Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (633)	5/24/2018 5:34:40 AM
From: elmatador	Respond to of 13801

US consumer staples plunge as bond yields rise Another problem for staples is a notable shift in consumer tastes As technology stocks set the pace for US equities in 2018 and help sustain the S&P 500 in positive territory, the grim performance of consumer staples companies is a reminder that some sectors are struggling. The S&P consumer staples group has fallen some 13.4 per cent in the year to date compared with a rise of more than 9 per cent in the tech sector. Rising bond yields have hurt sentiment for consumer staples companies, a group that includes Clorox, Coca-Cola and Kraft Heinz, and which sports a 12-month trailing dividend yield of 3.11 per cent, well above the 1.9 per cent of the whole S&P 500. Other so-called bond proxies, such as utilities, are also hurting this year, with that group down more than 6 per cent so far in 2018. Another problem for staples is a notable shift in consumer tastes. Demand is moving from traditional packaged food products to organic and natural products, according to analysts. For some, such changes in consumer appetite are already curtailing pricing power at a time when input costs are rising thanks in part to higher commodity prices. In an early sign of margin pressure for consumer staples companies, Wall Street estimates for revenue growth have risen slightly since the start of the quarter while analysts are dialling back forecasts for earnings per share, resulting in a decline in expected net profit margin for the second quarter to 6.8 per cent from 7 per cent as of March 31, according to FactSet. “Pricing power is an issue,” says Patrick Palfrey, equity strategist at Credit Suisse. “Many companies are facing higher input costs — for example, food input prices and shipping costs — but they lack the ability to pass that on to the consumer. Consumer preferences have changed. People are looking for a different set of products [than] many of the traditional staples retailers.”