaming revenue did fall, however, and analysts pointed to expanded risks in future guidance. In other news of note, the Wall Street Journal reports the Washington Post lost about $100 million last year, following similar losses in 2024 and roughly $77 million in 2023.
Chapter 4: What is the significance of the Hindenburg Omen signal for the S&P 500?
The financial strain was a primary driver behind recent layoffs of about one-third of its workforce, cuts that eliminated the sports section and scaled back many foreign bureaus. At a staff meeting Wednesday, acting publisher and CEO Jeff D'Onofrio and executive editor Matt Murray discussed the paper's financial condition and productivity.
D'Onofrio said the number of news stories published has fallen 42% from 2020, while newsroom costs were up 16% in 2025 compared with 2020. Looking to ETFs, Jane Street disclosed a record 20.7 million shares stake in the iShares Silver Trust, ticker symbol SLV, for Q4 2025, making it the ETF's largest institutional holder.
The stake surged from about 41,000 shares in Q3, vaulting Jane Street ahead of big holders like BlackRock, Morgan Stanley, and Bank of America. The filing also shows SLV put-and-call options, suggesting the position may be part of a hedge setup rather than a straight directional bet on silver.
And in the Wall Street Research corner, the S&P 500 has triggered its sixth Hindenburg Omen signal in the past month, according to data compiled by Subutrade, reviving memories of February 2020 when a cluster of similar signals came ahead of the COVID-driven sell-off. The Hindenburg Omen is a technical indicator meant to flag internal weakness in the market.
It's triggered when a meaningful number of NYSE stocks hit new 52-week highs and new 52-week lows at the same time, a split that suggests market breadth is fracturing. Other conditions often include a rising index and a weakening McClellan oscillator, a momentum gauge.
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Chapter 5: How does Jane Street's investment in silver ETFs impact the market?
Historically, it's the cluster of signals, not isolated readings, that get traders' attention. But it's also worth noting, over the past decade, it's been a false alarm more often than not. That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com slash WSP.
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