SOTS 2nd Hour: Food Fallout, New Boeing CEO’s First Earnings, Exclusive: Coke CEO 10/23/24
Oct 23, 2024
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James Quincey, the dynamic CEO of Coca-Cola, sheds light on the company's quarterly results and the potential impact of the 2024 election on consumer prices. Meanwhile, Kelly Ortberg, fresh in her role as Boeing's CEO, discusses navigating a $6 billion loss with plans for a leaner future. David Palmer, a savvy analyst from Evercore ISI, shares insights into the food sector's challenges, focusing on the E. coli outbreak affecting McDonald's and Starbucks' preliminary results. This blend of corporate strategy and market analysis makes for a captivating discussion!
Coca-Cola's CEO emphasized a strong global consumer demand while navigating inflationary pressures affecting pricing strategies ahead of the 2024 elections.
The E. coli outbreak linked to McDonald's significantly impacted investor confidence, leading to notable stock declines amidst a mixed corporate earnings landscape.
Deep dives
Current Trends in Existing Home Sales
Existing home sales fell by 1% in September to an annualized rate of 3.84 million units, reflecting the lowest level since October 2010. This decline comes alongside a 3.5% year-over-year decrease, with sales dropping across all regions except for the West. The rising mortgage rates, which started the year near 7% and have since decreased slightly, are impacting purchases and contributing to a longer average time for homes to sell—28 days compared to last year's 21 days. First-time buyers are particularly affected, making up just 26% of sales, which ties the all-time low recorded in August.
Market Reactions and Sector Performance
The overall stock market showed mixed signs, with the S&P 500 declining as treasury yields rose, pushing the 10-year yield above 4.2%. Increased treasury yields, linked to better economic data and upcoming elections, indicate possible inflationary pressures and have adversely influenced tech stocks, contributing to a negative market sentiment. Notably, shares of McDonald's dropped significantly due to an E. coli outbreak associated with their Quarter Pounder burgers, resulting in hospitalizations and leading to negative perceptions that could affect sales and investor confidence. Conversely, certain sectors like utilities and energy showed resilience, with gains contrasting with the overall downward trend in tech.
Consumer Demand Insights
Consumer demand remains resilient despite mixed corporate earnings reports across various sectors. Companies like Coca-Cola indicated strong global demand, with continuing relevance in developed markets, though slower growth was observed in emerging economies. Comparative assessments of companies such as Winnebago pointed to sluggish retail demand, while others like L'Oreal and Reckitt Benckiser reported solid performance, indicating a varied economic landscape. This divergence reflects consumer choices, balancing value-seeking behavior against ongoing demand for premium products.
Inflation and Price Trends Affecting Corporations
Inflationary pressures continue to influence pricing strategies across sectors, with Coca-Cola and others reporting price and mix effects that offset slower volumes. While inflation for certain input costs has moderated, pressures from wages and materials remain, which businesses must navigate carefully. The dialogue around potential inflation caps and consumer protection in pricing highlights the increased scrutiny on companies as political winds change with the upcoming elections. Therefore, firms are focusing on strategic marketing and product positioning to adapt to these economic challenges while maintaining growth.
Carl Quintanilla, Sara Eisen and David Faber began the hour with an exclusive interview with Coca-Cola CEO James Quincey, where they discussed the company’s quarterly results, the state of the consumer and how the 2024 election will impact prices. Staying with the consumer space, the desk broke down the prelim results out of Starbucks and the E. coli outbreak linked to McDonald’s. Also in the mix: The anchors highlighted Boeing’s latest quarter, with new CEO Kelly Ortberg saying the company is setting its sights on a ‘leaner’ future following a quarterly loss of more than $6 billion.