Join Tematica Research's Chief Macro Strategist, Lenore Hawkins, and Chief Investment Officer, Chris Versace, as they discuss and debate what's driving the market and the economy this week.
Markets last week
Last Thusday the Nasdaq closed up 0.7% for its 17th record high in 2021. Not to be outdone, the S&P 500 gained 0.6% to make its 30th record close for the year and the Dow added nearly 1%. The long bond remained fairly steady at 2.1% while WTI crude rose back above $73 a barrel and gold dropped lower to $1,775 an ounce as the VIX fell below 16, near to its pandemic-period lows.
Key Economic Data and Related Events LAST WEEK
Probably the biggest news was that a bipartisan group of Senators came to an agreement with the Biden administration on a roughly $1T infrastructure plan
- $579b new spending
- $312b transport
- $10s b on water infrastructure, broadband, environmental remediation, power & electrical grid
- Funding from new IRS enforcement? Ugh
- $100b in public/private partnerships
- $65b in 5G wireless spectrum sales
- Less than 60 votes in total right now for it in the Senate
Economic Data to Watch THIS WEEK
Tuesday, June 29:
- April FHFA Housing Price Index HOUSING
- April S&P Case-Shiller Home Price Index HOUSING
- June Consumer Confidence
Wednesday, June 30:
- June ADP Employment Change Report + Friday’s (LABOR)
- June Chicago PMI - Markit’s from last week showed slowing (SLOWING)
- May Pending Home Sales HOUSING
Thursday, July 1:
- Weekly and Continuing Jobless Claims (LABOR)
- May Construction Spending (SLOWING)
- June ISM Manufacturing Index (SLOWING)
Friday, July 2:
- June Employment Report (LABOR)
- May Factory Orders. (SLOWING)
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Lenore Hawkins, Chris Versace
Chris Versace 00:06
This is the week ahead brought to you by Advisorpedia and powered by Tematica Research. . .
Lenore Hawkins 00:30
Morning sunshine. Morning. Good morning,
Chris Versace 00:34
So, I know we have a lot to get to. This past week. There's some stuff on infrastructure. There's some stuff on the banks, there's some stuff on the Fed and perhaps the rejigger definition of transitory. But before we talk about that, it was actually a pretty big week for us here at America now, wasn't it?
Lenore Hawkins 00:55
Yeah, kind of eyes kind of was wasn't it?
Chris Versace 00:56
Yeah, pretty cool. I have to say. And so so what I'm what I'm referring to is, you know, over the last 1218 months, we've been working with firms in Europe to bring our investment themes and indices to market in the form of ETFs. And last week, we had a new milestone and that we cracked the US market with amplified ETFs that launched the amplify cleaner living ETF which is lower and I know and now you know, reflects our cleaner living investment themes Lin already want to give folks a kill on that.
Lenore Hawkins 01:35
Oh, and it has quite possibly the coolest ticker ever detox DT o x
Chris Versace 01:40
In case one wants to detox their portfolio.
Lenore Hawkins 01:45
And it's all about just the the trend we see all over the world for a cleaner homes, cleaner workplaces, cleaner environment, cleaner, transportation, cleaner products to put on your body cleaner food to put in your body cleaner products to use around your home. Things like TRex decking that is mostly made of recycled plastic bags.
Chris Versace 02:08
Correct? Yeah. And just to clarify, when you say a cleaner work environment, you don't mean that cleaning crews are coming in?
Lenore Hawkins 02:15
You mean you don't mean the loss of dirty jokes.
Chris Versace 02:19
Right, right. Those? Yes, they are. You just got to be careful who you share them with? Well, you're talking about his cleaner cleaning materials, you're talking about natural organic ingredients, paraffin free ingredients, things that are less harsh for the environment less sharp, less harsh on the skin, which which spans not only the new types of building materials, like you were saying in terms of recycled plastics, but others but we're also seeing the uptake in electric vehicles and other electric modes of transportation and some other things so all in all, it's it's capturing that consumer shift towards better for you better for the environment products were to say we're excited is something of an understatement.
