Consumer Discretionary stocks have outperformed the S&P 500 for nearly a year and appear to be peaking. Valuations of the sector are stretched as compared to historical averages and the overall market. That has a lot to do with two of the sector’s largest constituents, Amazon and Netflix, both of which have been expensive for several years but are key players in the increasingly technology-driven new economy. We have an active allocation to the sector and we pay close attention to how it and its key names are faring fundamentally and performance-wise. The case can be made for further outperformance as the overall economy and the consumer strengthens.