Randomly Noted

The screen shot of a FactSet data platform above tells a big story. In the lower right hand corner is a chart of Procter & Gamble’s stock trading. At one point in the afternoon, the stock fell more than $20 before recovering. Some are linking that spike lower to an overall 1,000 decline in the Dow industrials – and similar frantic trading across all financial markets here.

Billions of dollars were wiped out of the stock market (the Dow eventually recovered to being down 347 points). We don’t know yet if this was a program trade gone nuts or, as was being rumored late in the afternoon, a series of trades made in error.

But here’s what we do know: Procter & Gamble’s stock, like most other big capitalization stocks, usually trade up or down in terms of cents, not dollars. In other words, if you look at all trades occuring, you will see little price movement from trade to trade. I took a few screen shots off my CQG data platform and those screen shots show exrtremely wild and volatile trading in P&G’s shares between 2:46 p.m. and 2:48 p.m. today.

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One of the important messages we heard from Procter & Gamble this morning – if your business has to be cannibalized, it’s better you do it to yourself rather than leave it to a competitor.

The global consumer products giant announced fourth-quarter results today and said net sales for the quarter were down 11%. Organic sales, which exclude acquisitions, divestitures and forex translation, fell 1%.

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The recession gave a big boost to private-label brands peddled by retailers- cheaper breakfast cereals, soups and soft drinks (among other things) that taste the same as big-name brands.  The growth in sales is starting to slow: In the four weeks to May 16, “private label’s market share grew at an average 11%, a drop from the 21% growth those off-brand products saw at their peak around February,” DJN colleagues Anjali Cordeiro and Paul Ziobro report. Is this a sign consumers are feeling more confident and willing to buy pricier brands? Perhaps, but as happened following the economic downturn of the early 1990s, big-name brands will never recover the market share they had before the credit crisis. Fact is, when shoppers get used to store brands, they almost never leave them – even when their wallets and checking accounts fill up during an economic boom. Indeed, this is why consumer goods makers have been cutting prices recently in a scramble to keep shoppers coming back. Speaking of which, Anjali reports that Procter & Gamble will test a cheaper version of its iconic Tide detergent. “Tide Basic will cost roughly 20% less than the standard product,” she writes. What it won’t have is “the added fragrance technologies and other advanced technologies of the standard Tide.” Kroger Co. and Wal-Mart Stores Inc. will test the new product in 100 stories in the South. It will certainly be interesting to find out if shoppers detect a difference between premium-price and cheap Tide. If they don’t, I doubt P&G will let us know. Tide, P&G’s No. 1 North America brand, generates more than $3 billion in annual sales. Here’s Anjali’s piece:

http://online.wsj.com/article/SB124648188584882481.html