EU CONSUMER STAPLES: Couche-Tard: pushes on
(ATDBCN: Baa1/BBB+)
(SVELEV; Baa2/A)
Emailed statement (bbg) o/n: "We have identified a potential divestiture portfolio of US stores. In collaboration with Seven & i, and to provide further assurance, Couche-Tard is having exploratory discussions with third parties to identify potential acquirers."
- This matches 7-11's statement earlier in the week that divestments to satisfy regulators (i.e. US FTC) was being investigated together.
- Founder Alain Bouchard alongside management will head back to Tokyo next week. Planned news conference for 13th March (bbg).
This situation remains live, even with Seven and i divesting $5.4b of assets this week, supply can be significant. If it only eyes the US business (which seven and i wants to spin-off) then we are looking at ~70% of group sales or ~55% of EBITDA. Keeping in mind the last bid for whole business was $47b, if we take a conservative $25b (equity value) for US only we could be looking at -1x lower spike on leverage (mid to high 4x) on a full debt funded deal.
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OUTLOOK: Price Signal Summary - EUROSTOXX50 Futures Bear Threat Remains Present
- In the equity space, Monday’s initial sell-off in the {US} S&P E-Minis contract and breach of support at 5948.00, the Jan 27 low, strengthens a bearish threat and cancels - for now - a recent bullish theme. An extension down would open 5892.37, 76.4% retracement of the Aug 5 - Dec 6 bull leg. Initial resistance is at 6069.00, Tuesday’s intraday high. Gains are considered corrective, however, a stronger rally would expose key resistance at 6178.75, the Dec 6 high. {EU} EUROSTOXX 50 futures have recovered from Monday’s low. However, the sharp reversal lower earlier this week signals the end of the recent bull run - for now - and the start of a corrective cycle. Price has traded through the 20-day EMA, at 5170.66. A resumption of the bear leg would pave the way for a move towards the 50-day EMA, at 5065.54. On the upside, key resistance and the bull trigger has been defined at 5327.00, the Jan 31 high.
US TSY OPTIONS: TYH5 109.00 Puts Sold
Pre-NY trade in the TYH5 109.00 puts sees ~8.6K lots change hands at 0-26 over multiple clips, initially triggered by a seller.
FOREX: USD/JPY Support Contains Drift So Far, But Downside Range Expanding
G10 FX continues to benefit from the broad USD weakness into the crossover - with the latest phase of USD sales helping EUR/USD through the 50-dma resistance at 1.0413. This narrows the gap with 1.0440.
- Core US yields remain a key driver of the move, as markets pick up the prevailing theme from late Tuesday
- JPY strength still stands out on the overnight wage numbers: The break lower today for USD/JPY marks a major technical shift and expands the downside range, with markets looking to 151.06 as the next significant support below 152.55 - a retracement that's currently containing the sell-off.
- Late January lows at 153.72 were twice tested, a level that coincided with the 50% retracement for the upleg posted off the December low, raising the significance of this morning's price action.
