August 6, 2013 Update

DJIA:15,612 S&P 500:1,707 NASDAQ:3,693 Gold:$1,292 Oil:$106.76 EURO:$1.33 YEN:98.13

The Protein Industry

It has been determined that Americans consume over a sixth of the entire world’s population, despite the fact that they account for less than a twentieth of it. According to the United Nations, the US eats more than any other country; ranking far higher than China, which has 23% more people living in it. It is no secret that the US consumes more as nation than any other country across the world, the economy is driven by it. And as American consumers, we keep our own economy healthy since consumption accounts for more than 60% of GDP. But when it comes to nutrition, consumption may not always be a good thing. In fact, the typical American diet contains more protein than it ever has before. Door To Door Organics’ research concluded that the average American eats 50% more meat than the recommended daily serving. And as vegan diets and high-end workouts like Soul Cycle have become more posh than cigarettes and Twinkies, people are starting to become more aware of what they put into their bodies. Consumer research conducted by Kraft, Kellogg, and General Mills has concluded that the word ‘protein’ has a different connotation to each consumer category- and each group associates the term with healthy choices. Parents see the large biological molecule as a healthy way to energize their children. Weight conscience consumers believe protein will help them reach their target weight. Athletes rely on protein to speed up muscle recovery after working out. Active adults see protein-filled snacks as a healthy way to boost energy levels. Because of people's perceptions of protein, it has become the key term in advertising for nearly every nutritional item- from smoothies to cereal.  In FY12, athletic-nutritional products collected $398mm, a 100% increase from 2007. Even foods that are traditionally seen as unhealthy choices, like sugary drinks and treats, are advertising their ‘protein’ content to convince consumers of the nutritional benefits the junk food contains; and, for better or worse, it’s working. Taco Bell will soon have a “Power Protein” menu, that will taregt my generation- young adults demanding more protein and less fat. But as it turns out, the protein binge may be increasing revenues at the same rate its expanding waist lines. Adding more protein than necessary may not actually be making consumers healthier due to the fact that the human body can only process a certain percentage of protein per day. And unlike other molecules, once the body has reached its protein limit it either stores the excess as fat or annihilates it completely. Only extremely active Americans need more protein than the average serving. But seeing as most Americans do not exercise nearly as much as they should, binging on protein could be causing them to gain weight rather than loose it; the opposite effect consumers are searching for. Protein overdoses can also lead to calcium loss, liver damage, and dehydration. Consumers are trend followers that do not mind paying top dollar to feel good, seeing as they’re irrational by nature. The demand for protein will not last forever because, as the saying goes, too much of a good thing will kill you. 

Domestic News

• Market Update Futures are flat ahead of data on employment and trade. 
• International trade data will be released at 8:30, and is expected to show the gap closing slightly to $43B from June, down from $45B in May. 
• Data on job openings will be released at 10:00, and is expected to have risen to 3.85mm in June from May’s 3.82mm. 

International Updates

Asia

• Market Update Markets were mixed, once again. Japanese stocks rose from an announcement that a large pension fund could increase its equity allocation. Chinese shares fell after disappointing earnings from HSBC.

Europe

• Market Update Markets traded higher, driven by better-than-expected data on U.K. industrial output. 
• German factory orders for June beat expectations, coming in +3.8% vs. May’s -0.5%.
• Italian Q2 GDP grew at a rate of -0.2% vs. last quarter’s -0.6% growth rate.