[Summary]

As of May 10, 2026, caution regarding US consumption has increased somewhat. According to the University of Michigan's preliminary report for May, the Consumer Confidence Index fell to 48.2 and the Current Conditions Index fell to 47.8, with the Current Conditions Index dropping 9.0% from the previous month and 18.8% compared to the same month last year.

At the same time, U.S. employment statistics showed that the number of non-farm employees increased by 115,000 people in April, and the unemployment rate was 4.3%. While it is difficult to say that the economy is coming to a sudden halt, it is necessary to prepare for a scenario in which consumption momentum slows down.

It's not just high-dividend stocks that are highly defensive in this environment. A company with stable cash flow that remains in demand even during economic downturns and can easily pass on cost increases to prices.

If we were to prioritize stocks at this point, it would be easy to prioritize them in that order: telecommunications, food/daily necessities, drugstores/supermarkets, low-priced eating out, and domestic demand stocks that are likely to benefit from the strong yen.

The University of Michigan Consumer Sentiment Index is an important economic indicator in the United States that is based on a survey of U.S. households' business sentiment and consumer confidence, and is indexed with 1966 as 100. Preliminary values ​​(second or third Friday) and final values ​​(last Friday) are announced every month, and it is a leading indicator that attracts attention from market participants due to its quickness.

Survey method: The University of Michigan's Survey Research Center conducted a telephone survey (300 people preliminary, 500 people final).

Conclusion

What is important in the current market is not ``what will go up the most'' but ``what will be the least likely to collapse''.

In a situation where US consumption worsens, Japanese stocks that are defensive in domestic demand are more likely to be reconsidered than stocks that are sensitive to the economy. The ones with particularly high defense are in the following order:

  1. Communication/life infrastructure
  2. Food and daily necessities
  3. Drugstore/Supermarket
  4. Low-cost eating out
  5. Domestic stocks that can benefit from a strong yen

This does not mean that it will never go down. This means that we are looking at areas starting from areas where demand is likely to remain even during an economic downturn and where the downturn in profit margins is relatively small.

Why is defense important now?

In the University of Michigan's May preliminary report released on May 8, 2026, the Consumer Confidence Index was 48.2 and the Current Conditions Index was 47.8. In particular, the current situation index has fallen significantly from 52.5 in April.

Japan: Japan's Consumer Confidence Index in April 2026 was 32.20 points, down from 33.30 points in March.

This change indicates more than just uncertainty about the future. It is possible that consumers are starting to feel that their current lifestyle is difficult.

In addition, according to the US employment statistics released on May 8, the number of non-farm employees increased by 115,000 people in April, and the unemployment rate was 4.3%. While the employment situation has not yet collapsed, the pace of employment growth cannot be described as strong, and the sense of security regarding consumption has weakened somewhat.

On the inflation front, the latest CPI as of May 10, 2026 is for March. The overall CPI is 3.3% compared to the same month last year, and the core CPI is 2.6%, and the April release is scheduled for May 12th. If high prices and deteriorating consumer sentiment go hand in hand, investors will be more likely to focus on profit margins, solid demand, and cash generation ability rather than sales growth.

Investment decisions from this point on are based on ``Is the expense necessary even if the economy is bad?'' ``Will the quantity not drop significantly even if the price is increased?'' ``Is the cash flow stable?''

Sector with the highest defense power

Communication/life infrastructure

The easiest one to look at is communications.

Telecommunications companies such as NTT, KDDI, and Softbank have fixed-cost services that are difficult to cancel even during economic downturns. This is because smartphone lines and communication infrastructure are expenses that are difficult to reduce in household budgets.

The strength of telecommunications stocks is that they tend to provide stable monthly income. Even if the economy worsens, demand will not suddenly decline, and operating cash flow is easy to read, which is a defensive strength.

However, communication is not a panacea either. Continued attention must be paid to rate competition, capital investment burdens, and government rate policies. Even so, it is easy to put it as a first choice in the current situation because of the following three points: ``Demand remains,'' ``Price is unlikely to collapse,'' and ``Easy to be supported by dividends.''

Food and daily necessities

The next strongest category is food and daily necessities.

