In Business and Financial News:
Luv my burrito…
Shares of Chipotle Mexican Grill Inc. (CMG) soared more than 15% on Friday, topping an all-time high of $510 a share, despite news from the company that they are planning a price hike next year due to increase in higher food costs. Thursday, Chipotle posted unexpected strong third-quarter sales at established restaurants, overshadowing profits that fell short of Wall Street’s estimate. Sales at already open restaurants for 13 months, also known as same-store sales and a gauge of performance were up 6.2% in the third quarter.
The Denver-based company, known for customers building their own burritos, tacos, salads and bowls, has long prided itself serving farm-raised meat and vegetables to its customers. The chain was the first major U.S. restaurant chain to disclose which of its ingredients contain GMOs. Part of the reason for the chain not raising prices earlier was that the company wanted to first secure ample supplies of natural meats and switch to cooking oil and tortillas that do not contain genetically modified organisms (GMOs).
Not so Fast…
China’s economy, the second biggest in the world, grew at the fastest pace this year in the months between July to September. The country’s GDP (Gross Domestic Product), a gauge of a country’s economic health, rose 7.8%. The not so fast parts… signs of cracks have popped up in the last month to indicate that things may slow in Q4. An unexpected fall in exports (goods being shipped out of the country) in September, sluggish retail sales and easing growth in factory output suggest that China’s economy may have already begun to slow down at the end of the quarter. Authorizes also expect a cool down in credit growth, as inflation pushes towards a seven-month high, a factor which could cause a drag on economic activity.
A potential move by Mexico to slap a special excise tax on “junk food and sugary drinks” is shaping up to be a challenge for some of the world’s largest food and drink companies in for the form of profits, especially if the movement moves into other countries. Last week, Mexico’s lower house of Congress passed a bill that seeks to put a 5% excise tax on high-calorie packaged food like peanut butter and sugar-laced breakfast cereals. This new tax comes after another excise task of 1 peso (0.08 USD) tax on sugary soft drinks per litter.
Mexico’s Senate is expected to pass both taxes as part of a broader tax overhaul within a few weeks. The twin taxes could pose a threat to some of the world’s largest multinational food and beverage companies like Coca-Cola (KO), Kellogg (K), and Nestle (NESN.VX). The tax may initially hurt consumption, as Mexico is the largest per capita consumer of Coca-Cola products in the world. The bigger question and larger threat to the companies may come if the Mexican government keeps hiking taxes or if the movement spills over into other countries.
KJ’s Take: 7 out of every 10 adults in Mexico and a third of the county’s children are either overweight or obese, according to government figures. Mexico has surpassed American for the title of the most overweight country. To put it into perspective, Mexico’s murder rate from its drug war and common crimes is 20 per 100K people, meaning that 7x more people die from diabetes every year in Mexico than murder. It doesn’t matter if you agree or disagree at the very least the issue of healthy eating has become front and center.
This week the government will catch up on all the reports it did not release because of the government shutdown. First up on the list… The NFP (Non-Farm Payroll) jobs report released tomorrow.
In The Markets:
Shares in Asia closed in the green Monday. Investors shrugged off worse than expected economic data from Japan, instead focusing on the US jobs data due out tomorrow.
European stocks rallied on Friday closing at a fresh five year high. Expectation the Fed will keep quantitative easing in place longer following the partial US government shutdown had investors in a buying mood. European markets are higher in Monday morning trading, helped by upbeat corporate earnings.
US markets closed out the week on a positive note with the NASDAQ hitting a 13 year high and S&P 500 hitting another record high. Investors were given a couple more reasons to remain giddy with better than expected corporate earnings from Google and Chipotle. DJIA +26.65 15398.30 NASDAQ +51.13 3914.28 S&P +11.27 1744.42
In Dinner or Drink
2 oz. tequila
1 1/2 oz. Cointreau® orange liqueur
2 oz. sweet and sour mix
1 oz. lime juice
2 oz. orange juice
1 splash Sprite® soda
Pour all ingredients into a large cocktail shaker filled with ice. Shake and strain into a large cocktail/martini glass (8+ ounces) with a salt rim. Add two olives on a spear, and serve.
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