Hey Snackers,
Some young people are booking cheap coronavirus flights to live out their jet-setting dreams: it's the "here for a good time, not a long time" philosophy. We advise against it.
After an epic 11-year bull market, we're back in bear market territory — the Dow just closed 20% below its most recent high (set in Feb). We're not in an economic recession yet, but the "b-word" is buzzing. More below.
Bad news Bear Market... With the Dow down 20% from the record high it notched in February, we've reached the technical definition of a "bear market" after a historic 11-year bull run. Wednesday's 1,465 point drop was the 2nd largest on record (after Monday's) — The stocks of 94% of S&P 500 companies are now 10%+ lower than their recent highs. You may hear the term "bailouts" tossed around, aka tax-payer funds loaned by the gov to key companies/sectors at risk of going broke...
And the bailout bachelors are... Unlike in 2008, the issue hurting markets now isn't fundamentally related to the health of the economy. It's the effect of people staying home (not spending) that hurts — that's hitting some industries harder than others, earning them (still early) bailout attention:
The bachelor most in need of the bailout rose... Boeing might be the only one. As America's only major commercial airplane manufacturer, Boeing is an industry in itself. And just one of its models, the 737 Max, feeds 600 supply companies with business. Boeing was already struggling hard before with its grounded planes and cancelled orders. Now coronavirus has put it in a harder spot — it's reportedly maxed out its $14B credit line and it's no longer hiring.
"I might even be a Rockstar"... Hannah Montana said it best, but Pepsi's feeling it — it just bought Rockstar Energy for $3.85B. Russ Weiner founded the canned energy company in '01 (his mom was CFO). Pepsi has distributed Rockstar since '09, but that deal meant it couldn't launch a Mountain Dew-branded energy rival — now that it's acquired Rockstar, its energy ambitions are unlimited. The rest of Big Bev is shifting from sugary sodas too for these reasons...
Or combine the 2 for a winning strategy... For years, Big Bev lagged in the exploding health/energy sector. Lately, it has been upping its "functional drink" game:
Big Bev needs "functional bev"... Something providing more than just sugar/alcohol. With the Rockstar acquisition, Pepsi immediately gets the #3 spot in energy drinks (after Monster and Red Bull). It can also go big on its Mountain Dew line and do energy in-house. Sodas aren't far from energy drinks (caffeine, sugar, unpronounceable chemicals) — maybe Big Bev just has to throw in vitamins, more caffeine, and more extreme names (Coke Energy is the epitome).
Disclosure: Authors of this Snacks own shares of Amazon and Carnival and options of Peloton.
ID: 1117325