Gatorade's Newest Drink: Water
Steady as she goes. The Dow Jones Industrial Average looks to finish the week mostly flat, while both the Nasdaq and the S&P 500 are moving higher with help from tech stocks in their indices. I am surprised that March has snuck up on us so quickly. A government shutdown was averted again, if only for another week, and crocuses are beginning to bloom. Somehow, I missed winter once more. Regardless, the markets haven’t missed a beat and continue the momentum that led us into the start of the year. Investors, analysts, and economists are almost all in agreement that a soft-landing is upon us.
This week Washington D.C. avoided a government shutdown for the fourth time in six months. I would have mentioned the deadline last week, but frankly it wasn’t even on my radar. Politicians gave themselves one additional week to come to terms on twelve funding bills. If an agreement is not reached, defense spending will be cut 1% and all non-defense expenditures will be cut 4% based on the January 2024 agreement. Something tells me those who want spending cuts now hold the leverage in these negotiations.
Instead of delving into the economic data this week, let’s look at some of the more interesting company news I came across. For example, in perhaps the fastest turnabout ever, Wendy’s announced a plan to implement “surge” pricing on its menu items before recanting just two days later. Surge pricing is when prices change depending on demand. For example, Dave’s Baconator may be more expensive during the lunch hour than at ten in the morning or three in the afternoon. This method was first introduced by rideshare companies Lyft and Uber. Wendy’s did an about turn when consumer feedback was overwhelmingly negative on this news.
Here's another one. Gatorade announced a new product called Gatorade Water. It is the first unflavored Gatorade product and one that aims to provide “all-day hydration.” The premium water product was said to be developed for active people looking for an all-day hydration option. I know there are plenty of expensive water brands available, but for me Gatorade was built on the idea of replenishing electrolytes. While water is almost always a better choice than any of these sports drinks, it seems strange that Gatorade has embraced water. What next? Premium canned air by PepsiCo?In other news, we learned that Apple is again cancelling its electric car program. After ten years and a little over $10 billion in research and development, it has decided artificial intelligence is a more lucrative idea. I doubt this will be the last time Apple flirts with automobiles. And along these lines, Elon Musk announced Tesla is working on a new roadster that he claims will go 0-60 mph in under 1 second. While this car may not be for me, I know there are a few of you that will look seriously at this offering. You know who you are. The car is expected to ship next year and requires a $50,000 refundable deposit, although its price tag is yet to be disclosed.
In closing, I turn to perhaps the strangest company news I came across this week. If you have a home printer, you understand how expensive they are to operate. Ink is the most expensive liquid on the planet. When measured by the ounce, printer ink is more expensive than gold. So, with that in mind, HP (aka Hewlett Packard) is introducing a subscription service that rents people a printer and allots them a specific number of printed pages. HP is framing the service as simplifying printing for families and small businesses, but the deal comes with monitoring and a years-long commitment. Hold onto your wallets. Prices start at $6.99 per month for a plan that includes a printer and 20 printed pages up to $36 per month and 700 printed pages. Did I mention this is for a two-year commitment with an early termination fee of up to $270 plus taxes. I guess I shouldn’t be surprised. HP announced earnings this week and reported its revenue had fallen 4.6% year-on-year. This smells of desperation, but what do I know? Maybe people are clamoring for another subscription service. My recommendation… just get a Brother monochrome LaserJet for around $119 and thank me later. Now you know.
Bruce J. Mason, MBA