As we start October 2021, it's time to chat about the fourth quarter. Today, I'll outline the most important trends and stories heading into next week. Here's what I think about next week.
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| Dear Reader,
Apologies for the late note in the day. I spent the day visiting our friends at Ask The Pros and planning for a special event on Tuesday, October 5. Add in the fact that the household is in flux and market momentum is sideways, and there wasn't a lot of commentary to provide.
But let's look out to next week. As you, I'm very focused on the trends tied to the lock up of the global supply chain of goods. But what no one else is mentioning: The supply chain of money. I've listened to people say that until we fix the employment situation in the supply chain, the problems will persist. I argue something different. Until we figure out how to ensure that suppliers are getting paid on time, who cares about the workers? Because capital is all that matters. Money first. Every single time. I'm going to explain this story on Monday.
More importantly, I'm going to do a special Haven Investment Letter by video. I'm going to talk about a trend that is going to be absolutely critical to the next 18 months, and I'll give you a free pick in the process. So, check back on Monday.
What's Up Next Week?
The most important story next week isn't Barron's ridiculous live event about investment in water. They're behind the curve. I've told you how to make money on water many times.
The most important news next week is the earnings report of Pepsico (PEP). They hold their earnings reports on Tuesday. And - wow - is it important. Lots of companies are raising concerns about the ability to source products and suppliers in this global supply chain crunch.
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Well, Pepsico has to move lots of products around the globe. They have to procure plastic bottles and ensure that they have access to trucks and shipping. Margin pressures are likely going to hit this company. But what's worse - it's going to potentially hammer two companies in Alico (ALCO) and McCormick.
Alico is a massive company in my backyard. They run all of the orange groves, and they supply a TON of product to Pepsico's venture in Tropicana (the company sold the juice company and formed a joint venture with PAI Partners in August). It's 87% of their revenue.
Alico is a massive employer in Southwest Florida and a major source of tax revenue for our fast-growing area.
Then, there's McCormick (MKC). As you know, that company is home to me in Baltimore and a major part of my family and youth. My father worked there for more than three decades. Pepsico represents 11% of the revenue of McCormick's business.
There's a lot on the line for these two companies. And given the supply chain concerns and rising inflation, this report could have a compounding impact on the two places where I spend about 99% of my time each year.
I'll be talking about how both the physical and capital supply chains are in disarray next week. But keep this in mind. If Pepsico goes down, so will Alico and McCormick on Tuesday. Any surprise news, however, will be positive.
We'll talk more soon,
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| | | Garrett Baldwin
Chief Analyst, American Markets
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