It’s fair to say that the U.S. economy is showing an improved heartbeat, compared with recent quarters and years.
There’s even the proverbial “big news” on Wall Street. Last month, for example, Warren Buffet’s $23 billion take-over play for the H.J Heinz Co., an iconic food brand.
Is the Buffet play, for Heinz, a harbinger of better days ahead for stock markets generally, versus the future fortunes of the world’s flinty gold buyers? Even more optimistically, will this takeover play kick off the next nirvana for deal-makers?
Well, let’s give Herr Buffet credit for his excellent sense of timing. He’s a great picker of old-line companies with durable names, competitive advantages and predictable earnings. That’s Buffet’s gig, and he’s very good at this game.
Still, let’s take a clear look at what Buffet is buying. H.J Heinz is global, to be sure, but not really “international” in the way that, say Boeing or General Electric arc across the world. That is, Heinz is mostly a trans-national collection of local facilities.
The basic business model for Heinz is to own food-processing factories in dozens of countries. Heinz buys into local and regional brands, across a multitude of nations, ethnicities and cultures. Heinz then produces products derived from local agriculture, under tight hygienic standards, and emplaced into cans and bottles. In other words — and as the people who work at Heinz will be the first to tell you — it just doesn’t pay to ship tomato-flavored water, in bottles and cans, all that far.
So Buffet buying Heinz is good news, in many respects, to deal-maker wannabes. Heck, any big deal is a good deal, as long as the bankers and lawyers get their fees.
Yet the Buffet-Heinz hook-up seems limited in scope. It reflects an evolving world economy at, literally, the grass-roots level. More and more people have more and more money to buy higher quality, branded food items from factories that are located not too far away. That’s good, but it’s not necessarily the signal for a new global boom.