Lenore Hawkins 03:08
And what a week to get started on given. Last week, the markets were once again hitting record closes last Thursday, actually the NASDAQ closed at a record high for the 17th time in 2021. And the s&p 500 made its 30th record close. The long bond like all this inflation fears as we've been saying all these inflation fears seem to be toning down because the long bond yields remaining about fairly steady about 2.1%. Crude oil prices still a bit of a problem rose back above $73 a barrel and gold as you would expect as these inflation fears are starting to wane, dropped a lower to about 1775 an ounce and the VIX interesting to talk about complacency. the VIX fell below 16 and is now near the pre pandemic lows a lot of complacency. And actually when you look at sentiment this is this is something to really be paying attention to. So the latest investors intelligence poll showed that the bull camp expanded 2.4% to 56.5%. At the same time, the bear share contract at half a point to 15.8%. Now that means there's about four bowls for every bear that is very much in extreme condition at that and that's reflected in the VIX, right? So we've got confirming data points. The ay ay ay ay pole, similar show the bulls at 40.4% bears at 23.3. Again, that's an extreme gap relative to historical norms. And if you look at the Citibank panic euphoria, you know, this is the one that's where is the market is it in panic mode is it in euphoria mode? It remains well above the that euphoria threshold 0.41%. So this all goes to the market has priced in everything is just fantastic. And it just is only going to get better.
Chris Versace 05:11
But you and I know that that's not always the case. And generally speaking, when we see such a skew in this type of polling data, more often than not, it kind of suggests that number investors might be late to the party, and that we could see a little bit of a near term top.
Lenore Hawkins 05:32
Historically, when you've had this, these levels, you do you see a pullback, but as we've seen with this market, those euphoric tops could last longer than you think is ever real.
Chris Versace 05:45
No, no, no, absolutely true. But what's different this time?
Lenore Hawkins 05:48
There's there's a little what is different this time is we don't have a Fed saying, Yeah, we got your back. So that's a little bit different. But But we do have the fiscal side, which is trying to have your back, where we just got news that there may be some sort of an agreement reached on the infrastructure bill.
Chris Versace 06:10
Right. I just wonder, though, that, you know, the market reacts to that earlier than not. And I and we pile it all on I question, what are we gonna find out? Or what can be said, what can be done in the back half of the year to drive the market? 10%, higher, 15%? Higher, you know what I mean?
Lenore Hawkins 06:31
Totally a great, it's gonna have to be pretty spectacular. And I think what we see now given how elevated, right because you want to buy whatever it was like it's all over. And you want to sell when everybody thinks everything's just gonna go fantastic. I think what we're seeing now is, is an environment in which selling the news is a good idea, for example, with this, this, the reports on a potential infrastructure bill. Now, keep in mind, too, there's less than 60 votes for it right now in the Senate, which doesn't mean it's a sure thing to get through. It's a 1 trillion. So the they've agreed, in theory on a 1 trillion infrastructure plan, nearly 600 billion and you spending over 300 billion for transportation and 10s of billions on water infrastructure, broadband, environmental remediation power, and the electric good grid. And what's really awesome about this is the funding is going to come from New IRS Park. So that's, that's, I think that's got everyone pretty happy. That sounds like fun. They're also going to be selling some 5g wireless spectrum. But and then some private public partnerships, but really, it's that IRS enforcement that it's got to have people pretty happy.
Chris Versace 07:48
Yeah, I know. So let me ask you this. So that spending on broadband, does that get you? Does that up your conviction or what we what we have? It's America, which is our digital infrastructure, and connectivity, theme and index, does that get you a little more build up than you were before? Does that add to the 5g conviction?
Lenore Hawkins 08:09
I think it reinforces we keep hearing governments around the world talking about how this is critical for global competitiveness. A nation that doesn't have a solid digital infrastructure is not going to be able to keep up.
Chris Versace 08:25
Yeah, I agree with that. I do think that the you mentioned that 65 billion in 5g wireless spectrum sales. The more spectrum that's out there in the marketplace and used by the carriers, the greater the coverage, that perhaps the quicker of a development that we can see for some of these longer term applications, ar VR. telemedicine as well as autonomous, correct, you know, that's, that's like that word aluminum. Sometimes I can't say it correctly. aluminio aluminium, quite quite. Now, we also got the start of the month PMI data, both from IHS market and from ifsm. What did your analysis turned out?
