Church & Dwight Is Buying Acquire Hero for $630 Million
Posted by Eddy Elfenbein on September 6th, 2022 at 8:44 am

Big news today from Church & Dwight (CHD). The company is buying Acquire Hero for $630 million. Acquire Hero owns the Mighty Patch brand.

Mighty Patch® is the #2 brand in the acne category in the United States and the #1 patch brand in acne. The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter.

Hero’s net sales for the trailing twelve months through June 30, 2022 were approximately $115 million. The acne patch is the fastest growing treatment form in acne. The products are currently only marketed in the U.S.

(…)

Hero’s trailing twelve months EBITDA as of June 30, 2022 was approximately $45 million, with a 40% EBITDA margin. Church & Dwight expects to expand Mighty Patch®’s limited distribution by leveraging its US retailer relationships and international footprint.

(…)

2022 Outlook

Regarding the 2022 Outlook, Mr. Farrell commented, “We now expect full year reported sales growth of 2% to 4% (previously 4% to 5%), reflecting the incremental growth from Hero offset by continued softness across our more discretionary brands.

For Q3, we now expect reported sales to decline -1% (previously growth midpoint of 3%) reflecting lower demand for Waterpik, Vitafusion and Flawless. EPS affirmed at $0.65 (no change to previous Outlook).

The acquisition is expected to be dilutive to the Company’s 2022 EPS by ($0.05), inclusive of transition costs, acquisition-related expenses, interest expense, intangible amortization expense, and incremental marketing. We now expect 2022 adjusted earnings per share (EPS) to be $2.97, inclusive of the $0.05 dilutive EPS effect of the acquisition. In addition, adjusted earnings in 2022 and 2023 will exclude the impact of $0.03 and $0.11, respectively, to exclude charges related to the restricted stock which will be treated as compensation.

Looking forward to 2023, the acquisition is expected to be 3% accretive to cash earnings and neutral to adjusted 2023 EPS, inclusive of transition costs, interest expense and intangible amortization. In 2023, Hero’s annual net sales are projected to grow approximately 15% to $150 million.”

Morning News: September 6, 2022
Posted by Eddy Elfenbein on September 6th, 2022 at 7:03 am

Liz Truss’s Inheritance: A U.K. Economy on Its Knees

Why China’s Central Bank is Shoring Up the Yuan

Russian Minister Confirms Grim Economic Forecast

Steeper Winter Heating Bills Loom, With Less Federal Aid

OPEC Plus Agrees to Cut Production by 100,000 Barrels a Day

Energy Trade Risks Collapsing Over Margin Calls of $1.5 Trillion

The Race for US Lithium Hinges on a Fight Over a Nevada Mine

Biden Administration Releases Plan for $50 Billion Investment in Chips

Has Bidenomics Been Good for Workers?

CVS Makes $8 Billion Bet on the Return of the House Call

Volkswagen to List Porsche in One of Biggest IPOs in Years

Meta Fined $400 Million for Treatment of Children’s Data on Instagram

Bed Bath & Beyond Faces Leadership Gap After Executive’s Death

A Century of Lost Wealth

As Ex-Uber Executive Heads to Trial, the Security Community Reels

MrBeast Draws Thousands to YouTube Star’s New Burger Joint at American Dream Mall

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Morning News: September 5, 2022
Posted by Eddy Elfenbein on September 5th, 2022 at 7:10 am

Turkey’s Inflation Exceeds 80% in Worst Price Blowout Since 1998

Russia’s Unfounded Claims of Secret U.S. Bioweapons Linger On and On

Wary of Cold Days and Hot Tempers, Europe’s Leaders Vow Economic Relief

As Russia Chokes Europe’s Gas, France Enters Era of Energy ‘Sobriety’

OPEC Plus Meets, With an Output Cut Possible

India’s Electric Vehicle Push Is Riding on Mopeds and Rickshaws

Ocean Shipping Rates Have Plunged 60% This Year

Credit Suisse Trust ‘Failed Basic Duty,’ Says Billionaire Client

In Dubai, $1.7 Billion Denmark Fraud Suspect Contests Extradition

Federal Oil Leases Slow to a Trickle Under Biden

Next Wave of Nuclear-Power Plants Sees New Life in Climate Bill

The Fed Isn’t Moving the Stock Market, or the Price of Credit

Now Is the Most Rewarding Time to Switch Jobs in Years

Apple’s Priciest iPhones Take Center Stage as Industry Smartphone Sales Decline

Movie Theaters Had a Great Summer. But There’s a Plot Twist

Amazon To Close, Scrap Plans For Warehouses Across Us Amid Slowing Sales Growth

The Hidden Reason Behind Bed Bath & Beyond’s Demise

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Morning News: September 2, 2022
Posted by Eddy Elfenbein on September 2nd, 2022 at 7:04 am

