CEOs Paving the Way For 4IR Economy During a Rise in Domestic Crime, Food Inflation & Geopolitical Tensions
A content piece about The Fourth Industrial Revolution (4IR) by Isard Haasakker is an amazing work about this technological era and the need for education investments.
I have been working on topics related to 4IR, also known as Industry 4.0, ever since I realized its importance to the future while working with professionals in Shanghai, China. This was the main impetus for launching the publication Areas & Producers on Medium.
Industry 4.0 is now at the core of Areas where multinational corporations (MNCs) or state-owned enterprises (SOEs) produce, operate and invest. The following two paradigms should be followed closely: how the specific issues affect a target community in a given area; as well as why governments are adapting to strategy in the global context of radical changes to industrial policies.
In my opinion, the world must re-conceptualize education, and stop looking for any angle and reason to criticize education’s value to future generations. Education indeed is the most important aspect to a successful and better world under Industry 4.0. That’s why I admire Isard Haasakker for writing this piece!
“Investing in education is essential to creating a brighter future for all.”
Wal-Mart CEO Doug McMillon has been one of the most vocal about the issue of retail theft causing store closures throughout the United States. The CEO of the world’s largest corporation and retailer also added that local law authories should push for tougher enforcement measures to combat shoplifting.
The issues that CEOs are facing with retail crime is not only a major problem for corporate interests and the global economy; it’s also going to be a problem for any American who wants to achieve success in the future.
In my view, retail establishiments like Wal-Mart, Starbucks, Target, etc., are the places for ambitious people to go and feel productive while spending money that contributes to the economy. People without this same sense of productivity will be enraged by their plight and automatically target these places for the “injustice” caused to them. That’s why the debate should be focused on what is injustice? And what is injustice to whom in today’s new normal?
To understand what’s happening here, food inflation must be discussed in tandem with current news about retail crime. I will also provide the big picture scenarios of geopolitical trends and global commodities that are relevant to the discussion.
Coca-Cola (KO) is a brand known around the world for its dazzling red cans and reliable soft-drink taste. I’m living outside of the United States, but I have a coke in my fridge. In fact, I dont even have to go to the supermarket because the local street vendor in my neighborhood has them for sell at all times! And I guarantee you they are hot selling items in the neighborhood for welcoming foreign guests.
That’s why I wasn’t surprised to read the news about Coca-Cola beating Wall Street’s expectations on Q4 2022 earnings. Even with higher prices, as a result of food inflation, the coke soft-drink continues to sell off the shelves (or from the vendor himself) as a viable beverage internationally.
According to CNBC, the high point for Coca-Cola’s Q4 results was in net sales growth, rising 7% to $10.13 billion. But low points were attributed to a slight fall in net income from $2.41 billion to $2.03 billion. CEO James Quincey told reporters that “inflationary pressures from costs and wages” were one of the variables causing higher food and beverage prices.
These are the similiar scenarios that all CEOs are focusing on, particulary companies with exposure to North American & European consumers.
Conagra Brands CEO Sean Connolly said that the company has no plans to rise prices again like it did in the previous quarters of 2022. This doesn’t mean that it wouldn’t likely happen, though, as Nestle has already come out publicly saying that the company would raise prices again in 2023.
On the news of Coca-Cola’s revenues beat, the KO stock hit a peak price of $60.60 on 2/13/2023. But fall it did, going down to $59.22 on 2/16/2023.
These may not appear to be significant figures at the first look. But the peak at $60.60 barely gained momentum against a further downtrend of the KO stock since selling at $64.21 on 12/27/2022. The latter price was the highest KO price on NYSE since Q4 2022. The stock was performing well from a low of $54.39 on 10/10/2022.
While many CEOs continue to talk down inflationary pressures, Nestle’s CEO Mark Schneider says the company is being affected by inflation, and that wage inflation is next biggest concerns for the company’s global operations.
I chose US-based Conagra Brands Inc as a good example to evaluate how the New York Stock Exchange (NYSE) is reacting to the inflationary environment pressures on American consumers so far this year.
This company has been promoting its success story in the media despite the ongoing inflationary impact.
According to FoodNavigator USA, Conagra continues to invest in the growth categories of the company’s food brands, such as Banquet, the company’s legacy frozen food brand which the CEO called a “mainstay in American households.”
Conagra CEO Sean Connolly spoke about the rising costs due to inflation. He said that all of the company’s core units — frozen, snacks, staples — had seen an increase in the total price per unit of 9.4% in Q3 2022.
But this translated to a 13.8% increase in the total price per unit over the last two years.
The Conagra products serve as a classic example of consumer elasticity in the American grocery marketplace. Even as prices of groceries, and other goods go up, the production capacity and distribution success of companies like Conagra have an advantage over competitors by being able to increase volume during times of high demand.
If you’re one of those people who are spending more time at home after the Covid-19 pandemic, then Conagra is a brand that is likely to be popping up in the kitchen. But how about the stock price?
After reporting the Q3 2022 results, the CAG stock price went from $33.96 per share on 11/14/2022 to $40.96 on 01/06/2023. Since then, the stock has moved toward a downtrend at $35.96 per share on 02/09/2023.
This could be because of at least two reports that came out during the first week of the New Year.
