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Today's big stories

PepsiCo and Constellation Brands reported stronger-than-expected quarterly results
China's long-overlooked bonds are pretty attractive right now, but things could change fast – Read Now
Professional investors explained why environmentally friendly portfolios don’t make sense

1/3

Bottoms Up

What’s Going On Here?

Raise your glasses to drinks magnates PepsiCo and Constellation Brands, whose quarterly earnings updates were way better than expected on Thursday.

What Does This Mean?

Pepsi earned more in revenue and profit than investors predicted thanks to a 4% rise in “organic” revenue growth – which disregards swings in currency values and the impact of acquisitions – versus the same time last year. Cheers to rising sales of both its drinks and its most popular snacks for that one.

Constellation – the company behind some of America’s favorite liquor brands – saw its quarterly revenue and profit beat investors’ expectations too. Sales in bars and restaurants were knocked by ongoing disruptions, sure, but at-home sales more than made up for them. And of all the brands to really seize the moment, it was the unfortunately named Corona that saw its sales boosted by the launch of a hard seltzer line – one that might rival Molson Coors’ new tie-up with Coca-Cola (tweet this).

Why Should I Care?

For markets: Here’s to the future.
Both Pepsi and Constellation’s shares only got a modest boost on Thursday, potentially because investors were already more optimistic than analysts’ official projections. But Pepsi did try to give investor confidence a nudge: the company – which previously abandoned its annual earnings forecast – now reckons it’ll grow organic sales by 4% and turn in a higher profit than investors anticipated. Constellation, meanwhile, still thinks it’s too tough to call: the drinks firm opted out of making an official forecast.

The bigger picture: The best offense is a good defense.
Consumer staples companies – which tend to see pretty predictable demand – were up 10% last quarter, beating US stocks’ 8% average. That narrow gap might reflect investors’ flip-flopping over the state of the pandemic: defensive stocks like staples tend to perform better when things look bleak, while their “cyclical” counterparts – whose earnings rise and fall with the economy – shine most when things are improving.

Take action: Three types of stocks to buy in a recession.

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2/3 Premium

China’s Little Surprise

What’s Going On Here?

Long-overlooked Chinese bonds are seeing a surge in interest from overseas investors, but it might be a good idea to go East before the country’s currency gets any stronger.

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3/3

Environmentally Unfriendly

What’s Going On Here?

Environmental, social, and governance (ESG) investing is more popular than ever with retail investors, but one hedge fund’s professional investors made their doubts known on Thursday.

What Does This Mean?

According to the manager of a hedge fund that looks after $2.5 billion worth of cash on others’ behalf, most investors are well aware there’s a trade-off between the risk they take, the profit they might earn, and the ESG considerations they can prioritize. What they don’t know is just how significant the impact of those trade-offs will be.

That reveals a bigger problem: investment management firms – which have been told by regulators that they have a responsibility to get their investors the best possible return irrespective of ESG factors – might not have enough information to answer that question. And if they don’t have enough information, professional investors open to the idea of ethical investing probably don’t either – forcing them to stay on the sidelines.

Why Should I Care?

The bigger picture: Environmental, social, shrugganance.
That’s not the only issue facing investors: no one’s officially agreed what counts as ESG and how to calculate it, which might put them off otherwise ethically sound companies. Still, credit rating agencies made a move toward a fix last year by introducing ESG scores, while the European Union has started rolling out standardized terms that should help investors better understand what they’re getting into.

For you personally: Take that, oil!
There is research that’s shown the top ESG funds are generating better returns than their less socially responsible peers, so being ethical doesn’t necessarily have to cost you. Even this year, ESG portfolios fell by half as much as the broader market did during March’s crash. That may have less to do with ESG funds’ inclusion of eco-friendly businesses, mind you, and more to do with their exclusion of this year’s worst-performing sector: energy.

Invest with your heart: How you can keep your investments ethical, even in a pandemic.

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💬 Quote of the day

“People do not decide to become extraordinary. They decide to accomplish extraordinary things.”

– Sir Edmund Hillary (a New Zealand mountaineer, explorer, and philanthropist)

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Can computers talk to God? (Vice)
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Finimize - 🥤 Pepsi smashes Coke

Today's big stories

Bottoms Up

What’s Going On Here?

What Does This Mean?

Why Should I Care?

China’s Little Surprise

🧐 Dress to impress with BOSS

Environmentally Unfriendly

What’s Going On Here?

What Does This Mean?

Why Should I Care?

😭 In case you missed it

Older messages

📉 Last quarter’s worst stocks

💨 Uber’s high-speed deal

🎰 Caesars’ 4 billion dollar wager

🎮 Amazon pwns Google

😮 Some stocks are anti-vaxxers

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