Commentary: Financial management critical in successful city government | Chaska Opinion

Commentary: Financial management critical in successful city government | Chaska Opinion

The up coming subject matter in this dialogue of making a healthful local community lies with the financial scheduling and administration.

It will emphasis on regional authorities financing supplied which is in which we typically determine. What also is critical to recognize is that any elected governance board or council is the strategic arm of the business. They have the obligation for creating the eyesight and priorities of their neighborhood, such as the financial requirements and impacts, along with creating the community knowledge.

Bob Roepke is a previous Chaska mayor and serves on the Community Foundation for Carver County Board.

Two critical trends to watch as companies announce earnings: Morning Brief

Two critical trends to watch as companies announce earnings: Morning Brief

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Friday, March 25, 2022

Believe it or not, the first quarter ends a week from today. That means Q1 earnings season is just around the corner.

The past three months have been particularly eventful from the perspective of risk. Geopolitical angst spiked in February with Russia’s invasion of Ukraine. The conflict has sent global food and energy prices surging. Inflation is hot with the consumer price index jumping 7.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year-over-year in February, the biggest increase since January 1982. Meanwhile, the Federal Reserve recently raised interest rates for the first time since 2018 in its ongoing effort to cool prices.

All of these developments represent headwinds for business activity.

With this in mind, there are two trends to watch as companies announce earnings in the coming weeks.

Is demand still strong?

When uncertainty is high and sentiment is low, it would make sense for businesses and consumers to cut back on spending.

But that hasn’t been happening in recent quarters, even with inflation ramping up and COVID-19 variants presenting new health risks.

Earlier this week, Nike announced better-than-expected quarterly sales growth while adding that “demand continues to significantly exceed available inventory supply, with a healthy pull market across our geographies.”

In other words, Nike (NKE) is saying sales would’ve been even more robust had it not been for supply issues, which was something numerous companies said about the prior quarter.

On Thursday, Darden Restaurants (DRI) — parent of Olive Garden, LongHorn Steakhouse, and other popular restaurant brands — reported quarterly same-restaurant sales that jumped 38{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from a year ago.

When asked about the impact of surging gasoline prices, Darden CEO Gene Lee told Yahoo Finance, “I think the consumer balance sheet is stronger than it has been previously.”

Indeed, consumer debt levels are low and cash levels are very high.

On the subject of inflation, General Mills (GIS) has been raising prices to address higher costs. And in its earnings announcement on Wednesday, the company confirmed that consumers were paying up. In fact, sales of higher priced products drove all of the company’s revenue growth during the period, which actually saw pound volume decline.

Based on these early reports, it looks like revenue could deliver again.

Are profit margins holding up?

Over the past year, corporate executives have been very vocal about how inflation was causing the cost of doing business to rise.

However, profit margins actually widened to record levels in 2021. And analysts have been predicting that margins would stay high in 2022.

With its earnings announcement, Nike reported that its gross profit margin increased to 46.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} during the three months ending in February, up 100 basis points from the prior quarter.

Despite higher pricing, General Mills actually saw its profit margins contract.

Darden reported better profit margins, but management also warned that inflation costs were much higher than it previously anticipated.

“We started the [fiscal] year with a 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} inflation assumption,” Darden COO Rick Cardenas said. “Here we are three quarters later. We’re looking at 6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} total inflation.”

So far, companies are painting a mixed picture for margins.

Why it matters

Revenue and profit margins are the dominant drivers of earnings growth as you can see in the chart below. And earnings growth drives stock prices.

S&P 500 year-over-year operating EPS growth

S&P 500 year-over-year operating EPS growth

Analysts’ forecasts for earnings have been high and have only been improving.

So, it will be critical for companies to deliver on revenue and/or profit margins or else they could get punished by traders dumping their stocks.

By Sam Ro, the author of TKer.co. Follow him on Twitter at @SamRo.

What to watch today

Economy

  • 10:00 a.m. ET: Pending home sales, February month-over-month (1.0{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} expected, -5.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in January)

  • 10:00 a.m. ET: University of Michigan Sentiment, March final (59.7 expected, 59.7 in February)

Earnings

Politics

  • President Biden is set to travel within 70 miles of Ukraine today with a visit to Rzeszów, Poland, on the agenda. He will receive a briefing on the refugee crisis and also meet with American service members stationed there.

Top News

US, EU strike LNG deal as Europe seeks to cut Russian gas [Reuters]

Instacart slashes valuation by nearly 40{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to $24 billion [Reuters]

Apple is working on a hardware subscription service for iPhones [Bloomberg]

NIO top line beats estimates, but revenue guidance misses [Yahoo Finance]

Yahoo Finance Highlights

 

Amazon’s profits will be hammered by higher gas prices: top analyst

BlackRock’s Larry Fink sees Ukraine-Russia war ‘accelerating digital currencies’ as Bitcoin hits $44K

There’s a conspicuous Russian oligarch still missing from the US sanctions list

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn

Hong Kong’s ‘zero-Covid’ policy faces critical test from Omicron surge

AsiaWorld-Expo, a convention centre close to Hong Kong’s intercontinental airport, as soon as described itself as an “Expotainment” facility. Now the broad room is a dreaded quarantine centre just after staying commandeered by the govt below its “zero-Covid” coverage.

