12 BARRON’S August 5, 2019
Less Than Satisfied
Maybe markets expected too much.
The data looked typically mixed: The
Conference Board’s consumer senti-
ment survey for June hit a 2019 high
and consumer spending rose 0.3%. But
President Trump struck a negative note
on China and, while a much-antici-
pated Federal Reserve rate cut oc-
curred, it proved disappointing. Stocks
dove. For the week, the Dow industrials
fell 2.6% to 26,485.01, the S&P 500
sank 3.1% to 2932.05, and the Nasdaq
Composite shed 3.9% to 8004.07. The
economy did add 164,000 jobs in July.
No Shocker: Fed Cuts
The Fed cut rates a quarter point, to a
range of 2% to 2.25%, citing “implica-
tions of global developments for the
economic outlook as well as muted
inflation pressures.” Fed Chairman
Jerome Powell, in remarks after the
meeting, did not guarantee that fur-
ther cuts would follow, calling it a
“midcycle adjustment.” Investors,
disappointed that the cut wasn’t
larger, sold shares. The president said:
“Powell let us down.”
Trade Woes Widen
Treasury Secretary Steven Mnuchin
and Trade Representative Robert Ligh-
thizer resumed trade talks in Shanghai.
At home, Trump attacked countries he
said took advantage of the U.S., includ-
ing China, Turkey, Qatar, and the
United Arab Emirates, warning that a
deal with China, which he charged had
reneged on buying U.S. farm goods,
might not come until after the 2020
election. He then threatened 10% tar-
iffs on $300 billion in Chinese goods
by Sept. 1. Separately, Japan took South
Korea off its list of trusted trade part-
ners. On Friday, Trump announced a
deal with Europe on beef.
Coats Out, Ratcliffe Follows
The Director of National Intelligence,
Daniel Coats, said he was leaving the
job in August. President Trump im-
mediately nominated John Ratcliffe, a
Republican congressman from Texas,
who has been a fervent supporter.
Trump said Ratcliffe would “rein in”
intelligence agencies that had run
“amok,” but by Friday Ratcliffe with-
drew, hurt by charges of a padded
resume and lack of experience.
Hacking Capital One
A hack at credit-card issuer Capital
One resulted in records of 106 million
customers and applicants stolen. The
data stretched from 2005 to 2019, and
included 80,000 bank account num-
bers. A former Amazon.com cloud
systems engineer, Paige Thompson,
was arrested in Seattle for the theft.
Capital One said it would cost the
bank $100 million to $150 million.
Johnson Threatens, Pound Falls
New U.K. Prime Minister Boris John-
son said he would not meet with the
European Union over Brexit unless
the EU promised to abandon the Irish
“backstop.” The pound fell.
26,485.
Dow Industrials:-707.
Dow Global Index:-12.
REVIEW 10-year treasury note:-0.
A NORWEGIAN PLAY ON SUSTAINABILITY
Salmon, the
New Chicken
As America fixates on the Discovery Channel’s annual
Shark Week extravaganza, Barron’s offers its own, less
stressful, sea tale: Norwegian salmon farmer Mowi ,a
play on sustainable protein and healthy living.
U.S. investors may not be familiar with the Norwegian
fishing industry, but salmon there is a big business. Mowi
(ticker: MOWI.Norway)—formerly known as Marine Har-
vest—is worth more than $6 billion, more than publicly
traded chicken processor Sanderson Farms (SAFM) and
almost as much as Pilgrim’s Pride (PPC). As with
chicken, demand for salmon is growing, in part because of
its sustainability. Chickens turn about two pounds of feed
into a pound of protein, beating pigs or cows. Fish do even
better—water carries their body weight—converting
nearly a pound of feed into a pound of protein.
Feed conversion matters. A huge portion of the
world’s grain products feed livestock, which is why
Beyond Meat (BYND) thinks it can affect climate
change by cutting out the “animal factory” from protein
production and replacing it with plants.
Today, salmon has lots of upside, even though it is a
premium product. The world consumes some 300 million
metric tons of land-based animal protein annually. The
salmon industry produces two million tons. Wholesale
salmon sells for $3 a pound, and wholesale chickens for
about $1 a pound. And salmon’s growth looks reasonably
priced. Mowi shares trade for 14 times estimated 2020
earnings, below 16 times for other S&P 500 food stocks.
Not bad for a company whose sales have grown by almost
8% a year on average for the past three years.— AL ROOT
$1.23 T
Estimated federal debt
issuance for 2019. The good
news: It’s less than 2018’s
$1.34 trillion.
140 K
The number of Social Security
numbers stolen in the hack
of Capital One.
18 %
Decline of the pound against
the dollar since the June 2016
Brexit referendum.
800 %
The increase in Beyond Meat
shares after its initial public
offering, just before a
recent decline.
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THE NUMBERS
The Asahi Shimbun/Getty Images (Trump)“President Xi,
who I like very
much,saidhe
wantstomake
a deal, but he’s
not doing that
fast enough.”