Grocery Disrupt: Amazon’s Latest Venture Good Become a Store Near You; Tyson’s New Add-Venture; Trump’s Taxing Tariff Tweets

Move over, humans…

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Just when you to start to wonder what else Amazon could possibly do to disrupt and reinvent the retail shopping experience, along comes Amazon Go, an actual brick-and-mortar-store brought to you by the e-commerce giant. Talk about irony. The concept, which is still being tested by Amazon employees, allows shoppers to literally grab food and walk out. No lines. No cashiers. Customers just take their cellphones and tap them on a turnstile to get logged into the store’s network, which in turn connects to the Amazon Prime app, already conveniently installed on their phones. Customers pick items off the shelf and put them into their cart while, with the aid of sensors and artificial intelligence, the same items are also placed in virtual shopping cart. If a shopper decides that they don’t want an item, they simply place it back on the shelf and the item also disappears from the virtual cart. Like magic. Should you crave something a bit more immediate, the store also offers up fresh food, prepared on site. Once customers are done, they simply walk out while the app does all the work, which basically involves adding everything up and then charging respective Amazon accounts. The company has been on the hunt to gain a big presence in the food retail industry, an industry which still fiscally eludes it, and also happens to be one of the biggest retail industries. Ever.  Its fresh food delivery is nice and all, but Amazon’s set its sights on competing with the big grocery players like Wal-Mart, Krogers and Target. The food retailer index took a 1% dive on Amazon’s news while shares of Amazon went up. But established grocers can breathe a very brief sigh of relief easy as Amazon still has a few months before it opens up the store to the public. And humans, fear not. One tech investor said that people are still a very big, necessary component of the retail experience and to scrap the notion that jobs will be lost to machines. Phew.

Speaking of food…

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What to do when you’re a $20 billion company whose prime business is chicken, beef and pork, and you keep losing money to the alternative-meat and fresh-food industry? Why, you set up a venture capital firm, of course. And that’s just what Tyson Foods did in an attempt to compete with a burgeoning industry that is literally eating into its business model. Apparently, plant-based protein and food sustainability is where it’s at these days and if you can’t beat ’em then join ’em by investing in their start-ups. Hence we have Tyson New Ventures LLC, a $150 million venture capital firm that Tyson launched to tap into a market that favors more plant-based and fresh food. The venture capital firm will look to companies that are working on making food-related “breakthroughs” and new innovative technology and business models that relate to food. Tyson already announced its first investment a few months ago, when it bought a 5% stake in Beyond Meats, a company that makes meat-like products. Tyson has got nothing to lose either, considering its last earnings report was nothing short of dismal, and the news that its long-time CEO Donnie Smith was stepping down did nothing to instill confidence in investors. Tyson isn’t the only firm to try out this venture capital idea. Other companies like Campbells Soup, Coca Cola, General Mills and Kellogg’s have all established similar firms with pretty much the same objective: to continue to be a prominent player in a shifting market and industry landscape.  So far this year venture firms have already thrown $420 million into various food and agricultural companies. In 2015 that number approached $650 million.

A day without Trump?

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Over the weekend, President-elect Donald Trump mentioned, in a series of tweets of course, that he wants to get back at U.S. companies who dare shift jobs and production overseas. His preferred revenge tactic would be in the form of a 35% tariff and, strangely enough, his fellow Republicans don’t seem to be on board. The top House Republican, House Majority Leader Kevin McCarthy, does not support Trump’s tariff idea and thinks that the best, most effective way to create and keep jobs in the U.S. is via major tax reform. There seem to be a whole bunch of issues at play with Trump’s (overly) ambitious tax-revenge plans, including the fact that such a move goes against the whole spirit of free trade and has the potential to spark trade wars. And nobody likes wars, whether they involve armed conflict or goods and services. Tax specialists and other assorted experts have also said that it’s fairly debatable as to whether or not Trump’s tactics are even legal.  Republicans are, however, partial to over-hauling the corporate tax code in an effort to keep U.S. companies from fleeing to more tax-hospitable countries. They’d like to cut that pesky corporate tax rate to 20% or less which would allow the U.S. to be more competitive globally. House Republicans are also in favor of imposing corporate taxes to all imported goods and services and scrapping them for exports. But leave it to the critics to argue that changes like that might be seen as violations of the World Trade Organization.  In any case,  it remains to be seen how exactly Trump will get his way, if he does. That’s because tariffs aren’t typically applied to specific companies but rather entire classes of goods. Besides, the president doesn’t get to make those kinds of decisions anyway. That’s for Congress to decide and Congress doesn’t seem, shall we say, receptive, to Trump’s tariff talk.