Lenore Hawkins 09:09
Well, it's basically exactly what we have been talking about for the past few months that we expect to see a slowdown in the second half of the year and we're starting to see that the composite pmis sell in may still high, but they're they're rolling over. The chief economist at IHS market, Chris Williamson said that the second quarter will likely represent a peaking and the pace of economic growth. So he's on our page. And and when you're looking at that and say, Okay, well, why do I care? Well, it's because the financial markets respond to changes at the margin. So as we look forward to the weeks and months to come, data like this is most likely going to further solidify new market leadership, which means growth over value and defensive over procyclical. We also saw deceleration in the month over month, Kansas City fed composite, so it was similar it was hit 20 Seven similar to me so it rose up a little bit but still well below we saw in April. So we're not talking for the razzing, the economy's gonna, like crash over into recession. Right. We're saying that that those expectations that that crazy crazy year over year pace in the first half a year is not what we're gonna see. The second half of you can't.
Chris Versace 10:19
I mean, we can't you and I talked about this last time, which is we came to the most pronounced global slowdown stock we've ever seen. And in the second half of 2020, things started to pick back up, they weren't at normal levels. No, but that's gonna make comparisons that much harder. So it stands to reason that the huge year over year comparisons that we're seeing in March, April, May June are going to get that much more tighter, if you will, in the months ahead.
Lenore Hawkins 10:48
And we still have we have issues with the labor market that are starting to be more glaring, and I think you're going to be more difficult to just add, it's gonna work its way out.
Chris Versace 10:58
I know, I know, you have some comments from those reports. I'm going to add to that when I talk about what company said this week, because companies are flat out calling it out as well.
Lenore Hawkins 11:10
Yeah, we've got so from the PMI report, some select comments from companies saying it's very difficult to find entry level employees. Other saying with the lack of willing and able entry level workers, we are choosing to invest more in equipment and automation, which over time should leave our company to have a lower number of workers with a higher level of skills. And what's interesting, too, when you look at that is that, at the same time, new claims for unemployment benefits itself to 411,000 from a revised 400 and K in the prior period. This was well above market expectations for 380. The total number of claimants remains close to pandemic lows that was reached earlier this month. But what I think is really interesting is if businesses are citing labor shortages as their top concern, and telling the Bureau of Labor Statistics and the NFIB all about these job openings they have that why on earth are they firing people at double the pace of what ordinarily constitutes a normally functioning labor market? Like why is that happening? Why are we seeing all this firing? There's a lot more going on here? I mean, yes, we still have issues with labor market, people saying that they're they're concerned, like we're seeing a lot of people coming out of hospitality because they are concerned. Okay, I get that except you can't get the vaccine and are really that many people choosing to not get vaccinated. We're hearing that people are having trouble finding daycare. Okay. When is that going to work itself out? Right? Like, how long are these? How long are these stories going to get? It looks like something has fundamentally changed in the labor market
Chris Versace 12:49
I think so I think a lot of that going going back to the office going into work for white collar jobs and daycare, like you're talking about it. It all points to September that that's when we'll know if that aspect. I agree, Matt, as they say, the rubber hits the road. But it sounds to me, though, that if you're complaining you can't get people and you're firing people. I agree there's something structural that's going on, wink wink nudge nudge more automation, perhaps?
Lenore Hawkins 13:21
Yes. I mean, that's that was back in 2020. That was one area of substantial growth. We've seen productivity has increased more than in the prior decades. These are all good signs for companies that the productivity of the economy and all that not good sign for lower paid workers. But it seems like companies are having a tough time hiring them in the first place. So something's really fundamentally changed here. And that's going to need to get worked out. And that is a headwind. This, this this, these challenges in the labor market are a headwind. So when we're thinking, Oh, the economy is going to be growing so fast. Things are going so well. Yeah. Okay, except for what's going on with this labor pool that's really struggling to find the right person for an open position.
Chris Versace 14:08
I'll give you an anecdotal confirmation of automation. You're ready. When I go through the McDonald's drive thru, a robot pours my drink. Pretty cool when I go through chick fil a, a human force my drink, how long until chick fil a mic? over to robots?
Lenore Hawkins 14:26
Yeah. It's happening. But so in general, last week, what we saw was just confirming data points of the pace of the economy, starting to really slow which is what we were expecting to see in the back half of the year. Things are still good. It's not we're not a recession, not anything like that. It's just that crazy pace is definitely slowing. We would expect to see kind of weaker numbers in the back half the durable good orders. Same thing. Yeah. Okay. It's slowed down. More than expected was still at 2.3% month over month. But that mostly that headline was transportation, which is really lumpy. So if you take out the transport headline was up just point 3%. That's really light compared to estimates 4.7, so less than half. And a key component of this report is the poor cap x orders, which is nondefense capital goods x aircraft. And that's, that's the most reliable and it dropped point. 1%. So and that's against expectations for an increase of point six, so slowing?
