Happy July 4 weekend! I hope everyone has some great family time planned. Be sure to have a hot discussion on the June employment report. You can use these as your talking points:
- When was the last time (if ever) the ADP report nailed the NFP number?
- Weak construction jobs confirm that dreadful Owens Corning (OC) earnings warning from weeks back.
- At the core, retail jobs are disappearing; don't be misled.
- Yellen's modestly hawkish comments on asset prices yesterday are pretty prescient in light of the stronger-than-expected jobs report. What did SHE know...
- Watch how riskier areas of the market perform today; sentiment will be dealing with Yellen's comments and the economy appearing to gain steam. Although keep in mind we have received a few data misses and scattered earnings warnings.
Quick Notes on the Market
Scribbled down notes before going on-air yesterday; here they are:
Best Buy (BBY): market may not be appreciating what's happening (positively) on the company's online business or new layout of the store interior.
Starbucks (SBUX): expect analyst upgrades into the next earnings report; bar set low and new menu options are selling.
Nike (NKE): I continue to get interesting post-earnings data from their team, and believe estimates for upcoming quarters will have to be taken higher due to the World Cup.
Kellogg's (K): I think the company is sitting on another bad quarter. As we learned from General Mills' (GIS) warning, packaged food profit margins are under intense pressure. Given Kellogg's recent financial trends, (and the company's unwillingness to talk with me the past two months), my view is the second quarter will be rough on the eyes.
Bigger Picture Thoughts
Trends such as the rush to deliver online merchandise quicker from the likes of Walmart (WMT) and Amazon (AMZN), the aging of the global population, and greater focus on the planet, mean one thing for shipping and logistics companies UPS (UPS) and FedEx (FDX): they will have to invest more in their infrastructure to meet new demands on their systems.
Here is what I learned on how UPS is tackling those challenges by talking with the company's CFO, Kurt Kuehn, for a piece on TheStreet.
The company has a fleet of more than 3,000 alternative fuel vehicles that include Liquefied Natural Gas, Compressed Natural Gas, Hybrid Electric and Hydraulic Hybrid. It is even testing vehicles that run on chicken waste. By 2017, Kuehn noted that UPS is on pace to drive more than 1 billion "green" miles.
Kuehn shared that he envisions the day when a specially-trained UPS driver not only delivers a patient's medication, but also performs basic tests and monitoring procedures and relays the information electronically to physicians. I think UPS will partner with retailers in some way; they are opening up in-store clinics.
To better handle a rush of online-derived orders during the holidays, UPS has added more than 6,000 additional package cars and built new buildings, while expanding others.
