The broad conditions for equity buyers remain in place. Easy central bank monetary policy and broad fiscal stimulus mean conditions are suitable for further equity gains. However, investors need to be aware that markets have been trading at elevated levels and are struggling to make new highs despite strong earnings.
Will PepsiCo move higher in keeping with its very strong seasonal pattern this year? Over the last 15 years, PepsiCo has gained in value eleven times between June 08 and July 07. The largest gain was in 2018 with a 5.14% profit.
Summer months can be good months for soft drinks companies as demand picks up. Will this be the same again this year?
Major Trade Risks:
- The main risk to this trade is from any risk-off tones which will weigh on equity prices.
- A fast rise in US inflation could result in bond tapering which would potentially weaken PepsiCo’s share price if US interest rates are expected to rise.