Chris Versace 15:38
No, no, no, it's about that. I yes, yes. That's a technical summary.
Lenore Hawkins 15:44
It's an economic term.
Chris Versace 15:46
I don't I don't recall my professors teaching me that I might have missed it.
Lenore Hawkins 15:50
That's the phase and the economy. Got it.
Chris Versace 15:52
Got it. Let's Let's move on. Because I know that there was some stuff going on with the Fed last week. And I know that you and I have been particularly focused on the use of that one word transitory Yeah, that's favorite word this year. But but it sounds like they some of the some of the Fed might have be quietly redefining what that really is what that word means.
Lenore Hawkins 16:16
Yeah. So if you recall, two weeks ago, we had the market started getting nervous with Fed officials, some Fed officials coming out and saying we're going to need to raise rates sooner rather than later. Last week at benefit president Bostic joined Bullard and Bullard is going to do two weeks ago in the hawkish camp stating that the central bank may slow its asset purchases in the next few months. So that's tapering in the next few months. And that quote, given the upside surprises in recent data points, I've pulled forward my projection for our first move in late 22.
Chris Versace 16:52
So far, so sometime in 2023, coming out of the feds meeting last week now. Late 2022, late 2022 so it's late so at least right now it's at least four maybe five quarters away maybe.
Lenore Hawkins 17:09
So that's that's in contrast, pal still in the Yeah, we've got we've got ways to go. The time will tell but there's definitely didn't. That is concerned.
Chris Versace 17:19
It Right. Right. But didn't Powell? I can't remember. I think he testified this week somewhere Disney?
Lenore Hawkins 17:25
Yeah. for Congress.
Chris Versace 17:27
Yeah, he just so so can you imagine him while that's coming out? Given this guy shooting Bostwick? dirty looks I bet. Come on, man. I'm in front of Congress.
Lenore Hawkins 17:37
Well, but that's you know, that's one of the things about the Fed that I respect is is they respect differing opinions. Right and it's it's it's it's kind of interesting that let the market hear differing opinions. What another one's kind of interesting because China is such a massive economy and has such an enormous impact on the global economy. The guys over at Bloomberg put together a little dashboard where they slice and dice all the data coming out of China and found that inflation there and this is really important because China is the biggest importer of commodities. Inflation in China peaked and is rolling over that and that will be you think, Okay, why do I care a bond market that's really good for duration because if inflation's rolling over equity market again, good for growth over value. Okay, and keep in mind what we've been talking about lumber, being you know, killing the homebuilders, lumber prices are down 50% from the May peak just do and are now back to where they were in August.
Chris Versace 18:38
So the wood is softening. Okay. What about the labor market?
Lenore Hawkins 18:48
Well, we talked about labor market, you're the one you were the one who said you were the one who said dirty jokes cancel with me. Let's go to housing. So home prices have soared at a record pace into a record high but new home sales fell 5.9% in May 2011 month low and it had April not been revised lower that would have been more like a 10.9% plunge. So we're really seeing housing it that it's it's not what it seems from the headlines. existing home sales fell point 9% month over month in May after dropping 2.7 in April. That's the fourth consecutive month over month decline. At the same time inventories are up 29% and an annual rate over the past six months while sales have fallen 21%. So things are changing there to unsold inventory backlog has written to risen to a 12 month high of 5.1 month, up in May from 4.6 in April and 4.2 in March. So how's it we're seeing shifts there that that market is not on the same trajectory it was on.
Chris Versace 19:58
The only thing I'll point out Is that 5.1 months supply is still historically low.
Lenore Hawkins 20:03
Chris Versace 20:04
And you have to remember that just for context, that 12 month timeframe is exactly when the housing market started to explode this time last year, because people realized, whoa, I need to vacation differently, I need to do something differently, I need to move out of the city. So I agree with everything you said. I just think that 5.1 is kind of a tough number to really think about at this point.
Lenore Hawkins 20:30
But it is I think it's important to realize that the dynamics in the housing market are evolving. And it isn't, it's there's more than just you see it. The headlines. probably agree, though, if we look forward to next week, given that we're talking about housing, we'll be looking for the FHFA housing price index on Tuesday, and also the s&p Case Shiller home price index on Tuesday. On Wednesday, we get maize pending home sales. And then if we're talking about the labor market, we'll be looking for ADP employment change report for June on Wednesday. And then the usual weekly jobless claims on Thursday. And, of course, the big labor report comes on Friday, the unemployment report.
