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from Data Dive:

Pepsi pops, Coke fizzles in Q2

The two giants of the beverage empire reported earnings this week, with PepsiCo outperforming estimates and Coca-Cola missing them.

For Coke, global sales volume rose 3 percent, but beverage sales were flat in North America. This is partly because Americans are drinking fewer diet sodas, Reuters reports. Interestingly, sales of regular Coke rose 1 percent in North America, which the company attributes to “demand for smaller packages of the product, which Coke has found to have generated more ‘brand love.’”

Pepsi announced organic revenue grew 5 percent in its snacks business and a 2 percent organic sales increase in its beverage business globally. Reuters writes that this is good news for the company, which is currently trying to battle activist investor Nelson Peltz, who “is urging the company to split its more successful snack division from its sluggish beverage business. Peltz said last week that a proxy fight at PepsiCo was a ‘possibility.’”

from Counterparties:

MORNING BID – Waiting on volatility

The day brings another run of earnings reports in what’s overall been a steady and admittedly staid earnings season – many of the high-fliers that investors counted on for volatile trading post-earnings haven’t delivered on that promise, an angle we’ll be exploring in more detail later in the day. Facebook went out with results that weren’t terrible or even all that amazing and shares meandered their way to a 2 percent gain in post-close trading Wednesday (it has since risen and is up 8 percent in premarket action Thursday, so that one has at least panned out for some). Shares of Gilead Sciences bucked the trend among more volatile biotechnology shares and really didn’t do all that much at all.

The big-cap stocks have been similarly unexciting, and the equity market gets a ton of them before and after on Thursday, including heavy equipment giant Caterpillar, the two car companies (Ford and General Motors). There’s also Post-It maker 3M, online retailer Amazon, payment processor Visa – another good consumer spending barometer, and the likes of PulteGroup and DR Horton, a pair of larger homebuilder stocks.

from Counterparties:

MORNING BID – The consumer outlook, out of earnings

The next several hours will bring a handful of important consumer names that may give investors some idea of the progress the consumer economy is making. This only works as a barometer to some degree. Sales at S&P 500 companies far outpace the growth of the overall economy, which in part explains why the market itself is doing as well as it is (we’re in the 1980s now on the S&P, so crank up the Def Leppard) and the rest of the economy is lagging behind.

And mass market consumer-facing names like McDonald’s and Coca-Cola disappointed investors with their results on Tuesday, so it will be interesting to see whether others, like Whirlpool - which has tended to buck the general trend - will fare a bit better with their results. (Whirlpool, for its part, cut its outlook amid weak results, but North American sales were up 4 percent excluding currency effects, so score that one on the positive side of the ledger.)

from Counterparties:

MORNING BID – The quiet days for Apple

Apple’s been the two-ton behemoth of the stock market for so long that it is going to be surprising, in a way, to see that the company isn’t really pulling its weight anymore when it comes to its percentage of S&P 500 earnings. This sort of thing can be a bit silly, but Howard Silverblatt, the index guru over at S&P Dow Jones, points out that Apple right now is about 3.2 percent of the total market value of the S&P while at the same time accounting for an expected 2.8 percent of earnings in the S&P – the first time since 2008 that Apple hasn’t delivered a percentage of S&P earnings equivalent to its market value.

In the past few years, Apple has tended to carry much of the S&P on its back, such as in the fourth quarter of 2011 and first quarter of 2012, when it accounted for 6 percent and 5.2 percent of the index’s earnings – compared with accounting for about 4.4 percent of the market’s value at that time. In the last quarter of 2012 the stock was 6.3 percent of the market’s earnings and was less than 4 percent of its market value.

from Breakingviews:

BofA stuck in a low-profitability trap

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bank of America is stuck in a low-profitability trap. Several businesses at the Charlotte, North Carolina-based bank actually put in a good showing for the second quarter. The trouble is, BofA as a whole is still struggling to churn out solid earnings – even after aggressive cost-cutting.

from Data Dive:

Citigroup settles

Citigroup reported earnings today — coincidentally the same day the Justice Department announced a $7 billion settlement with the bank over crisis-era mortgage securities. Its quarterly earnings fell 96 percent to $181 million and its return on equity was a mere 0.2 percent — mostly due to the aforementioned fines. However, the numbers are nonetheless stronger than expected, largely because of a strong quarter in its fixed income business.

Reuters has an interactive graphic showing Citi’s performance versus other big banks. Below is a still — the interactive is here.

from Counterparties:

MORNING BID – Hewlett-Packard and the declining sales

Shares of Hewlett-Packard fell late in Thursday's session after the company inadvertently released results just before the closing bell, but the year hasn't been so bad for HPQ at least where its stock is concerned - shares are up about 13.6 percent so far in 2014, part of solid performance by a group of stocks Goldman Sachs identifies as "weak balance sheet" companies, the kind of phenomena that occurs when the economy seems to be in recovery and financial conditions are favorable, which they are right now - low rates, high levels of borrowing, reduced covenants in loans and further appetite for risk.

That may change as financial conditions tighten -if Treasury rates start to rise, for instance, or if banks throttle back on lending - but at least HPQ has something going for it right now. The company is cutting 16,000 jobs as it tries to revive its moribund profit margins and reverse what is now 11 straight quarters of sales declines. Companies with weak balance sheets in Goldman's screen such as HPQ, Time Warner, Norfolk Southern and Delta Airlines generally post lower per-share earnings growth and weak sales growth - often companies in more mature industries or that find themselves left behind one way or another.

from Counterparties:

MORNING BID – There’s A Sale at Penney’s!

We come not to bury J.C. Penney, because everyone else has done that a few times over already.

Headed into the last gasps of earnings season, overall earnings growth for the quarter is currently 5.5 percent - much better than the 2 percent expected at the outset of reporting season and trending back in the direction of what had been expected Jan. 1 before, well, before anybody knew anything at all.

from MacroScope:

Bank of England sticks to its view and analysts, some defiantly, stick to theirs

Bank of England governor Mark Carney gestures during the bank's quarterly inflation report news conference at the Bank of England in LondonMark Carney has delivered what is probably the clearest message on the trajectory of interest rates from the Bank of England for a very long time.

There was no more  talk of "forward guidance", but the guidance was pretty clear: no change to the view, on track for a first rate hike in a very gradual series, starting around a year from now. Nothing to see here.

from Counterparties:

MORNING BID – Stability, earnings, and Russia

The S&P 500 heads into the last session of the week less than 1 percent from an all-time closing high, corporate credit spreads have generally continued to shrink or at least stay stable, and overall investors remain enamored of riskier assets even though the momentum crowd has had its head handed to it for the better part of two months now.

Volatility is low overall, and while earnings estimates are coming down for the second quarter, they're doing so at a pretty slow pace - with the second quarter expected to come in at 8.1 percent from 8.4 percent estimated on April 1. That's pretty tolerable, though of course we've still got more than half of the earnings season left to get through.

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