CONSUMER STAPLES: Campari Group (CPRIM: unrated) says US spirits weakness lingers
Sep-16 08:12
- Campari CEO flagged continuing US weakness into the 3Q on Friday and later clarified it was in reference to the whole sector not company. It saw a firmer +3.5% growth in 1H US sales vs. Pernod -9% (year to June) and Diageo -3% (year to June). Its stock closed -6% and peers Diageo (-2%) & Pernod Ricard (-3%) were weak (SXXP +0.8%).
- We are cautious on the sector after weak trends and open ended guidance. Still Diageo priced 3-part next to AB-Inbev curve late last month - which surprised us (AB-Inbev is wide moat; largest & highest margin brewer).
- Guidance from the 3 spirit players below and please note the pending brewer/Carlsberg M&A supply- we expect £1.8b cash short-fall (financed through a bridge facility) to be refi'd eventually.
- Pernod; FY organic sales to reverse back to growth (after organic -1%/reported -4% to June) and sustain organic EBIT margin (28.4% last year, +80bps yoy).
- Campari; Outperform industry but ability to expand gross margin will be limited. It will roll over (from 2H last year) a gross 56.7% and adj. EBIT 17.7% margin.
- Diageo; consumer environment continuing to be challenging - when it improves we will see organic net sales return (reported -0.6% on -3.5% volume fall for year ending June). Expects EBIT margin pressure to continue (contracted -130bps to 29.6% in year ending June).
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USDCAD TECHS: Corrective Cycle
Aug-16 20:00
- RES 4: 1.4048 High May 22 2020
- RES 3: 1.3977 High Oct 13, 2022
- RES 2: 1.3856/3946 High Aug 6 / 5 and bull trigger
- RES 1: 1.3755 20-day EMA
- PRICE: 1.3708 @ 16:14 BST Aug 16
- SUP 1: 1.3689/57 Low Aug 14 / Low Jul 17
- SUP 2: 1.3589 Low Jun 11 and a key support
- SUP 3: 1.3547 Low Apr 9
- SUP 4: 1.3478 Low Apr 4
The trend condition in USDCAD remains bullish and the latest pullback still appears to be a correction. However, note that price has breached an important support at 1.3730, the 50-day EMA. An extension lower would undermine the bull theme and highlight scope for a deeper retracement towards 1.3657, the Jul 17 low. On the upside, a confirmed reversal higher would refocus attention on 1.3946, the Aug 5 high and key resistance.
AUDUSD TECHS: Has Breached Moving Average Resistance
Aug-16 19:30
- RES 4: 0.6799 High Jul 11 and key resistance
- RES 3: 0.6744 High Jul 18
- RES 2: 0.6693 76.4% retracement of the Jul 11 - Aug 5 bear leg
- RES 1: 0.6643 High Aug 14
- PRICE: 0.6641 @ 16:12 BST Aug 16
- SUP 1: 0.6565 Low Aug 12
- SUP 2: 0.6508/6350 Low Aug 8/ 5 and the bear trigger
- SUP 3: 0.6339 Low Nov 10’23
- SUP 4: 0.6315 Low Oct 31 ‘23
AUDUSD continues to trade at its recent highs. From a short-term perspective, the latest recovery still appears to be a correction, however, price has traded through both the 20- and 50-day EMAs. A continuation higher would undermine a bearish theme and signal scope for stronger gains, towards 0.6693, a Fibonacci retracement. For bears, a reversal would refocus attention on 0.6530, the Aug 5 low.
COMMODITIES: Gold Soars to Fresh Record High Above $2,500
Aug-16 19:21
- Gold soared to a fresh all-time-high on Friday, notably rising above the psychological $2,500/oz mark. The rise follows US data indicating inflation slowed last month while retail sales surged, easing recession worries while strengthening expectations the Federal Reserve can begin easing in September.
- "Gold's data dependency remains paramount, as jobs, inflation, and economic data all have the potential to clarify the Fed's path and future monetary policy," a strategist at RBC Capital Markets, said in a note.
- The technical break above $2483.7, the Jul 17 high and bull trigger resumes the uptrend. The initial target of note is $2528.4, the 3.00 projection of the Oct 6 - 27 - Nov 13 price swing.
- WTI crude futures have weakened 1.7% on the session, keeping the front-month contract roughly flat week-on-week. Notably, Commerzbank revised their oil price forecast downwards on weak China demand with Brent at $85/bbl and WTI at $80/bbl by year end.
- OPEC+ has succeeded in fine tuning its supply to support prices, but planned cut unwinding could create downward pressure, according to Platts.
- For natural gas, Henry Hub has pulled back to its lowest level since Aug. 9. Indications of cooling weather, robust production levels, and a continued - albeit shrinking - storage surplus have added pressure.