Some of the centre’s clients, who snooze in beds divided by transparent screens and endure consistent lights and loudspeaker announcements, are becoming so desperate to get out they are gargling hand sanitiser in a vain bid to neutralise exam effects, in accordance to one person stuck there.

“People are rinsing their noses in hand sanitiser, folks are inclined to do fucking something to get out of below,” stated the patient, a college scholar.

The patients’ desperation is matched only by that of the Hong Kong governing administration as it seeks to sustain its coverage of completely doing away with Covid-19 regardless of an aggressive Omicron outbreak that threatens to overwhelm the Asian money centre’s defences.

Hong Kong on Tuesday confirmed 625 new scenarios, a file for a city that for most of final year had no regionally transmitted infections, leading authorities to announce the hardest social-distancing steps yet together with boundaries on gatherings at private properties for the initially time. 

“The community pandemic predicament is incredibly severe,” food and well being secretary Sophia Chan said on Monday.

The zero-Covid policy, which is also in force in mainland China, has been credited with conserving lives and blocking the collapse of healthcare facility programs found elsewhere. While unpopular with many expatriates since of vacation limits, it authorized much of the city’s population to reside pre-pandemic existence for most of previous 12 months.

But the newest outbreak starting up in December has elevated questions over the strategy’s sustainability. Despite the fact that deaths are continue to small at 213 because the start out of the pandemic, medical professionals get worried that the outbreak could endanger the territory’s elderly. Only about 20 per cent of all those aged a lot more than 80 have had two vaccination photographs.

“The federal government will not give up. We will proceed to do our ideal to reach zero Covid,” declared the city’s chief, Carrie Lam, on Friday.

Ironically, the newest outbreak is forcing the government to reluctantly ease some of its strictest policies due to the fact it is operating out of amenities to dwelling people and shut contacts of those people infected.

Intercontinental people arriving in Hong Kong or neighborhood citizens who exam beneficial for Covid are commonly placed in isolation in healthcare facility for a minimal of 10 times. Immediately after that, they can only be introduced from the ward if they check adverse twice within 24 hours, a approach that could just take up to extra than a thirty day period.

But with hospital and quarantine facilities below tension from the most current outbreak, the federal government past week relaxed its incredibly demanding polymerase chain response (PCR) tests need for clients to go away clinic.

Beforehand, on discharge from medical center, people today have been also necessary to expend an additional two weeks in a quarantine centre, these kinds of as AsiaWorld-Expo. Now this can be performed at residence with the governing administration making use of quarantine centres for asymptomatic scenarios as hospitals fill up.

Quarantine for these screening beneficial is significantly hard for the reason that of the unsure launch date. “I’m breaking down,” said 1 Hong Kong instructor still in healthcare facility isolation right after landing in Hong Kong 17 days before. “We are not aliens, we shouldn’t be singled out.”

Health officers verified to the FT that a four-calendar year-outdated kid who tested good for the virus was separated from her mother in early January for a shorter time period. The kid was going through Hong Kong’s compulsory quarantine for people who have experienced near get in touch with with a beneficial circumstance when she started out exhibiting Covid symptoms and was transferred to clinic. At a person stage, nurses uncovered the baby wandering the corridors by itself. She was finally reunited with loved ones.

Hong Kong has also has been applying ambush lockdowns on a number of apartment blocks when Covid is uncovered in sewage exams and issuing web pages-prolonged lists of destinations that have been exposed to Covid conditions, demanding all those who frequented these destinations to get analyzed.

A person resident of a superior-rise condominium that was locked down, June Chu, was caught in her public housing flat of about 300 sq ft with her husband, two kindergarten-age children and her mother-in-law. “There is mainly no area to shift about,” she explained to the FT. The mother expected the household could reduce as significantly as a quarter of their month-to-month household profits from lacking do the job in the course of the lockdown.

The new restrictions are set to inflict much more suffering on Hong Kong’s overall economy, which is now beneath pressure in element due to an outflow of expertise just after political unrest in 2019. Inflation is an additional menace. Vegetable charges rose by more than 20 for every cent above the weekend, according to a wholesale retailers association, just after two truck motorists analyzed good.

However the outbreak is not likely to prevent the authorities from pursuing zero Covid.

“Zero Covid could nevertheless be achievable but then it would have to have a whole lot far more exertion,” Leo Poon, a professor at Hong Kong University’s university of community health and fitness, mentioned. “It is a choice for the governing administration to make.” 

A single authorities professional recently told regional radio that when Hong Kong reached a vaccination rate of 90 for every cent and fulfilled other circumstances, it could adopt an “exit strategy” which include easing social-distancing measures.

Beijing, even so, stays committed to the zero-Covid coverage, with a major Chinese wellbeing formal, Wu Zunyou, saying that relying on vaccines by yourself could not contain the virus.

China’s state-operate Xinhua Information Company explained that ended up Hong Kong to drop the coverage, it would jeopardise the city’s overall economy and community wellbeing, and delay a long-awaited reopening of its border with the mainland for regular travellers.

Irrespective of the issues, a lot of Hong Kong inhabitants also still appear to help zero Covid. “This is the sacrifice people like us have to do for a greater way of life for folks in Hong Kong,” explained Yudi Soetjiptadi. An exhibition government, he examined favourable immediately after travelling overseas and had been in isolation for 27 days when he spoke to the Economic Instances.