Chris Versace 21:17
Do you think so? I'm just kind of curious on that, you know, I I've been thinking in writing that, as certain states pull out of the pant the federal pandemic unemployment, yeah. stimulus that will start to see employment tick up. And I think it's going to get better. You know, May was better than April, I think June will be better than May. And we'll continue to step forward. But I that blockbuster number, I don't think it's going to happen until September. That's, that's what I think. What do you think?
Lenore Hawkins 21:52
I think. So, in Wall Street Journal, and Bloomberg, I've been reading article, I'm sure everybody's been reading these articles talking about how people are really looking at work differently, that the pandemic forced a lot of people to reevaluate their lives, where they're working, where they're living, how they're working. And what we experienced during that pandemic, has really changed the way people view their lives and what they want out of life. I wonder if that is transitory? Or if that's going to really stick? Are people going to exit you read reports about people quitting their jobs now? Yeah, you know what, I don't want to go back to the office. I really like being home, being able to see my kids, I like being more part of my family's life. And I can't do that with a 60 Hour Workweek and hour commute each way. Right. And I think I think that is a year from now let's talk and see, has that really fundamentally changed? Or is it something that's like coming out of the pandemic, people have these emotions, but it's all going to kind of fade and we'll go back to life as it was a year from now.
Chris Versace 23:06
So I agree that that's an unknown. I was just thinking more about all the reports that we heard of people not going back to work sitting home on the couch because of those extra unemployment benefits. Right. Those don't really expire until September.
Lenore Hawkins 23:21
Yeah, thank you. So we won't really know until like q late q3, q4 October.
Chris Versace 23:28
Yeah. October is the real one. All right. Well, let's, let's shift gears. Was there any other economic data you're watching next week? No. All right.
Lenore Hawkins 23:36
Well, there's a little bit on May factory orders. That's about a factory orders the GSM. That's on Friday GSM. We're still looking to see those those pmis the manufacturing, is this kind of rolling over? That's on Thursday. That's about it.
Chris Versace 23:53
Okay. All right. So let's shift over to earnings. And there were a handful of reports this past week. I think the big three that people were looking at were Nike, which totally crushed expectations, both from a physical and digital footprint perspective. And they were across the board in terms of geographies, no surprise, compared to year over year, but really, the two year stack numbers are off the charts as well. You know, I think that's all because let's be honest, athleisure has been a huge hit. But what jumped out to me is that Nike says that Nike direct is about 40% of its company's branded business. Now, Nike direct is where they ship direct to consumers. They don't deal with Dick's Sporting Goods or anybody else. So 40% of their brand business is direct, that is huge. They think it's going to go to 60% by 2025, with the biggest part of that growth, digital, so that's, that's a huge number.
Lenore Hawkins 24:54
The other thing that was good for the bottom line, you're taking out the middleman.
Chris Versace 24:57
Well, it also kind of speaks a little bit to that automation perspective that you were talking about earlier, less hands on the different boxes. And they guided their 2022. year there may fiscal and 250 billion, the consensus revenue was 48 and a half billion so Nike shares, I mean, unbelievable ballpark would. Absolutely. Let's do another one. That is one of the greatest slogans I have to say. The other, the second one was Darden restaurant operates a restaurant operator across the board, various price price points with its portfolio. Simply put, you know, people are flooding back to eating out no surprise, so very confirming. But what you said earlier about the difficulties of attracting employees. They said, Look, the restaurant industry is going to continue to struggle attracting workers. That means that the overall experience may not be as good as people were hoping for, or maybe a little less compared to what it was pre pandemic. I don't know about you, but I'm still gonna go out to eat I might have to wait in line the tables may not turn as quick but I plan on doing my part to stimulate the economy in the other one to talk about just in terms of staffing was FedEx and look FedEx put up good numbers year over year. But even they said that as we ramped towards the seasonally stronger second half of the year, we are going to have a tough time attracting people. So they're revisiting pay packages and hourly rates, but it's going to be tough, particularly as they look to really go head to head to gain ecommerce market share away from Amazon and really ups so that's going to be difficult. Two other quick things that kind of jumped out. One was more price increases. Corning the the glass company said that they are going to have moderate price increases and the reason for that higher logistic costs and material costs. And then paper companies Sunoco products said that they're going to implement a $50 per ton price increase for all grades of uncoated recycled paperboard effective July 15, which means you'll be paying for
Lenore Hawkins 27:13
Yeah, it is it is incredible the amount of shortages that still exists throughout the economy. I am as you know, need to fix a painting. Judgment a mistake. I like whatever Sherwin Williams, Sherwin Williams will not give you samples because there's a paint shortage. So you can't get a sample. And the smallest you can get are these big cans. And while I was there, a couple of people came in and couldn't get the type of paint. I mean, it gave the color but not the type of paint that they wanted.
