Yellen’s annual Fed speech, Kraft (KRFT) reports Jell-O sales continue to drop and Dynegy (DYN) to purchase power plants.

Bourbon & Bayonets / Friday, August 22nd, 2014

Markets were heading lower on Friday morning ahead of the Federal Reserve Chair Janet Yellen’s speech at the annual Fed Conference in Wyoming. She is expected to discuss labor markets and go over the minutes from the Fed’s July 29th and 30th meeting. The minutes were released on Wednesday and revealed a large debate over raising interest rates sooner than expected if the economy keeps gaining strength. Despite the debate over interest rates, there were no changes made during the meeting and it was approved 9-1 to keep rates where they are. Richard Perry, a market analyst with Hantec Markets, said, the “hawkish noises coming out of the recent (Fed) meeting minutes will add extra spice to what Yellen has to say. It would be surprising if she did anything other than hold a steady ship and that the Fed will maintain an accommodative monetary policy for a considerable period of time.”

Kraft Foods Group, Inc. (KRFT) were trading relatively flat after the company announced that one of the their longest running brands keeps sinking. Kraft’s century old dessert brand, Jell-O, continues to post disappointing sales. The dessert was created as a quick and affordable treat but has posted sales that have declined 19% over the past four years. Jell-O executives say they are confident in the ability of the brand to make a comeback, however efforts have proved disappointing. In 2009, the company reported that Jell-O sales that came in at $932.5 million. By 2013 sales have sunk to $753.8 million.

Shares of Dynegy Inc. (DYN) were skyrocketing up over 19% after the company announced that they would be spending nearly $6.25 billion on power plant acquisitions. The company will be purchasing the plants from Duke Energy and Energy Capital Partners. Dynegy said that this move would help them gain a presence in the Midwest and New England. When broken down, they will spend about $2.8 billion with Duke and $3.45 billion with Energy Capital. This deal will boost the company’s coal and gas generation by nearly 12,500 megawatts. Both deals are expected to close in the first-quarter of next year. Chief Financial Officer at Dynegy, Clint Freeland, said, “The target capital structure of the combined company has been designed to ensure the continued strength and flexibility of our balance sheet and maintain significant secured capacity for both hedging and liquidity requirements going forward.”

That’s all for today,

Warren Gates, Normandy Research

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