The Investor’s Business Daily reported that Conagra could be facing another quarter of slowing earnings growth throughout H1 2023. This is will impact the stock’s performance after coming off a yearly high in Q4 2022, since investors will want to see that the company’s revenues are not losing momentum from the boom of work from home (WFH) trends in shopping during the Covid-19 pandemic.
Speaking with Reuters, CEO Sean Connolly said that the company has no plans to rise prices again like it did in the previous quarters of 2022. This doesn’t mean that it wouldn’t likely happen, though, as Nestle has already come out publicly saying that the company would raise prices again in 2023.
For instance, a bulk of the market-share for Conagra depends on consumers buying more foods from the ready-to-eat meals category. If inflation persists, consumers would likely continue to buy those products at a premium. But if there’s a change in the economy, then consumer behavior is likely to change too. This trajectory is critical for CAG’s stock performance in the short- and long-term.
In my view, the outlook doesen’t look so promising for most food & beverage companies whose exposure to the American consumer market correlates to their P&L. For instance, I’m currently drinking a Nescafe while I write up this content, and I’m not located in the United States. But if I was in the United States right now, I would more likely be drinking a Nescafe due to rising prices across the board. For me, coffee is an elastic item, but one for which I will lower my cost barrier for in regard to inflation.
Beware The Ides of March
That’s what the soothsayer said to former leader of the Roman Republic, Julius Caeser, who was assasinated in Rome in 44 BCE on March 15.
I gathered information about the Julius Caesar story from four sources: Britannica, National Geographic, University of Texas (UT) and Boston College Law School.
And here’s what I found…
The Ides of March were recognized in Ancient Rome as a time when the first full moon phase began at the start of a new year in March. This was also a time for people to settle their debts with one another. Based on this context, I guess it isn’t inconceivable to understand why Shakespeare’s Julius Caesar focused the Caesar’s doomed fate on the Ides of March.
On the first impression of the soothsayer Caesar dismisses him as a fool to one of his compatriots.
He is a dreamer; let us leave him: pass
On the second impression, Caesar addresses the soothsayer directly: “The Ides of March are come.”
And this time the soothsayer responds: “Ay, Caesar; but not gone.”
The other side of the plot revolves around a conspiracy by “the liberators” who are the ones planning to kill Caesar before he leaves Rome. Yet, Caesar had to attend a meeting at the Roman Senate before leaving, so the conspirators seized the moment to stab him to death in front of the Roman senators.
Et tu, Brute?
This is the part of the Julius Caesar story where the famous “Et tu, Brute?” comes from the lips of Caesar, who was agnozing over the betrayal of Brutus as one of the conspirators against him.
The academic debate isn’t settled over who was the good and bad guy in this story. Plutarch’s account, which is the one Shakespeare chose, portrayed Brutus as a liberator for the right to dethrone an unjust emperor.
While another account told by the famous poet Dante revealed that Brutus would be sent the lowest depths of hell for what he did to Julius Caeser. In the end, however, the conspirators failed to control the Roman Senate for themselves. This led to Julius Caesar’s heir, Octavian, becoming Rome’s first emperor.
Octavian would come to lead the Roman Empire, formerly known as the Roman Republic prior to Julius Caesar’s assasination. This Shakespeare story serves as a warning to political leaders who underestimate the power of their opponents. In this case, Julius Caesar had been completely caught off guard by what the Republic’s war planning outside of Rome against the Parthians — today’s Middle East region.
The Ides of March bear other kinds of significance, too. During the age of Ancient Rome, it was a time for people to settle their debts to one another.
The Covid-19 global pandemic uncovered fault lines in our society that are likely to have an impact for years to come. Just look at what happened to Bob Lee, founder of Cash App, who was fatally killed in San Francisco.
Bob Lee was stabbed to death.
Julius Caesar was stabbed to death.
In response to the murder of Lee, Elon Musk said: “Violent crime in [San Francisco] is horrific and even if attackers are caught, they are often released immediately.”
From his statement we can draw the conclusion that he is framing the issue around standards of crime and punishment. But how about the evolution between politics and technology and how their impact on society is fueling hatred between people and leaders?
Perhaps this is what the CEOs visiting with United States’ government officials in California should be discussing with one another in the upcoming high-level meetings this week.
For instance, Representative Ro Khanna (D-California) told reporters about the upcoming meeting with CEOs and how it will focus on the agenda set forth by the Select Committee on the Chinese Communist Party (CCP).
In response to questions about the agenda, she said:
I would like to see more of our electronic production come here to the United States. For display screens, for micro-electronics, for semiconductors, for the component parts of our smartphones, and that is a conversation we’re going to have. How do we do it today? What do they need from the United States government to be able to do it?
Khanna is framing the discussion around the electronics industry of the future. In other words — Who will control and profit the most from surging imports to the United States?
Chairman Mike Gallagher (R-Wisconsin) took it a step further, by indicating how China’s rise is a growing threat to United State’s national security interests, “We want to make sure that the power of the Chinese economy is not seducing certain companies into betraying American values.”
Betrayal — a quaint thought.
Who betrayed Julius Caesar?
Why was Bob Lee killed?
Where is the growing power of politics and technology, from both within United States and China, leading societies and nations from both a local and global perspective?
I don’t know.
But did you know about The Weekend Brief (TWB) newsletter?
I publish TWB in Areas & Producers every weekend. It’s a newsletter looking at publicly-traded companies operating in the global markets (including stock markets) at the nexus of tech, industrials and global commodities.
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