Even if the economy worsens, food itself will not go away. Companies such as Ajinomoto, Kikkoman, Nissin Foods, Nichirei, and JT tend to have strong brands and standard products, and their volumes tend to be less likely to decline significantly even after price increases.

What you should look at at this stage is not the sales amount itself, but the following.

  • Maintain quantity after price increase
  • Gross profit margin
  • Raw material cost
  • Exchange rate impact
  • Operating profit margin

Food stocks appear to be defensive, but profit margins are reduced in situations where raw material prices are high and the yen is weak. On the other hand, if the yen continues to appreciate, there is room for a tailwind from lower imported raw material costs.

In other words, the defensive power of food stocks is determined not only by the fact that demand does not fall easily, but also by how far they can tolerate price increases.

Drugstore/Supermarket

In the life-defense phase, consumers avoid high-priced consumption and tend to focus on actual demand consumption such as daily necessities, food, and medicine.

In this sense, drugstores and supermarkets are easy to view as defensive domestic stocks. If you look at listed stocks, candidates include Matsuki Yokokokara, Tsuruha HD, Sugi HD, Sundrug, Cosmos Pharmaceuticals, drug manufacturer Aoki HD, Aeon, Life Corporation, and Kobe Bussan.

However, this sector is not uniformly strong either. The important point is that while the frequency of store visits is unlikely to decline, gross profit margins tend to decline if the proportion of food items increases too much.

If you're looking at it as a defensive stock, you'll want to check the following points.

  • Are you able to maintain the number of customers?
  • Is the average price per customer dependent only on price increases?
  • Has the gross profit margin collapsed?
  • Do you have a dispensing or high gross margin category?

Even if sales are strong, if profit margins are being reduced, it is difficult to say that a company has "high defensive capabilities."

Is low-cost eating out a protection?

Low-priced restaurants like Yoshinoya are not completely defensive.

However, there is a certain degree of protection against economic downturns. This is because while consumers may refrain from eating out at high-priced restaurants, they may shift to eating out at cheaper prices.

In this sense, Yoshinoya, low-priced restaurants similar to gyudon, set meals, and fast casual restaurants are relatively easy to protect among restaurant stocks.

However, what really matters when it comes to eating out is not sales, but profit margins. Below are the indicators you should look at.

  • Are you able to maintain the number of customers?
  • Has the frequency of store visits decreased even after the price increase?
  • Are you able to absorb increases in beef, rice, labor costs, and utility costs?
  • Is the operating profit margin improving?
  • Is demand for takeout and breakfast growing?

While low-priced eating out "remains in constant demand even in an economic downturn," it is susceptible to rising cost rates. Therefore, although its defensive power is one step lower than that of telecommunications and food stocks, it is relatively easy to see among restaurant stocks.

The advantage of strong yen from the perspective of domestic stocks

If the US economy worsens, the yen may appreciate due to expectations for interest rate cuts and risk aversion.

A strong yen is generally seen as a headwind for Japanese stocks, but it can have a positive effect on some domestic demand stocks. In particular, for companies affected by imported raw materials and energy costs, the strong yen can be a factor in improving profit margins.

The following are areas where the benefits of a strong yen are likely to emerge.

  • Eating out
  • Food
  • Retail
  • Super
  • drug store

In other words, a strong yen may be a headwind for export stocks, but a tailwind for domestic defensive stocks.

Therefore, instead of saying "we are bearish about Japanese stocks as a whole due to the deterioration in US consumption", it is also possible to say "money will shift from export stocks to domestic stocks that will benefit from the strong yen".

Sectors to be wary of

Sectors that are likely to be cautious at this moment are those that depend on U.S. consumption and the economic cycle.

I would like to pay special attention to the following.

  • car
  • semiconductor
  • Machine tools
  • Electronic components
  • Luxury consumer goods
  • Export company to the US

As U.S. consumers begin to cut back on their purchases of durable goods, the impact is likely to spread to automobiles, home appliances, semiconductors, and machinery.

Even if there is a short-term rebound, this is an area where there is likely to remain a risk of downward revisions to earnings. In terms of defensive power, it's hard to actively place him in the top ranks right now.

Indicators to look at when making investment decisions

The priorities for the US side are as follows.