Chris Versace 27:49
Because they were out what that it's like I was still going on ...
Lenore Hawkins 27:52
Global economies that were not there. I had.
Chris Versace 27:56
I had big plans to pressure wash and reseal my patio. Sherwin Williams, they don't have the sealer. Yeah, so I couldn't do it. One area though, too. That's actually kind of interesting, though. And it confirms what we've been hearing from a number of the airlines that things are heating up. Yet the said that it's planning to hire more than 1000 pilots between now and next summer, because of the rebound and travel demand. So it sounds like delta is getting their act together. Whereas I hate to report when or that the airline you have to frequent quite a bit. Yeah. American Airlines what's what's going on there? I can't believe it.
Lenore Hawkins 28:36
Yeah, they're canceling hundreds of flights due to a staffing crunch. So looking at both of these, and then taking a bigger look at the broader economy. It is just not easy to stop the global economy and then start it again. And when we see the market price to perfection record high after record high after record high and yet you hear a company saying like, we have problems where a restaurant cannot hire just minimum wage workers. When has that been an issue? You've got American Airlines canceling flights, because they can't get people to work so that they can get these flights. So you're actually cutting the supply of what you sell. Because you can't get work that all of this together. This is not good science for the economy to grow at record pace. And yet the markets expecting that so it's just a little warning that we're seeing signs that this isn't the easiest thing to do. No, no, not at all. Not Well, thankfully, peloton came out with something to help all those companies that are struggling with all the stress.
Chris Versace 29:43
Well, that's that was a good transition. Right, right. So So there. So they've, they're offering the chance for employers to subsidize exercise accounts for their workers. I think it's a smart move. And it kind of ties in to as companies are in racing the work from home move. Yeah. Which I think which I think is gonna stick around. But But the real kickoff to the week was Amazon's Prime Day. Yeah.
Lenore Hawkins 30:08
And that, that that didn't go that well did it?
Chris Versace 30:11
Well, it's not that it didn't go that well, right. They were still up year over year, I believe. Adobe analytics said that the first day of the two day event beat digital sales of 5.1 billion for Thanksgiving in one day, in one day. Now, I now I know that I helped Amazon because I got it. I got I got I got multiple boxes. You know, what the number one selling thing in the US was? For from Prime Day? You know? No rumba. rumba.
Lenore Hawkins 30:44
I could see that. Yeah, I come home. And I know, the dirt.
Chris Versace 30:50
But I know. I know. I know. I know. I know. And yet I I did not partake in that. You know, I had dog Roomba issues last year, which you don't need to go into the dirt. I will say house training a dog and a Roomba in the same location can lead to disaster. It can lead the type of spread that you don't want. Yeah. I will say I also ordered stuff from Target and target actually surprised on the upside, not only in terms of availability and price in terms of discounts, but I got the target stuff before I got the Amazon stuff. Oh, to Shea. Yeah, that's much on Amazon
Lenore Hawkins 31:32
What are you looking for next week.
Chris Versace 31:33
So again, we still have another small week. But each day on really Wednesday and Thursday, there's there's about three or four companies we're going to pay attention to. The first one is Pernod Ricard. They are the upscale spirits company, they upsize their outlook last week saying that consumption in restaurants and bars was far stronger than they were looking for. This, I think sets up a positive report for constellation brands.
Lenore Hawkins 32:03
So we're still strict drinking a lot. During the pandemic, we're traveling a lot.
Chris Versace 32:08
We're just not drinking a lot at home. That's all so ...
Lenore Hawkins 32:10
We're just doing it with friends now.
Chris Versace 32:12
Right? Right. Right. So So when constellation reports, we're gonna want to hear what they have to say about their at home or on premise consumption. And again, given their portfolio is a beer, is it wine? Is it alcohol, that's leading the charge? And again, because of their diverse portfolio with constellation brands, is it standard premium or super premium varieties that are doing it?
