Levi Strauss to Deepen Pockets

Mar 15, 2019   //   by Bruce Mason   //   Weekly Market Update  //  No Comments

In the scheme of things, it was a good week for the stock market.  In recent quarters the cycle seems to fluctuate between earnings season and political developments (i.e. government shutdown, trade negotiations, Brexit, etc.).  It is typically at the peak of the new cycle that we see volatility and volume surge.  For now, we are at a lull in the cycle but expect things will pick up again soon with the start of earnings season in early April.

Due to the government shutdown, we are just now getting some important pieces of economic data from December and January and I’m pleased to report that it looks good.  January Durable Goods Orders came in considerably higher than expected and showed growth.  After a difficult December, January Construction Spending far surpassed expectations.  Also, consumer sentiment surged past estimates with even future expectations showing signs of improvement.  Lastly, job openings hit 7.58 million in January suggesting jobs are aplenty for those looking.  While you could contend these data points are from some months ago, it is hard to argue with the market recovery over the past few months.

In company news, we learned that Kraft Heinz is weighing the sale of its Breakstone’s dairy business.  The move is believed to be part of a broader review of the company’s dairy business, which also includes cheeses.  Dairy sales have slowed in recent years as U.S. consumers increasingly turn away from dairy products or look to non-dairy alternatives like oat, soy, and almond milk.  It is fascinating to watch industries adapt to cultural trends.  The best companies recognize these changes and find ways to thrive despite changing customer tastes and habits.

We also learned this week that Levi Strauss is once more going public.  I was surprised not by the announcement, although I had never given much thought to this company, but instead that this is the second time it is going public.  The company, founded in 1853, went public in 1971 but was again taken private in 1985.  The company is most known for its blue jeans, but should also be recognized for its Dockers brand, which helped usher in the era of casual Fridays.  The company looks to raise approximately $550 million with an average price between $16-17 per share.  The date of the IPO has not been determined but I would expect it within the next couple of months.

Last week I discussed our national debt and deficit spending.  I think I touched a nerve and apologize if I left anyone feeling down after reading last week’s email.  This week I came across a novel, dare I say innovative, idea regarding credit cards.  You’re undoubtedly familiar with cash-back credit cards and those that offer travel rewards.  How about a card that offers “stock-back?”  If financial startup Stash has its way, the next time you shop at Amazon, pay your Netflix bill, or pick up groceries from Kroger, rather than cash back, you’ll earn fractions of shares of the companies’ stock.  It will be interesting to see how this pans out and if other card companies follow suit. This is not an endorsement for either the company or its credit card.

In closing, I don’t have a witty or strange story this week.  However, I do have an offer that sounds like a good deal.  Burger King is running a coffee promotion through its app (what company doesn’t have an app these days).  For just $5 for the month, you can get a cup of coffee at Burger King every day.  That works out to only $0.17 a day for a 30-day month.  While it is unlikely Starbucks will offer anything similar, if you like Burger King coffee and don’t mind downloading another app on your phone, this sounds like a good deal.  Now you know.

March 15, 2019

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