  • University of Michigan Consumer Confidence Index
  • Employment statistics
  • Unemployment rate
  • Wage growth rate
  • Retail sales
  • Credit card delinquency rate -CPI
  • Crude oil price

On the Japanese side, the following are important:

  • Exchange
  • Raw material prices
  • Same store sales
  • Number of customers
  • Price per customer
  • Gross profit margin
  • Operating profit margin
  • Maintaining demand after price increase

In particular, as of May 10, 2026, the deterioration of the University of Michigan's Current Conditions Index, the April employment report, the next May 12 CPI, and the New York Fed's Q1 Household Debt Report are important in the United States.

In addition, according to the New York Fed's Q4 2025 data based on the latest final report, the rate of credit cards becoming 90 days or more delinquent was 7.13%. Q1 2026 data is scheduled to be released on May 12th, and if this worsens further, the shift of funds to defensive stocks will likely become stronger.

Judgment frame when announcing CPI

How the market interprets the CPI is more important than the number itself.

CPI remains high + stock prices fall

This is the most unpleasant combination.

If stocks decline without inflation slowing down, concerns about stagflation will likely increase.

CPI slowdown + stock price rise

Expectations for interest rate cuts have strengthened, providing a tailwind for risk assets.

However, even in this case, economy-sensitive stocks do not necessarily rise immediately across the board. It is necessary to determine to what extent economic deterioration is factored in.

CPI slowdown + stock decline

This is a situation in which people are more concerned about a decline in demand than about a subsidence in inflation.

This is a combination in which defensive stocks tend to be relatively strong.

CPI remains high + yen and gold are strong

Geopolitical risks, inflation concerns, and risk-off may be occurring simultaneously.

In this case as well, domestic defensive stocks tend to have an advantage over export stocks.

Current priorities

Rather than focusing on one individual stock, it is now more natural to look at stock types.

First choice: Communication

It has the most stability.

Even if the economy worsens, demand will not decline easily, and the dividends will be easily supported.

2nd candidate: Daily necessities/food

Companies that can withstand price increases and have brand power are strong.

If the yen continues to appreciate, raw material costs can be expected to decline.

3rd choice: Drugstore/Supermarket

This is an area that can easily become a target for people who want to save money.

The frequency of store visits is unlikely to decline, making it easy to function as a stock that protects against domestic demand.

4th choice: Low-cost eating out

Low-priced restaurants like Yoshinoya are relatively defensive among restaurant stocks.

However, it is essential to check the cost rate and number of customers.

Practical perspective

In the current situation, it is natural to prioritize defense over offense.

As for the order of analysis, rather than looking at economy-sensitive stocks in a points-deductible manner, it is less likely to fail if you choose companies from telecommunications, food, daily necessities, drugstores, supermarkets, and low-priced restaurants that have stable customer numbers, profit margins, and cash flow.

In particular, if US consumption worsens and the yen appreciates at the same time, domestic demand stocks, which benefit from lower raw material costs, are likely to become relatively stronger than export stocks.

Final conclusion

As of May 10, 2026, we are not yet at the stage to conclude that U.S. consumption is suddenly collapsing.

However, since the current situation index in the May preliminary report from the University of Michigan showed a significant decline and it is difficult to say that employment growth is strong, the idea of ​​``thickening defense'' is completely rational.

Currently, the most protected areas are communications, daily necessities, food, drug stores, and supermarkets.

Although low-priced restaurants like Yoshinoya are not completely defensive, there is a possibility that demand will flow towards "cheap restaurants" during an economic downturn, and it is a relatively easy-to-see category among restaurant stocks.

The focus going forward is not on sales. What you need to look at is the number of customers, profit margin, cost ratio, and demand maintenance after price increases.

In a situation where US consumption is weak and the yen is appreciating, stocks that protect domestic demand, which are more likely to benefit from the yen's appreciation than export stocks, may become relatively stronger.

Source

This article is for educational and informational purposes only, based on public information. It is not a recommendation or solicitation to buy or sell any specific security or financial product. Although care is taken with accuracy, the content and future investment outcomes are not guaranteed. Final investment decisions should be made at your own judgment and responsibility.