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from Breakingviews:
Heinz deal suggests Big Food deserves a fresh look
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opini0ns expressed are his own.
After the Warren Buffett-backed takeover of Heinz, Big Food merits a fresh look. Makers of meals, sauces and spreads may offer better value than is immediately obvious.
The value of shares depends on future cashflows. In many sectors, high profit margins are a fleeting thing - just ask yellow-pages publishers, or record-store clerks. But food-makers’ strong finances may have a very long shelf-life. This is the sort of “moat”-like protection that Buffett famously prizes.
The sector’s giants are built around strong brands, relentlessly promoted and rejuvenated. Technological disruption is minimal. Developing markets offer promise. Profitability is strong, and holds remarkably steady. Operating margins at Heinz have only wavered 2.2 percentage points in 10 years, around a 15.5 percent average.
from The Human Impact:
IF campaign to end hunger seems a bit iffy
By Maria Caspani
Techno music and revolving images of hungry babies were among the most disheartening, not to say disturbing aspects of the event that kicked off the 'Enough Food for Everyone IF' campaign at London's Somerset House this week.
The catchphrase – ‘There is enough food in the world to feed everyone, yet 2 million children die from malnutrition every year' – was repeated so many times during the hour-long event on Wednesday evening that, by the end of it, I felt like the words had lost their meaning.
from Felix Salmon:
The tasting-menu backlash
The world's best art is not the world's most expensive art. But artists like being rich just as much as the rest of us, and so there are a lot of ambitious artists out there, working the art world hard, making precisely the kind of art which appeals to the tiny group of global plutocrats willing and able to drop millions of dollars on a single contemporary artwork.
That's fine, as far as it goes. But the problems start arising when art-for-global-plutocrats starts becoming broadly accepted as the best and highest form of art being produced today. It's not: it's just the most expensive, and the most celebrated. But drawing that distinction is very difficult, and probably pointless -- at least in the art world.
from Felix Salmon:
The economics of artisanal chocolate
[youtube]http://www.youtube.com/watch?v=9uFdjTQCwi4&feature=share&list=PL8B23AC66D3BDAD1D[/youtube]
Who doesn't like hanging out in a chocolate factory? My visit to Cacao Prieto, in Red Hook, was fascinating: what I wanted to do was understand the reason why artisanal chocolate (or artisanal coffee, or even artisanal mayonnaise, for that matter) seems to be such a fast-growing market these days.
from Global Investing:
Emerging Policy-The inflation problem has not gone away
This week's interest rate meetings in the developing world are highlighting that despite slower economic growth, inflation remains a problem for many countries. In some cases it could constrain policymakers from cutting interest rates, or least from cutting as much as they would like.
Take Turkey. Its central bank surprised some on Tuesday by only cutting the upper end of its overnight interest rate corridor: many had interpreted recent comments by Governor Erdem Basci as a sign the lower end, the overnight borrowing rate, would also be cut. That's because the central bank is increasingly concerned about the lira, which has appreciated more than 7 percent this year in real terms. But the bank contented itself by warning markets that more cuts could be made to different policy rates if needed (read: if the lira rises much more).
from Breakingviews:
Starbucks cross-border tax tactics fail taste test
By Edward Hadas
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Never underestimate the power of a government which changes its mind. The managers of Starbucks might want to contemplate that adage. The U.S.-based coffee chain reported last year a loss of 33 million pounds on revenue of 398 million pounds at its UK subsidiary for tax purposes, according to a Reuters report. The company does not disclose accounting results by country, but operating profit margin of the international business stood at 13 percent.
from The Human Impact:
Conway book urges united global action plan to end hunger
Global food security can be achieved for almost 1 billion chronically undernourished people by promoting strong political leadership, technological innovation, investment in smallholder farmers and efficient markets, according to a new book.
In “One Billion Hungry: Can We Feed the World?”, author Gordon Conway, a professor of international development and director of advocacy group Agriculture for Impact at Imperial College London, emphasises the importance of reducing hunger and poverty by increasing food production within an environmentally sustainable framework, which recognises climate change as a serious hindrance to future food security.
from Breakingviews:
Market geniuses don’t even get milk
By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.When the most pedestrian of groceries can surprise investors, something has clearly gone off. Along with an unexpected profit, Dean Foods unveiled a corporate split - of one sort of milk from another. By sending the company’s valuation soaring 40 percent, the dairy engineering exposed glaring inefficiencies.
Selling milk is a low-margin business. Most shoppers just pick the cheapest gallon they can find. Many commodity prices, from diesel to grain, can hit margins hard. Passing along such costs to customers isn’t easy.
from Global Investing:
Russia: a hawk among central bank doves?
This week has the potential to bring an interesting twist to emerging markets monetary policy. Peru, South Korea and Indonesia are likely to leave interest rates unchanged on Thursday but there is a chance of a rate rise in Russia. A rise would stand out at a time when central banks across the world are easing monetary policy as fast as possible.
First the others. Rate rises in Indonesia and Peru can be ruled out. Peru grew at a solid 5.4 percent pace in the previous quarter and inflation is within target. Indonesian data too shows buoyant growth, with the economy expanding 6.4 percent from a year earlier. And the central bank is likely to be mindful of the rupiah's weakness this year -- it has been one of the worst performing emerging currencies of 2012.
from Global Investing:
Risks loom for South Africa’s bond rally
Investors are wondering how much longer the rally in South Africa's local bond markets will last.
The market has received inflows of over $7.5 billion year-to-date, having benefited hugely from Citi's April announcement that it would include South Africa in its elite World Government Bond Index (WGBI). But like many other emerging markets, South Africa has also gained from international investors' hunger for higher-yielding bonds. And the central bank's surprise rate cut last week was the icing on the cake, sending 5-year yields plunging another 30 basis points.
