Marketbites: Coca-Cola defies inflation
Portfolio Manager Commentary:
Stocks closed higher for another session as a decline in bond yields contributed to the gains. Lower yields and higher indices point towards investors doubling down on expectations of a less hawkish Fed.
Earnings reports from many major corporations were released yesterday. Here are some recaps from a few notable reports:
General Motors posted a 37% increase in quarterly profit as its traditional business has performed well despite higher borrowing costs and recessionary worries. The higher sales can be attributed to supply-chain issues easing up and customers buying a lot of pickups. On the other hand, GM had to reduce its forecast for EV sales in North America due to delays in battery output.
Coke announced 10% higher sales for the 3rd quarter. One factor helping this revenue growth was a 7% higher average price for Coca-Cola products compared to last year. Still, Coca-Cola is noticing signs that inflation is changing consumers' buying habits with a shift to store-branded water and juice and shopping more in dollar stores. As a result, the company will be selling products at lower price points in the short term.
Alphabet missed earnings expectations on both the top and bottom lines as YouTube ad revenue slid. YouTube ad revenue fell 2% as opposed to estimates that it would increase by 3%.
Chart of the Day:
The chart below highlights the past three years of both the substantial net wealth increase from the bottom 50% of U.S. households and the significant amount of cash the wealthy were able to accumulate. As a result, many luxury companies such as LMVH and Hermes have reported strong sales numbers from the extra cash the wealthy held on to over the pandemic. Other industries, such as airlines, have also seen this trend. For example, data by Airbus-owned startup Skytra shows that, in Europe, business-class volumes are up an astonishing 28% relative to just before the pandemic.
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