😅 Healthcare's extra Super Tuesday
Hey Snackers,
Pancake poll: Extra syrup, tripled-stacked, or with a hearty serving of criminal? This English police force is stamping the faces of most wanted suspects on pancakes — because breakfast tastes better with a dollop of danger.
US markets rallied on news that lawmakers set aside $8B for coronavirus emergency funding. All 3 major indexes are now less than 10% down from their 52-week highs — aka, out of "correction territory."
Biden's big day is UnitedHealth's best day since 2008
An extra Super Tuesday... for the healthcare sector, which rallied massively after Joe Biden scored wins in most of the 14 Super Tuesday states. Biden's victory affected healthcare stocks because it suggests a lower likelihood of a Bernie Sanders Medicare for All reality, which would abolish private health insurance. Health insurance companies/investors breathed a collective sigh of relief:
- The S&P health care sector soared 5.8% and recorded its best day since 2008 — health insurers added around $48B in market value Wednesday.
"Pricing in" the risk of a Bernie win... A stock's price is largely dependent on what investors perceive to be the future growth/profit potential of the company. Tuesday changed things for health insurance:
- Before Super Tuesday, UnitedHealth's stock had a priced in chance that the company might be decimated by a Bernie presidency.
- Now, the odds of that are lower. Biden's wins increase his odds of becoming the Dem's presidential nominee, and he advocates for less dramatic healthcare reform.
- The result: The less-probable Bernie victory boosted UnitedHealth's market value by $20B.
"Policy risk" affects some more than others... And it's baked into the stock prices of companies in certain industries: Tobacco and gun stocks reflect the risks of anti-tobacco and gun-control policies — Defense stocks mirror the risks of foreign military conflicts. When industry-specific policies shift, the industry stocks react (for better or worse). And 2020 is a year of policy risks.
H&M wants to "share" its supply chain with retail rivals (for a cost)
Secret's in the (faux) leather bag... H&M is your go-to for $7 dollar sunnies and floral basics. It's also 1 of the world's top 3 fashion retailers. Now, it wants to share its know-how with rivals — for a price. H&M is debuting "Treadler," a service that allows other brands to use its massive clothes-churning infrastructure.
- Not so glam: Clothing supply chains are complex — fashion companies (especially smaller/newer ones) often struggle to organize their own suppliers, production, and logistics.
- Supply Chain as a Service: H&M is offering retailers access to its massive global supply chain — from development, to sourcing, to production, to delivery. Clients can leverage H&M's scale/expertise, and get connected to its supplier partners.
Sharing "progressive sustainable work"... What H&M is positioning this as. It's faced heat for fueling an economy of frequently replaced (and then thrown away) clothes/accessories — aka, fast fashion.
- The fashion industry may be responsible for 10% of the world's greenhouse gas emissions because of those long and energy-intensive supply chains.
- H&M has been on a big sustainability kick, touting the use of recycled materials, using AI to make sustainable production decisions, and aiming to be carbon neutral in 10 years — also, its new CEO is its former sustainability chief.
Not about generosity or sustainability... More about H&M leveraging its massive infrastructure and excess production capabilities to make a buck. Right now, H&M is only catering to consumers — and fast fashion is struggling. Treadler could generate revenue from other businesses as H&M basically Airbnbs out its extra resources. It's a potential H&M revenue source that also reduces others' carbon footprints.
Soup is back — Campbell jumps 10% on canned foods and Millennial families
Surpassing the impossible... Tomato, Chicken Noodle, Cream of Mushroom — Campbell's iconic posse of condensed soups is back in action. Campbell Soup stock jumped 10% after expectations-beating 1% sales growth — That's fantastic, considering US soup sales for Campbell have fallen 8 of the past 9 years. Some things to slurp on:
- Pantry-staples like canned soup are a hot commodity as coronavirus-fearing shoppers stockpile non-perishables.
- Demand for Campbell's products has grown, both in-store and online. Now, Campbell is increasing soup production to prep for more demand.
- Campbell has also been investing in better ingredients and more hard-hitting soup marketing (advertising costs rose 7% in the quarter).
Millennials are soup-ing now... The CEO credited the surprise sales from "younger households." Apparently, he was surprised: “Frankly, this is a trend that many believed was not possible” (including him).
Millennial tastes are growing up (kind of)... In 2020, a Millennial is anyone aged 24 to 39. As we become heads of households and families, our biz-shifting powers grow. Maybe Millennials' juice-cleanse-loving, acai-bowl-scarfing ways are evolving as they transition to buying food for families, not just themselves. Managers should pay attention.
What else we’re Snackin’
- Fleeting: Twitter will test disappearing tweets with users in Brazil — it's latching onto Snap and Insta's 24 hour "fleeting" vibes
- Late: Same-day delivery services from Amazon, Walmart and Instacart have been hit with delays as coronavirus fears cause a surge in online ordering
- TLDR: ViacomCBS is exploring a sale of its Simon & Schuster book-publishing biz for at least $1.2B, according to PFWTM (aka people familiar with the matter)
- Push: Japan's Olympic minister says the Tokyo 2020 Games could be postponed to the end of the year, instead of their scheduled summer start
Thursday
- Earnings expected from Costco, Kroger, and LaCroix-maker National Beverage Corp
Disclosure: Authors of this Snacks own shares of Amazon
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