Welcome to Talking Points for Tuesday, May 9. Boston’s Fed chief weighs in on possible interest rate hikes. Trouble is brewing for Budweiser. Meet the newest wind farm player off Martha’s Vineyard. Forget TSA patdowns, but beware the airport brawl. Plus Jon Chesto checks in with Gillette on its latest move in the blade wars.
Chesto means business
The nick of time: Gillette was famously late to the shaving club party, launching its own subscription service three years ago after being outmaneuvered by the likes of Harry’s and Dollar Shave Club.
But now the Boston-based blade maker is striking back, with the industry’s first order-by-text service. Employees gathered at the South Boston factory today to celebrate by watching thousands of colorful dominoes fall in an elaborate,Rube Goldberg-style publicity stunt.
The Gillette On Demand texting service was inspired by surveys of people who bailed on these subscription clubs -- Gillette’s and others. One reason they left: They ended up with too many blades. Cartridges piled up, for example, when consumers took vacations and changed their shaving routines. On Demand represents a third way to reach them, a step somewhere between traditional retail sales channels and the shave club.
The biggest knock on Gillette blades is the cost. While Gillette may offer a better shave, plenty of consumers would prefer to save money. Toward that end, parent company Procter & Gamble made an average 12 percent price cutacross various Gillette lines this spring. But will it be enough?
Gillette’s dominance in the US shaving industry is eroding. The business was P&G’s weak link in its April earnings report, with grooming division salesfalling 6 percent. Analysts peppered CFO Jon Moeller with questions about the decline during the quarterly earnings call.
Launching a texting service might be the sort of thing you would expect from a startup. To compete, the executives at P&G know they need to think like one.
Jon Chesto is a Globe reporter. Reach him at jon.chesto@globe.com and follow him on Twitter @jonchesto.
Executive summary
Rosengren talks rates: Can you ever have too much of a good thing? Boston Fed President Eric Rosengren seems to think so.
In a speech today, Rosengren said the rapidly dropping US jobless rate could dip below 4 percent. In Rosengren's opinion, the “natural” unemployment rate is 4.7 percent. We're at 4.4 percent nationally. Rosengren said that this sort of super-low unemployment, if it goes below 4 percent, could trigger inflation. In that case, the Fed would have to start immediate and rapid interest rate hikes get the economy back under control. Rosengren does not vote on policy.
Rosengren is not the first Fed president to speak on this subject this week. Yesterday, Federal Reserve Bank of Cleveland president Loretta Mester also said she's concerned the Fed will have to rapidly raise interest rates to tame inflation caused by a super tight labor market.
Brewing controversy: Remember the acclaimed Anheuser-Busch Super Bowl ad showing the company's humble beginnings? A lot has changed. State regulators claim the world's largest brewer gave away nearly $1 million in swag to bars and liquor stores to shut out their competitors.
The Alcohol Beverages Control Commission said Anheuser-Busch gave 441 bars and liquor stores everything from chrome-plated beer-taps to Budweiser-branded refrigerated coolers. Anheuser-Busch said it believed the items were provided lawfully and that it plans to contest the allegations.
Power play:
Watch out, Eversource, DONG, and Deepwater Wind. There’s a new player in the offshore wind farm battle taking shape off the Martha’s Vineyard coast.
Jon Chesto reports that Avangrid Renewables, an affiliate of Spain’s Iberdrola SA, has acquired a 50 percent stake in Vineyard Wind from Copenhagen Infrastructure Partners.
A state energy law passed last summer mandates the big utilities in Massachusetts to buy as much as 1,600 megawatts of power from offshore wind providers over an extended period of time. Eversource and DONG have already teamed up for one proposal, and Deepwater is pushing another.
The Vineyard Wind project is the third. CIP acquired the development rights last year right after the energy legislation became law. Iberdrola will bring important construction and operating experience to the mix, as well as its undisclosed financial investment in the project.
Cashing out: Are investors loosing faith in America?
Investors are cashing out of US stocks and moving billions into mostly European and some emerging market equities, where they hope to get better returns.
US equity funds saw an outflow of $22.2 billion during the seven weeks ending May 3. Money managers’ allocations to US stocks fell to a nine-year low in April. Meantime, first quarter net inflows into European funds were the most in five years.
Trending pick
Spirited airport clash: Cell phone video captured a brawl between airline officials, passengers, and police at the Fort Lauderdale airport. Spirit Airlines passengers were fed up after their flight was canceled -- part of a systemwide problem. The airline said a dispute with its pilots has resulted in hundreds of flights being canceled.
Line items
Hyperloop wants Boston-to-Providence ride in 20 minutes:
High-speed electric propulsion pod travel technology backed by Elon Musk -- BostInno
Hubspot and iRobot alumni launch Owl Labs with $6m funding:
Matrix Partners leads Series A round for video-conferencing startup -- BostInno
Hiring and turnover reports steady in March:
Jobs reports show economy maintaining momentum -- Wall Street Journal
Taxes on table to pay for $2b TrumpCare shortfall:
Dem leader says revenue may be needed to balance budget -- CBS Boston
NBC Universal wins 10 yr tax break from Needham:
$2m TIF toward headquarters construction -- Boston Business Journal
ICYMI
Drug test: The latest drug to treat multiple sclerosis is good news for patients. But as reported in today’s Globe, Ocrevus may present a serious threat to Cambridge-based Biogen.
Ocrevus was developed by San Francisco-based Genentech. It was the first drug approved by the US Food and Drug Administration for patients with primary progressive MS, which is the most severe form of multiple sclerosis. It also was shown to be effective against relapsing MS, the most common type, and the one treated by drugs already available.
While good for patients, Ocrevus’ success poses a challenge to Biogen. Less than six weeks after FDA approval, doctors are prescribing Ocrevus. While not tested against Biogen’s drugs, Ocrevus proved effective in trials. And it’s less expensive annually than other drugs on the market. Biogen’s MS drugs are a big part of its business -- $11.4 billion in revenue last year. Ocrevus’s quick success suggests it will eat into Biogen’s market share.
Talking Points newsletter is compiled by Edward Mason. Follow him on Twitter at @EBMason. If you like what you've read, please tell your friends to sign up.