Strikes Sweep Britain as Workers Demand Better Pay

Global Bonds Tumble Into Their First Bear Market in a Generation

Global Equity Funds Post Massive Weekly Disposals on Rate-Hike Angst

Oil Prices Rebound, With OPEC+ Meeting in Focus

The Government Is Pinching Pennies on COVID Now

These 50 Startups Rose as America Locked Down

Service Is Slow. Luggage Is AWOL. Companies Struggle With an Influx of New Hires.

Gig Workers Tire of Waiting for Action From Biden’s White House

Starbucks Names a New Chief Executive

Illumina Wins Case Against FTC on Grail Acquisition

Trying to Sell Your Old Peloton Bike? So Is Peloton.

Amazon Loses Key Step In Its Attempt to Reverse Its Workers’ Historic Union Vote

Banks Battle Back-to-Office Fatigue with Ping Pong, Snacks, Indoor Gardens

Passenger Blimps Could Be Making a Comeback. Here’s Why.

Warren Buffett’s Berkshire Offloads More Shares in Chinese EV Giant BYD

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Morning News: September 1, 2022
Posted by Eddy Elfenbein on September 1st, 2022 at 7:05 am

China Locks Down Megacity Chengdu as Covid Zero Intensifies

Tech Companies Slowly Shift Production Away From China

Debt-Stricken Sri Lanka Reaches Initial Deal for I.M.F. Bailout

Inflation Tightens Its Grip on Europe

Portugal Could Hold an Answer for a Europe Captive to Russian Gas

Russia Mulls Big Purchases of ‘Friendly’ FX to Stem Ruble’s Rise

Many Developed Countries View Online Misinformation as ‘Major Threat’

US Jobs Data Have Potential to Push Fed Toward Third Jumbo Hike

The Problem With College Is So Much Bigger Than Student Debt

Why Totino’s Needs 25 Ways to Make Pizza Rolls

Citigroup’s Russia Exit Removes One Obstacle for CEO, but Challenges Remain

Yes, Zoom Has an Office. No, It’s Not a Place to Work.

Netflix Seeking Top Dollar for Brands to Advertise on Its Service

Disney Explores Membership Program Like Amazon Prime to Offer Discounts and Perks

An Apple Watch for Your 5-Year-Old? More Parents Say Yes.

US Airlines Commit to Free Meals, Lodging for Delays as Labor Day Chaos Looms

Airlines Keep Gouging Passengers. Regulate Them.

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Morning News: August 31, 2022
Posted by Eddy Elfenbein on August 31st, 2022 at 7:08 am

Eurozone Inflation Reaches 9.1 Percent, Driven by Prices for Energy and Food

Russia Halts Natural Gas Flows to Germany Again

Biden Still Undecided on Chinese Tariffs, Commerce Secretary Says

Powell Abandons Soft Landing Goal as He Seeks ‘Growth Recession’

Mortgage Demand Falls Even Further, as Rates Shoot Back Up to July Highs

US Life Expectancy Sees Biggest Two-Year Decline in a Century

This Remote Mine Could Foretell the Future of America’s Electric Car Industry

Some Carmakers Say Recycling Car Parts Is the Future. But Is It Realistic?

Choosing Your Own Hours Isn’t Just for Remote Workers Anymore

To Meet a New Generation, Legacy Black-Owned Businesses Get a Reboot

Fast-Food Operators Mobilize Against California Wage Bill

Bed Bath & Beyond Sinks After Saying It May Sell Shares

HP Warns of Slowing Business Spending as PC Sales Sag

Frustrations Mount at Washington Post as Its Business Struggles

While Serena Williams Plays Her Final Matches At U.S. Open, Here’s How She’s Building Her Off-Court Investing

Japan Declares ‘War’ on the Floppy Disk

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CWS Market Review – August 30, 2022
Posted by Eddy Elfenbein on August 30th, 2022 at 6:57 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Holy Jackson!

In last week’s issue, I talked about how the impressive summer rally had finally faced some pushback. Until very recently, the bulls had been having a great summer.

We first got a little hiccup after the Federal Reserve released the minutes of its last meeting. Things got a lot worse on Friday when Fed Chairman Jerome Powell said we’re in for “more pain.”

