Hi John, here's what you need to know for October 18th in 3:09 minutes.

☕️ Finimized over a matcha latte at Vermillion Café in Kyoto, Japan (18°C/64°F ☁️)

⏳ Keep it brief

Food Fight

What’s Going On Here?

Arch-rivals Unilever and Nestlé – two of the world’s largest consumer staples companies – reported quarterly updates on Thursday. And in a reversal of last quarter, investors sided with Unilever’s stock over Nestlé’s.

What Does This Mean?

Anglo-Dutch Unilever – the gastronomic powerhouse behind Ben & Jerry’s ice cream and Hellmann’s sauces – grew its third-quarter “organic” sales (which excludes the effects of currency swings and acquisitions) by 2.9% versus the same time last year. But that was lower than investors had been expecting, since growth in emerging markets like India, China, and South America wasn’t as high as hoped.

Switzerland’s Nestlé, meanwhile, saw its organic revenue grow by 3.7% over the same period – higher than its rival’s and bang on what investors had predicted. The candy bar-maker probably deserves to have a break after besting Unilever in 2019, which may be the reason Nestlé’s stock price had risen by double Unilever’s so far this year.

Why Should I Care?

Zooming in: Sweet, sweet profits.
Nestlé’s outperformance this year might’ve led some investors to sell their shares and lock in their profits on Thursday: its stock fell 2%. And that’s despite announcing it’d give shareholders an additional $20 billion via share buybacks or extra dividends over the next three years, following the successful sale of its skincare business (unless it finds another company to buy instead). A higher-growth and more profitable post-sale Nestlé should attract new investors, not to mention please existing ones.

For markets: You’re being so defensive.
Consumer staples companies sell products people buy whatever the economic weather. In other words, they’re “defensive”. As economic growth slows then – UK retail spending, for instance, froze in September versus August – investors will look for companies where customer demand is typically resilient even if prices get raised, which could push their stock prices higher (tweet this).

Stanning Morgan

What’s Going On Here?

Bank of America and Morgan Stanley followed rival US investment banks with updates of their own on Wednesday and Thursday – and investors were big fans of their stronger-than-expected results.

What Does This Mean?

Bank of America’s last quarter was better than investors had predicted, thanks to the part of its business that advises companies on making deals and raising money, whose revenue grew by more than its rivals’. And the bank’s consumer-facing business helped too, partly owing to the income it earned managing high rollers’ investments.

Investment and wealth management represents half Morgan Stanley’s revenue, and last quarter brought home as much bacon as investors were hungry for. It was the bank’s other money-spinners, though, that turned the meal into a feast: Morgan Stanley made more than expected from companies it advised and investors it helped trade stocks and bonds – driving the bank’s profit higher than forecast.

Why Should I Care?

For markets: Bank stocks’ biggest fans.
Earlier in the week, banks including JPMorgan and Citigroup flagged slowing loan growth (which, in turn, leads to lower fee and interest income). But Bank of America revealed strong loan growth on Wednesday. Likewise, Morgan Stanley generated more “net interest income” – the gap between the amount of interest it receives and pays out – than expected. Investors bought up stocks of both: Morgan Stanley’s had already risen 5% in the past week (with investors predicting a strong update after other banks' earnings), and on Thursday its shares rose another 4%.

The bigger picture: Stalking the US Federal Reserve.
At the end of this month, the US central bank will announce if it’ll cut the country’s interest rates further. Banks’ updates this week suggest consumers and companies were pretty busy last quarter, so the economy may not need more of a boost. On the other hand, American consumers felt less confident and curbed their shopping in September – and may therefore benefit from a rate cut, which encourages more spending since savers earn less.

💬 Quote of the day

– Steve Jobs (an American business magnate, entrepreneur, industrial designer, investor, and media proprietor)