YUM! (ticker: YUM) bids for Little Sheep. Little Sheep is a "hot pot" concept restaurant based in China. Customers essentially dip vegetables in boiling broth. YUM has been betting on growth in the China market since the 1980's when introducing the Kentucky Fried Chicken brand to China. The company has changed the image of its US brands to fit Chinese preferences and has been successful. Simply, going to a KFC or Pizza Hut in the United States is completely different than going to one in China.
From a business standpoint, this makes sense. Acquiring the brand completely gives the company increasing exposure to the Chinese consumer. It can also bring the brand to the United States. Asian style food is definitely on the rise of consumer preferences in the United States, as evidenced by brands like Panda Express or Flat Top Grills expanding.
U.S. Fast-Food Giant Yum Bids for Chinese Chain (click here)
Stocks vs. commodities
Commodities have lost their luster for leading investment strategists on fears that global economic growth, particularly Chinese demand, may be lower than previously expected.
"While we would wait for a better entry point, we believe the cyclical bull market in equities is not over and would buy any summer weakness in stocks, Michael Hartnett, Merrill Lynch's chief global equity strategist, wrote in a report, in which he favors U.S. and emerging markets over Europe and Japan.
Defensive stocks are preferred to cyclical ones, JP Morgan said, arguing that the economic indicators show the global manufacturing sector is experiencing an inventory correction similar to the one seen around the middle of last year.
Defensive stocks are not the only ones that should perform well this year, according to Merrill Lynch. Companies with strong and stable profit growth are also expected to thrive as corporate earnings decelerate in general and the Federal Reserve prepares to reduce monetary stimulus, it said.
Time to Move Some Money from Stocks to Commodities (click here)