Before the Bell: One Number Could Decide the Next 10% Move

Five Banks, One Inflation Print, and a Blockade

I pour the coffee before I look at the futures. This morning I needed the whole pot.

At 8:30 Eastern, the Bureau of Labor Statistics releases June CPI.
At roughly the same moment, five of the largest banks in America report second-quarter results. And behind both of them sits a president who spent Monday announcing a blockade on Iranian shipping through the Strait of Hormuz, along with a 20% fee on cargo moving through it.

Where Futures Sit

Dow futures are down roughly 129 points, or about 0.2%. S&P 500 futures are close to flat. Nasdaq-100 futures are higher by about 0.4%, with semiconductors bouncing after Monday's beating... 

Stock Highlight

Coca-Cola (KO)

Here is a number I want you to sit with this morning: 0.35.

That is Coca-Cola's beta, which is the market's shorthand for how much a stock moves relative to everything else.

A beta of 1.0 means the stock moves with the index. Coca-Cola moves about a third as much.

On a morning when the market is bracing for an inflation print and five bank reports inside the same thirty-minute window, that number is the entire investment case.

Not a projection. Not a story about what might happen. A measured fact about how this business has behaved when the world got loud.

The particulars. Shares trade in the low-to-mid $80s. The quarterly dividend is $0.53, or $2.12 annualized, putting the yield around 2.5%... modest, but running above its own five-year average of roughly 2.2%, which means you are being paid slightly better than the recent norm to own it.

This year marked the 54th consecutive annual dividend increase. Not a decade. Not two. Fifty-four years, through the inflation of the 1970s, the crash of 1987, the dot-com unwind, 2008, and a pandemic that shut down every restaurant and stadium the company sells into.

Why it belongs in this specific morning's brief rather than a generic list of safe names: core inflation is expected to hold at 2.9% and refuse to come down. In that world, the question that matters for any business you own is simple. Can it raise its prices?

Coca-Cola can. It has been proving that for a century, and it does it without a factory full of commodity exposure to Hormuz or a loan book that gets tested when the consumer cracks.

When the Fed's next move might be up rather than down, the businesses that suffer are the ones whose value depends on cash flows arriving many years from now. Coca-Cola's cash flows arrive this quarter, and the next one, and the one after that.

Here's my scan of KO

(TheStockAnalyzer.ai is my own personal tool, and I share it for free)

Best

-Greg