White House advisors and officials, including EPA Administrator Scott Pruitt and Energy Secretary Rick Perry, will meet today to discuss whether the U.S should remain in the Paris climate agreement.
Global companies, ranging from BP to Microsoft (NASDAQ:MSFT) and General Mills (NYSE:GIS) to Walmart (NYSE:WMT), sent a letter to President Trump yesterday urging him to stay in the deal to protect their competitiveness.
Credit Suisse lifts Coca-Cola (KO -0.1%) to an Outperform rating after having the Dow stock set at Neutral.
The investment firm thinks incoming CEO James Quincey will push a growth agenda that will unlock new revenue streams from regional brands.
Also keep an eye on M&A activity with Coca-Cola. Potential targets include the Monster Beverage (NASDAQ:MNST), LaCroix (NASDAQ:FIZZ), Yoplait (NYSE:GIS) and Arizona (private) brands. The company already has an 18% stake in Monster.
CNBC is reporting that there is no truth to the reports that 3G Capital is interested in making an offer for Panera Bread (PNRA +0.1%).
The 3G shadow hangs over a number of food sector companies -- including Mondelez International (MDLZ -0.5%), Coca-Cola (KO -0.1%) and General Mills (GIS -0.4%) -- with another mega-deal seen coming down the road. The rich premium on Panera would have quashed some of that 3G speculation regarding major food players.
Fitch Ratings shifts to a Negative outlook on General Mills (GIS +0.1%) and its BBB+ rating after factoring in two years of declining organic growth in key regions. Key snippets from the Fitch report are posted below.
"Fitch expects the company will continue shaping its portfolio with dispositions of slow- or negative-growth brands and acquisitions in faster-growing categories. In the near- to intermediate-term, Fitch expects organic growth to be challenged and trend negative in the low single-digit range beyond fiscal 2017 given the continued declines in the cereal and yogurt business."
"Fitch expects debt balances to remain roughly flat over the next two years with FCF being directed to shareholders versus debt paydown. However, debt-financed share buybacks that take leverage towards 3x would be a rating concern."
"A positive rating action could result if the company commits to maintaining leverage near 2x with FCF margins maintained at 4.5% or above."
Amazon (AMZN -0.2%) is bringing in executives from large consumer products companies to Seattle in May to discuss bypassing traditional retail channels by selling directly off its website. Bloomberg reports that reps from General Mills (GIS -0.1%) and Mondelez International (MDLZ -0.8%) will be in the house amongst many other packaged goods execs.
"Amazon strongly believes that supply chains designed to serve the direct-to-consumer business have the power to bring improved customer experiences and global efficiency. To achieve this requires a major shift in thinking," reads the invite from the company.
The development has the potential to create broad shockwaves if heavweights such as Nike (NYSE:NKE), Procter & Gamble (NYSE:PG), Unilever (UN, UL) and Kimberly-Clark (NYSE:KMB) consider the Amazon direct selling channel (beyond the dabbling in the past). There's also the dramatic impact it could have on retail chains such as Target (NYSE:TGT), Wal-Mart (NYSE:WMT), Walgreens (NASDAQ:WBA), Costco (NASDAQ:COST), Kroger (NYSE:KR) and many others.
"Fear, more than anything else may compel these companies to pay attention," observes Slice Intelligence analyst Ken Cassar. Others anticipate a hesistant stance on jumping full-force into the Amazon ecosystem.
Monster Beverage (NASDAQ:MNST) +1%, Constellation Brands (NYSE:STZ), PepsiCo +0.75% premarket after JPMorgan initiated coverage with Overweight ratings.
Among the positive factors: Monster's expanding use of Coca-Cola's distribution system, PepsiCo's growth in snacks and non-carbonated beverages, and Constellation's fast growth and valuation.
Other food names are also on the move: ConAgra (NYSE:CAG) -4.7%, Campbell Soup (NYSE:CPB) +1.7%, General Mills (NYSE:GIS) -2.1%, Kellogg (NYSE:K) -0.3%, J.M. Smucker (NYSE:SJM) -1.5% following a Bernstein report that downgraded the firms to Underperform from Market Perform, citing weaker industry trends.
The FDA has updated and modernized the Nutrition Facts labeling on packaged foods and beverages with the aim of better informing consumers about food choices that support a healthy diet.
Serving size and number of servings per container are more prominently displayed. Serving size updated to reflect what people actually eat and drink (as compared to the mouse-sized portions previously listed).
The daily values for nutrients updated based on new scientific evidence. The daily values reflect amounts to consume or not to exceed. Data for %Daily Value make it easier for consumers to determine how much a nutrient in a serving contributes to a daily diet.
Added sugars are now required on the label. Vitamin D and potassium are also required because many consumers fall short of the recommended amounts. Vitamins A & C are no longer required since deficiencies in these vitamins are rare today.
Larger manufacturers have until July 26, 2018 to institute the new labeling requirements. Small businesses have an additional year to comply.
Grocery store stocks are lower after Reuters reports that Wal-Mart (WMT -1%) is running a pricing test in 1,200 U.S. stores. The company is reportedly putting pressure on consumer packaged goods suppliers in order to protect margins.
Consumer names such as Procter & Gamble (PG -0.7%), Church & Dwight (CHD -0.4%), Colgate-Palmolive (CL -1%), Seneca Foods (SENEB), General Mills (GIS -2.3%), Kellogg (K -1.5%) and Kimberly Clark (KMB -0.9%) are all modestly lower on the day.
Seeking Alpha gave a heads-up to grocery store investors last week on the WMT development, but the rest of the market seems to be just catching up today. Kroger (NYSE:KR) -3.36%. Smart & Final Stores (NYSE:SFS) -2.42%. Weis Markets (NYSE:WMK) -2.75%. Whole Foods (NASDAQ:WFM) -2.00%. Village Super Market (NASDAQ:VLGEA) -1.82%. Supervalu (NYSE:SVU) -1.15%.
Target (NYSE:TGT) is still in positive territory with a 0.15% gain, but could also feel an impact from Wal-Mart pricing initiative. Look for that question on the Target earnings call tomorrow.
A prolonged effort by Wal-Main to gain market share through basement pricing could create even more ripples in the retail sector and give Amazon (AMZN +0.8%) something to think about.