The Banking and Strategy Initiative

Chillin' out till it needs to be funded

IT’S MONDAY! Jobs report and superb results put a positive spin on mixed Economic data (US Economy – May 06-10, 2013)

The deflation risks in a negative reported inflation or falling retail sales and even jobs and hours worked seemed to be forgotten for the week on Friday after the headine numbers of the Jobs report pushed the Dow to 15k and S&P near 1600 before closing. Markets thus open on a positive note this week though Earnings and sector upgrades at Sam Adams’ manufacturer Boston Beer(US:SAM) could not stop the stock from tipping over after the earnings announcement near the 33X earnings multiple mark following the general retail push down led by McDonalds and Coke. Budweiser(US:BUD) reported 4.1% global declines in volume as Boston beer reported a big dip in profits but Budweiser was able to increase revenues per hecto liter on the elixirs by nearly 6%. SAM jumped revenues by nearly 20% in the quarter and sent dollars to marketing to push among others its Freshest Beer program while depletions grew by 16% in Cider and Tea brands on better brand cognition cutting inventories down while old stock was replaced with Fresh stock.

Unlike GMCR posting its own market shares and segments though, (in its fight with Starbucks for single Kcups and VIA systems) Boston Beer’s additional Capital investments  will also accrue to the brand portfolio.  Budweiser grew international volumes by 8.4% leading with gains in China and Brazil. Kelloggs also reported good American performance in Snackfoods(flatbreads etc) and Speciality food ( Pringles acquisition) undertaking larger Capital investments in Asia. Starbucks also reaffirmed double digit growth in the newly aligned Pacific geographies clubbing India, China and SEA and larger capital investments with the expanding member program (in US and China) Fresh juices and menu speciality breakfast/food items in the North East and more than 1000 new stores in Korea and China.

Auto major General Motors, also got beat on the Topline without its Finance company revenues adding on but undertook an ambitious program to reduce dependency on more than 3 in 4 fleet sales currently and implemented key Sales Accounting transformations basing them on sales geographies. Its US market share shows up as more than 17% and global share actually increased to 11.4% despite expected reverses in Europe. GM in fact reported profits in Europe while Global Topline was an even $37B for the quarter.The dip in Americas profits were  easily explained by lower sales to dealers as retail sales increased and the depreciation in the Venezuelan Bolivar that has led to drops of $200 mln at GM and others US lifestyle giants this quarter.

Meanhwile Barrons 500 show cased a cash power play continuing at US tech giants despite dropping C sales and the troubles of Intel, including Western Digital and Seagate.

Meanwhile the threat of falling recovery levels still lurk as Services growth slowed thru US, India and China while european Data recovered albeit to a low 47. european industrial production data follows after an encouraging catch up by France and Italy in retail and production data for April while Spain reported discouraging retail and employment data last week and Germany is on cue to decide for everyone how worse off Europe will be in 2013

This week’s Consumer Credit report data is expected to show a welcome cut to $15 B while Delinquencies data on the MBA housing data will be reported today/tomorrow

An interesting battle is slated this month at JP Morgan’s Board meeting on May 21 as ISS dug in its heels for the fight. even if the votes to split the post of Chairman and CEO, taking at least one away from Dimon succeed in garnering majority JPMorgan can well risk displeasure and not implement the same. Three Directors who served on the Risk policy Committee are slated to go however, with ISS leading the vote against their continuing on the Board.

In Europe, French and German Banks incl Commerzbank and SocGen are slated to report whittled earnings while HSBC and StanChart speak from UK and emerging market successes on Tuesday and Wednesday. Data from South Korea and Malaysia could be bulllish for Asia as Korea turns back the clock matching stimulus from neighbours Japan and China and filling up the deficit in progress reported in the last 3 quarters to clawback jobs

Crude and Gasoline reports for April are also due midweek in the US while Canadian and Aussie housing and banking data may possibly trace counterparts into a tailspin this quarter onward. Strong performance expected from Germany and India on trade balance are the only risk to deflated expectations otherwise as one starts the final turn into 2013 forecasts and looks to coast downhill in europe and China unexpectedly while recovering the baton despite sequester and inflation pressures in US and India respectively



Boston Beer Sam Adams Cinder Bock Rauch Bock

Boston Beer Sam Adams Cinder Bock Rauch Bock (Photo credit: The Northwest Beer Guide (aka, The Pickled Liver))

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This entry was posted on May 6, 2013 by in Financial Markets and tagged , , , , , , , .


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