Yikes! One must understand that central bankers simply don’t speak that way. Obfuscation is part of the job description. Alan Greenspan famously said, “I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.”

Powell’s words had an immediate impact, and the market gods were displeased. During the trading day on Friday, the Dow lost more than 1,000 points and the Nasdaq Composite dropped 4%. The market fell again on Monday and Tuesday. Since August 16, the S&P 500 has lost over 7%.

It’s about time the Fed acted boldly. To be perfectly honest, the central bank helped cause the inflation, and its predictions consistently understated the threat of higher prices.

Here’s the trend of the Fed’s projection for inflation in 2022:

Sep 2019: 2.0%
Dec 2019: 2.0%
Jun 2020: 1.7%
Sep 2020: 1.8%
Dec 2020: 1.9%
Mar 2021: 2.0%
Jun 2021: 2.1%
Sep 2021: 2.2%
Dec 2021: 2.6%
Mar 2022: 4.3%
Jun 2022: 5.2%

The emergence of inflation was clearly visible one year ago, yet the Fed did nothing. The Fed currently projects inflation of 2.2% in 2024. Yeah, right.

“They Will Also Bring Some Pain”

Let me explain what Powell said and why it was so jarring to the market. First off, this wasn’t just any address. Powell was speaking at the Fed’s annual end-of-summer conference in Jackson Hole, Wyoming.

Since there’s no Fed meeting this month, the conference gets a lot of attention. In previous years, the Fed has used that Jackson Hole conference to announce major changes in policy.

The backdrop of this year’s meeting was a very impressive summer rally. In fact, as I mentioned in last week’s issue, the bulls finally faced some resistance only after the Fed released the minutes of its most recent meeting.

There’s also the all-important issue of persistent inflation. While there has been some improvement, mostly with energy, Americans are still facing rising costs for nearly everything.

Furthermore, there’s concern that the Fed may not realize the enormity of the job before them. I have to count myself among this group. It’s easy for the Fed to talk tough, but it’s quite another to act tough.

Here’s the broader text of what Powell said. I’ve added the boldface.

Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-tren growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.

Powell was unambiguous that the Fed intends to defeat inflation. Powell said, “We will keep at it until we are confident the job is done.” That’s unusually blunt language for a central banker. The remarks were also unusually brief.

The Fed has already raised short-term interest rates by 0.75% at its last two meetings. Recently, however, some Fed members have expressed concern about the damage the economy has experienced. Just ask anyone you know who works in the housing sector.

There was some concern that the Fed might announce a “pivot” in Jackson Hole and plan on a softer interest-rate policy. Alas, the pivot never came.

Some Possible Softening of Inflation

As it turns out, Friday was also the day that the government released its PCE inflation report. This is the Fed’s preferred measure of inflation. According to the PCE, inflation rose by 6.3% in the 12 months ending in July. That’s down from 6.8% for the 12 months ending in June. While inflation may be decelerating, it’s still high. The goal of 2% inflation is based on the PCE.

The core PCE rate, which excludes food and energy, is up 4.6% over the last year. During July, the core PCE rate increased by 0.1%. That’s a very big drop from the 0.6% increase we had in June. Powell said, “restoring price stability will likely require maintaining a restrictive policy stance for some time.”

Much of inflation is really an expectations game. If the public expects more inflation, then there will be more inflation. If the public expects inflation to wane, then it will wane. The problem is that once expectations become embedded in the public’s perception, then it’s very hard to undo that. That’s part of the reason why Powell is sounding so tough.

On Friday, Powell said, “The longer the current bout of high inflation continues, the greater the chance that expectations of higher inflation will become entrenched.” He also noted that the economy “continues to show strong underlying momentum” despite some mixed signals on growth.

This Friday, the government will release the official jobs report for the month of August. The last report showed the lowest unemployment rate in 53 years. Some folks had been expecting to see a drop off in the jobs market. So far, that hasn’t happened.

For Friday, the consensus on Wall Street is that the economy created 318,00 net new jobs last month and that the unemployment rate will hold steady at 3.5%. That sounds about right.

The Federal Reserve’s next meeting is on September 20-21. Previously, it had been a tossup in the market’s mind as to whether the Fed would raise interest rates by 50 basis points or by 75 basis points. However, after Powell’s comments, the 75-basis-point camp now has a solid majority among futures traders.