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OMG-D-P!!!!; No Bling In Tiffany & Co. Earnings; McDiss Day

G.D.P-habulous…

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

China might be hogging center stage for its economic slowdown but the U.S. is stealing the spotlight now for the exact opposite reason. The exciting news off Wall Street today (okay, exciting is a stretch) is that the U.S. economy grew by a whopping (not a stretch) 3.7% instead of the initially estimated 2.3% growth rate. So let’s give a big shout out to the GDP for not repeating that awful first quarter growth rate of .6% which had everybody reeling and blaming a brutal winter and a slowdown at west coast ports. Business investments also saw a 4% increase even as low oil prices and a strong dollar continue to toy with our fiscal emotions. Shares went up across the indexes and the Dow Jones isn’t looking so scary right now, having gone up 1.4%. Consumer and government spending are up too. As if government spending ever goes down? So does this mean the Fed might once again forge ahead with its unwelcome plans to raise rates? Doubtful, for September anyway. But brace yourself because that hike is on the horizon.

You can forget breakfast…

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Tiffany may have some sweet bling to offer but its earnings were anything but. The luxury goods retailer saw a 15.4% decrease in profits to $105 million, raking in 86 cents per share, a nickel short of estimates. So what gives? A strong dollar has got tourists shying away from Tiffany & Co. since they wouldn’t have been getting enough bang for their good old American bucks. However, Tiffany also saw a 21% increase in sales from Japan. The jeweler is also betting big on China, despite that fact that everyone else seems freaked about by the country’s slowing economy. Sales there are up. So clearly more than a few folks in China are plunking down lots of cash for some fancy Tiffany merchandise. Which makes perfect sense since China is the number two luxury market in the world. In fact, Tiffany is going ahead with plans to open two more stores there, adding to the thirty others already in the country and its 304 total stores. But shares of Tiffany are down 20% for the year and are currently hovering at an 18 month low. Interestingly enough (at least I thought so), less prestigious bling company Signet Jewelers Ltd., parent to both Kay and Jared Jewelers, saw some especially good earnings. Signet beat estimates of $1.15 per share to come in at $1.28 per share. Does this mean a shift in consumer preferences? Hmmm.

Off with their chicken supply…

Image courtesy of  joephotostudio/FreeDigitalPhotos.net

Image courtesy of joephotostudio/FreeDigitalPhotos.net

McDonald’s has cut ties with one of its chicken suppliers after some video was obtained from a Tennessee farm that supplies to Tyson, which in turn, supplies to McDonald’s. Unfortunately, these chicken farmers were allegedly using inhumane tactics on their farm – a big no-no if you wanna be in good with the Golden Arches. And while it was the right and noble thing to do to terminate their contact, McDonald’s still has not exactly landed in the good graces of Americans today. However, it has nothing to do with chicken. Only beef. As in a beef with Burger King. Perhaps you may have heard that today is National Burger Day. In a two page ad taken out in the New York Times and Chicago Tribune, Burger King wanted to join forces with McDonald’s on this auspicious day, put aside its McDiffferences, and offer up a McWhopper. Instead of graciously accepting this show of good beef, McDonald’s very undiplomatically declined the opportunity with CEO Steve Easterbrook writing, “We commit to raise awareness worldwide, perhaps you’ll join us in a meaningful global effort?” Can you say McOuch?

And the winner is…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Tyson. Not Mike, silly! He’s busy doing movies with Bradley Cooper. I meant Tyson Foods Inc. (TSN) What? You weren’t at the edge of your seat for this one? Hillshire Brands (HSH), the company behind some of the most beloved brands like Jimmy Dean Sausages and Ball Park hot dogs has, according to the corporate rumor mill anyway, accepted Tyson’s very juicy offer of $63/share which adds up to a plump $7.7 billion. Also, sort of coming out a winner is Pilgrim’s Pride (PPC), maker of Vlasic Pickles, as the company stands to gain $163 million just because Hillshire bailed on the deal it (thought) it had with the company just a few weeks back. But if you’re wondering why Tyson was so eager to get its hands on Hillshire, look no further than deli. No not New Delhi. Just deli. Prepared foods bring in lots more money than raw foods do. Tyson wants to make a name (and a few bucks) in that market and the Tyson/Hillshire combo could help nicely by bringing in sales of around $40 billion. That’s a lot to chew on.

