Dollars and Jens
Monday, December 29, 2003
Mad cow
From down a bit in this article,
Dow industrials component McDonald's tacked on 41 cents, or 1.7 percent, to $24.50 after J.P. Morgan upgraded the fast food behemoth to "overweight" from "neutral." Analyst John Ivankoe feels the recent decline in the stock on concerns over mad-cow disease have created a buying opportunity.

"We believe mad cow will cause very slight consumer reaction beyond the immediate term - assuming discovery of future cases is limited - but that the downward pressure on beef prices will be immediate, erasing a previous investment negative for the restaurant industry in 2004," Ivankoe said in a note to clients.
As I read this, it is expected that consumer demand for beef will remain largely stable, so that there will be no loss of sales or pressure on prices of burgers, but that the price of beef will fall. What is causing the price of beef to fall if there is no fall in consumer demand? Does mad cow disease cause cattle to reproduce more quickly? Surely I misunderstand something.

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