Reuters Insider - Trading at Noon: Retailers smile as oil drops

Great American Financial

08/01/2015 08:13

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Restaurant and apparel chains benefiting from drop 
                     in gasoline prices.Pepsi and Campbell's reportedly 
                     takeover targets.                                 
 
 
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Transcript (May be auto-generated)

 Falling oil prices and gas prices as a result, and everybody is wining and 
dining more than we actually thought that they were. Let's go to Nathan Layne. 
He's in our Chicago bureau. He's Reuters' reporter, has a terrific story out 
today. Nathan, help us really quantify here the numbers in terms of how much 
falling gas prices are benefiting other sectors. Well, I think the impact is 
broad. But what we've seen is that the gas prices continue to fall through 
November and December- obviously the two key months for the holiday season. And 
one analyst from Customer Growth Partners has estimated the impact to be $13 
billion. $13 billion of savings at the pump, wow. Okay, so talk to us about some
individual companies, particularly the retailers who have benefited. Right. 
Well, I think there's a broad positive impact here, so you're going to see 
Wal-Mart benefiting, you're going to see Target benefiting, you're going to see-
JCPenney came out with strong numbers yesterday benefiting, Macy's- kind of 
across the board. But what analysts are saying is that a lot of the money- the 
extra $10, $20 you save at the pump is going to go to things like fast food, 
eating out, movies, going to a bar, whatever- kind of those little things that 
you do when you have a little extra money in your pocket. Right, we just took a 
look at some retail stocks, and JCPenney as you mentioned in particular up huge 
today, roughly like 17%. Alright, talk to us because I love this quote from your
story- from the Retail Consultant Craig Johnson, "Nobody is going to buy the 
wife a diamond bracelet on a $10 gas savings." Tease that out for us. Right. 
Well, I think what he's trying to say is that what we're talking about here is 
not- for each individual household it's $10 here, $20 here. It's not huge 
savings. It's enough to put some money into food or a night out, but you're not 
going to go out and buy your wife a diamond bracelet like Craig Johnson said. So
what he's trying to say is basically that this is going to turn what was going 
to be kind of a decent holiday season for the retailers into a little bit better
holiday season for the retailers. But it's not going to be the 4.8% growth we 
saw in 2011 or more than 5% growth we saw in earlier years. That's right. And 
just to go back to your point of fast food restaurants- I just want to point out
that Sonic, on the back of strong earnings yesterday, hitting a 52-week high 
today, and that stock is up about 9%. Alright, Nathan Layne from our Chicago 
bureau, thank you so much. Thank you. Alright, let's take a look at the markets 
and see what we've got going on today, because stocks have been rebounding after
starting off the New Year. Look, Dow's up about 193 points, NASDAQ up 53, S&P 
500 up 23, so we are back. We had that strong ADP number for December and 
actually November's number was revised upward as well. And at 2PM today, we will
get the minutes from the most recent Fed meeting, so obviously analysts and 
traders and investors out there will be looking at the tea leaves on those 
notes. Alright, let's move onto some hot stocks today. 

Two very big names: Campbell Soup and Pepsi moving today. Campbell Soup- let's 
take a look, up about 4.5%; Pepsi up just under 3%. This is because of a story 
out of the Wall Street Journal that says 3G firm, that Brazilian investment 
firm, may be interested in buying one of these companies, or in the case of 
Pepsi, maybe part of the company. That would be of course a huge purchase. Now, 
3G Capital, you remember, teamed up Warren Buffett for the purchase of Heinz, 
another great American food brand that we know here in the US. Bought Heinz, and
it was also involved in the deal of Burger King buying Tim Hortons, and Warren 
Buffett was involved in that as well. I just want to mention actually the Wall 
Street Journal named some other interesting investors in 3G- this Brazilian 
firm. Tennis champ Roger Federer is an investor, as is hedge fund champ Bill 
Ackman. 

Alright, finally, I want to mention the oil driller Continental Resources. Let's
take a look at the stock. It was up- last look up roughly 3% or so. CEO Harold 
Hamm of course embroiled in this very bitter and very public and very, very 
expensive divorce. Now, we're taking a look at the stock right now of 
Continental Resources. Offered his former wife Sue Ann a handwritten check for 
$974.8 million. There's the check. Take a look at it. How many people can write 
a check for that amount? Harold Hamm can do it, and guess what, rejected- put a 
red circle and a big slash through that. She's appealing- this is what actually 
a November ruling said that he owed her- there's Harold Hamm right there 
floating over me. He didn't write me that check but then again I wasn't married 
to him. There's Sue Ann, and she rejected the check even though it's what a 
November ruling said that she was owed- she's appealing and she said she's owed 
a lot more, obviously. Alright, that does it for us here at Trading at Noon. 
Follow us on Twitter: @ReutersInsider, check out more videos at www.Reuters.com.
I'm Lisa Bernhard. This is Reuters