What's going on?

Coca-Cola�s stock had its worst day in almost 2 years as the company reported results on Wednesday that�fell flat.

What does this mean?

Coke�s stock had done very well going into these results – so it�s somewhat the victim of high expectations. That being said, the struggle for Coke is very real. Sales in emerging markets were hurt by weak economies (like Brazil). Also, the profits from the overseas sales it�did make are worth less when translated back to America due to the strong US dollar (yes, the dollar has been weakening recently but it�s still much higher than one year ago). The company did, however, �innovate� by introducing smaller bottles that cost you more per ounce (nice trick�). Lastly, Coke has a bright spot in �still� beverages like sports drinks and tea – you know, the �healthy� stuff.

Why should I care?

For markets: The world we live in is increasingly challenging for Coke. The world�s economic growth doesn�t appear to be picking up � and so it�s difficult for a global company to significantly increase its sales. Also, the world is becoming healthier. While Coke owns a lot of non-carbonated brands and its growth in that area is strong, it�s unlikely that Coke has the same brand advantage in still drinks that it has in carbonated drinks. And so it must convince investors that it can profitably dominate the new world of discretionary drinks.

For you personally: Coke and Pepsi are great examples of why you should care about the global economy. Emerging markets have had a rough time lately� do you care? Well, if you own Coke or Pepsi stock, you sure do. And that is true for almost every big western company. Understanding the global economy is extremely important to understanding investments in large, multi-national companies. �