On Tuesday, we learned that jobs openings reached 11.24 million. That was much higher than expectations. That’s nearly two openings for every unemployed person. Economists also like to track the number of people who quit their jobs, and that’s still high. This probably suggests that workers have the upper hand in being able to demand higher wages since it’s relatively easy to find work elsewhere.

That’s all for now. The stock market will be closed on Monday for Labor Day. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. If you want to learn more about the stocks on our Buy List, please sign up for our premium service. It’s $20 per month, or $200 per an entire year.

Morning News: August 30, 2022
Posted by Eddy Elfenbein on August 30th, 2022 at 7:06 am

Germany’s Energy Bill Spirals as Uniper Seeks More Cash

China’s Biggest Developer Says Property Crisis Has Yet to Bottom

Lockdowns in China, and North Korea, Deal Double Blow to Bridge City

World Cup Fever Spreads From Qatar in Tourism Boom

Cryptoverse: Bleeding Bitcoin’s Holding Out for A Hero

Fed Plans 2023 Launch of Long-Anticipated Faster Payments System

Biden’s Student Loan Plan Sets Off Fierce Debate Among Economists

Bonds Are Sliding Toward the First Bear Market in a Generation

A Different Take on the U.S. Economy: Maybe It Isn’t Really Shrinking

The Bottom 50% of Americans Are Building Wealth Even as Inflation Bites

Would You Take Out a Loan to Buy This Week’s Groceries?

This Remote Mine Could Foretell the Future of America’s Electric Car Industry

FTC Sues Idaho Company for Selling Sensitive Tracking Data

Silicon Valley’s Elite Get Dragged Into Musk-Twitter Trial

Indian Billionaire Gautam Adani Is Now the World’s Third Richest Man

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Morning News: August 29, 2022
Posted by Eddy Elfenbein on August 29th, 2022 at 7:03 am

Xi Jinping’s Vision for Tech Self-Reliance in China Runs Into Reality

‘The Eye of the Storm’: Taiwan Is Caught in a Great Game Over Microchips

If Economists Fear Inflation, It’s a Sign You Should Not

‘Inflation Fever’ Is Finally Breaking — But Central Banks Won’t Stop Hiking Rates

Rally Hopes Crumble as Powell’s Rates Reality Hits Full Force

Dollar Zooms Higher as Markets Brace for Higher for Longer Rates

Some Companies Haven’t Paid a Dividend Since 2020. They Might Bring It Back as a Slowdown Looms

Asset Managers Renaming ESG Funds Told to Brace for Backlash

Revenge of the Founders: A Generational Struggle on Wall Street

Everyone’s a Landlord—Small-Time Investors Snap Up Out-of-State Properties

Everyone’s an Energy Trader as Power Bills Hit the Sky in the US

Honda, LG Set to Build $4.4 Billion EV Battery Plant in US

Ryan Cohen’s Bed Bath & Beyond Stock Sales Highlight Gray Area in Disclosure

Changing Consumer Habits

NASA’s Artemis Launch Gives Boeing Chance to Restore Its Space Credibility

A Who’s Who of Silicon Valley Lawyers Up for the Musk-Twitter Trial

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Morning News: August 26, 2022
Posted by Eddy Elfenbein on August 26th, 2022 at 7:02 am

The World’s Rivers, Canals and Reservoirs Are Turning to Dust

China’s Record Drought Is Drying Rivers and Feeding Its Coal Habit

UK Energy Bills to Rise by 80% in October as Regulator Announces Hike

Underwhelming Iowa Corn Crop Sets Stage for More Food Inflation

The Crypto World Can’t Wait for ‘the Merge’

Crypto’s Real Value Was Never $3 Trillion

Fed Watchers Scrutinize Jackson Hole for Hints on Interest-Rate Outlook

Powell Is Not Likely to Tell Investors What They Want to Hear in Jackson Hole Speech

IRS Revenue Boost From Stronger Enforcement Is Scaled Back in CBO Estimate

Alibaba, JD.com, and Other China Stocks Rose on Potential Deal Ending U.S. Delisting Risk

How Elon Musk Plans to Kill Off Cellphone Dead Zones Across the US

California E.V. Mandate Finds a Receptive Auto Industry

Dollar Stores Report Higher Sales as Shoppers Seek Inflation Relief

Gap Posts Surprise Profit on Banana Republic Boost; Withdraws Forecasts

Peloton Slides as Bleak Forecast Douses Hopes of Quick Turnaround

Ford Trucks in $1.7 Billion Verdict Weren’t Subject to Tougher Safety Rules

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