Lenore Hawkins 32:34
We're also ideally consumers what the consumers feeling about the future?
Chris Versace 32:37
Correct? You know, the the good stuff for correct or do I got to kind of my things that I I don't mean to be judged. judgey judgey? who's buying? But seriously, who buys but people who like budget? Okay, whatever. Anyway, we're we're also going to hear from General Mills. And we know that consumers are eating out. We kind of heard that from Darden last week. What are they embracing breakfast out? Remember, at one point, breakfast was thought to be the holy grail and growth engine of the restaurant industry. So we'll be wanting to hear what they have to say. We're also going to hear with General Mills has to say about input prices and potential price hikes. When I say price hikes, I mean, not only those ones that they formally announced, but I mean, those really sneaky ones, too.
Lenore Hawkins 33:26
But yeah, price is the same as less inside more air, you open it up and you've got like, like a tight like the box, like the normal size box, and you open it up in your cereals like on the bottom fifth
Chris Versace 33:39
Cephalometric except for Magic spoon, but I will say that, when was the last time you bought a pound of coffee? Can't do it. You know why? At least not at the grocery store? 12 ounce bags, ridiculous. All right. We also on Wednesday, we're gonna hear from micron memory company. And you know, everybody pays attention to their memory price forecasts. So people are going to recalibrate that against what device shipment expectations are for the seasonally stronger second half. When micron reports we're gonna want to hear any and all comments that they say about 5g. And then on Thursday, one of my favorite companies ever McCormick and company. I love their seasonings. I love their spices. They're obviously going to put up a good number for their consumer facing business. But it's the right it's the restaurant industry facing one their flavor solutions business that I'm really interested in. That's going to tell us how quickly the rest of the restaurant industry is rebounding. But I also want to hear about their integration of cholula hot sauce and phone international because mccormicks even as big as they are, they do have a number a number of nip and tuck acquisitions and I want to hear if they think more on the way. Also Thursday we're gonna hear from simply good foods. I know who they are.
Lenore Hawkins 35:00
Not everybody does. But if reducing those pandemic pounds
Chris Versace 35:03
100% correct because of their quest and Atkins products so, one, I think they're going to put up a good quarter. I think their guidance is going to be good as we again start to put the world of sweatpants behind us and go back out into the world. pandemic padding.
Lenore Hawkins. 35:20
I can go all day. Yes, all day.
Chris Versace 35:22
I know No, I know you can. I'm just trying to pandemic postured words that we want. There's certain words that we want to use and certain words we don't want to use. So I have to choose my words carefully. But you are correct on that. I will say this though I do want to understand are they seeing a rebound in the store, they just continuing to see their ecommerce business dominate. And then the last company I want to pay attention to is Walgreens boots Alliance. The reason being is that when Rite Aid reported this past week, they missed expectations. And Walgreens shares are up about 30% year to date. So what are they going to say? That is getting inspire confidence given what Rite Aid said? In other words, are they going to guide their 2021 NPS above the 467 consensus? And more importantly, menor What is it going to say about Amazon moving into the physical pharmacy space?
Lenore Hawkins 36:18
The Deathstar the Amazon deflationary Deathstar,
Chris Versace 36:21
It's come I, I gotta tell you what I, as things have opened up. I've done my homework and my diligence questions. And I've asked people, are you shifting your prescriptions over to Amazon pharmacy and leveraging prime? And the vast majority of people are saying,
Lenore Hawkins 36:38
Chris Versace 36:41
Well, I don't have to go anywhere. I know it's going to show up. People have a lot of faith in crime. I mean, I do. I certainly,
Lenore Hawkins 36:47
it does. It just shows up. So and then there was a there was one other thing. There was a good news for the banking sector last week. Mm hmm. That's right. We heard that from the Federal Reserve those stress tests. Whoo. Yeah, the banks have been under a lot of restrictions. since the financial crisis, were they they're a little lever or weren't quite so healthy. So the Federal Reserve announced that they 23 largest lenders are able to comfortably withstand a kind of severe recession, which paves the way for them to boost dividends and stock buyback programs.
Chris Versace 37:26
And we can so that came out late last week this past week. And odds are that we could hear both dividend increases and upsizing of stock buyback programs from banks as soon as well this week. Stay tuned. And with that, I believe Lenore, that is the week ahead. Cut the check.