A slice of Cupertino Apple pie…

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Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

Now that Apple’s stock has split seven to one (meaning for every share of Apple you own, you lucky investor, you get six more!) the price of the stock is almost affordable! Just from the earth-shattering excitement of Apple’s announcement back in April that it was planning a split  – the first in nine years –  the stock climbed 24% on that news alone. Big riveting things are happening in Cupertino. Apple is expanding its stock buy back program, increasing its dividend program and it would be remiss not to mention the momentum from that very hip $3 billion Beats deal. Now shares are hovering above $90 a share. And to think it was just Friday when a single share fetched almost $650.

Bargain hunter…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

You may not find him pushing a cart full of merchandise down the aisles of your local Family Dollar (FDO)  – though the visual fills me with convulsive laughter – but billionaire Carl Icahn is very interested in the bargain-friendly establishment. Actually he has over a 9% interest in the company, causing investors to wonder if (or just assume) a takeover is impending. The company did put a “poison pill” in place which is not as scary as it sounds. Unless you’re the company adopting one. A “poison pill” or as it is less glamorously known, an anti-takeover measure, was adopted by Family Dollar because it doesn’t care to be pushed into a deal with Dollar General (DG), as many suspect Icahn and his fellow billionaire cohorts plan to do. Expect more bargain-unfriendly drama to unfold.

Panera Is Going Au Natural, Pilgrim’s Pride Is Throwing Down the Poultry Gauntlet and You Auto Know

Food chain reaction…

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Image courtesy of stockimages/FreeDigitalPhotos.net

What could possibly be artificial about Panera? Well, there is that caramel color that’s used to achieve that fine hue in its roast beef. At least it’s not Subway’s yoga mat ingredient. Panera Bread becomes the latest food chain to battle GMO’s (genetically modified organisms). Unfortunately you’ll have to wait until 2016 for your Panera bread and all its accompaniments to be completely free of any dyes, sweeteners, prservatives, additives…”Panera is on a mission to help fix a broken food system,” said Scott Davis, who just happens to be Panera Chief Concept Officer. I wonder what he could do with our social security system? It seems that Panera doesn’t want to contribute to the behavioral problems of children that are apparently linked to artificial ingredients. No word yet on how much this is all going to cost but Panera’s hoping you wont mind the slight price increase too much.

Talking poultry?

Image courtesy of Serge Bertasius Photography/FreeDigitalPhotos.net

Image courtesy of Serge Bertasius Photography/FreeDigitalPhotos.net

Hillshire Brands is definitely the popular kid today on Wall Street. Both Tyson and Pilgrim’s Pride are eager to scoop Hillshire, maker of the acclaimed Ball Park hot dogs. Pilgrim’s Pride offered $5 more per share than what Tyson offered. That’s corporate speak for bring it on! Both companies are looking to expand through prepared foods, of which Hillshire has aplenty. Just a few weeks ago Hillshire was set to buy Pinnacle Foods, maker of esteemed classics like Duncan Hines and the ever indominatable Mrs. Butterworths. If the Pinnacle deal falls through (and it is certainly looking that way), then Hillshire would theoretically be stuck with a $163 million termination fee. But lucky for Hillshire whoever buys it is probably going to be the one to eat that giant tab.

Vroom vroom goes the auto industry…

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Image courtesy of bplanet/FreeDigitalPhotos.net

Take a good look around you. Chances are you’ll see someone – maybe even someone you actually know – driving a brand new vehicle. May proved to be a very lucrative month for the auto-industry. In fact, the industry hit a nine year high. All those consumers who felt that our nasty winter made them not in the mood to get a new car are all coming out and putting an end to some of the anxiety about the industry itself. Almost every automaker saw sales increases, including GM. Yes, even GM with all its bad publicity and safety recall debacles saw a sales increase. It seems consumers still really do like GM products. Well, its SUVs and pick-up trucks anyways.