EU CONSUMER CYCLICALS: US retailers
Mar-12 14:43
S&P500 +0.2%, YTD -5%
- VF (-1%) was in the green briefly this morning but has reversed. We will circle back we are assuming earnings growth when we see value on it, so there is concern that equities have taken -35% off in the last month. Bloomberg card data is pointing to weak sales YTD. This doesn't always translate to earnings (as 2Q earnings last year proved) given it only tracks DTC sales in the US. DTC only makes up half the group sales (rest in wholesale) and similarly US only half. Both have been the weaker performing segments for it. Still trades on growth multiple (vs. peers).
- PVH (-1.4%) still no support after -38% slide YTD. Despite low leverage and levels, we would encourage caution till earnings. Ongoing IG/HY decompression is impacting names like VF and will make PVH less attractive on relative value.
- Birkenstock (+2%) bouncing after a -25% slide in the last month. We have little concern for the name. We would need to see another circa ~100bp sell-off in rates to move the call to 2029 (currently working out to 1yr). We hope to see refi supply.
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US OUTLOOK/OPINION: Unrounded Core CPI Estimates Centered On 0.3% M/M
Feb-10 14:41
- Due Wednesday at 0830ET, consensus sees core CPI inflation at a seasonally adjusted 0.3% M/M in January.
- The below unrounded estimates are firmly centered on that with a median 0.30% M/M or average 0.29% M/M, with a range of 0.22-0.37% M/M. It would be an acceleration from the 0.23% M/M in December, assuming no revisions in the annual update due to be released simultaneously.
- The limited early estimates for core PCE inflation at this stage average 0.29% M/M in January for a firmer acceleration from the 0.16% M/M in December.
- Whilst these estimates would see core CPI right on the cusp of rounding either to 3.1% or 3.2% Y/Y after the 3.24% Y/Y in December, well-known base effects would see a larger moderation in core PCE (from 2.79% to 2.58% Y/Y in the hypothetical case with no revisions).
USD: USDJPY is paring gains
Feb-10 14:38
- Worth keeping an aye on the USDJPY, Bond futures are extending gains, Yields are moving lower.
- The USDJPY saw another volatile overnight session, a function of the Dollar on US Tariffs risks, and had already printed a 151.16 low Overnight, although the initial support is still seen at 150.93 Low Feb 07.
- USDJPY is down to 151.65 at the time of typing.
US TSY FUTURES: BLOCK: March'25 5Y Buy
Feb-10 14:35
- +6,800 FVH5 106-16.75, buy through 106-16.5 post time offer at 0927:48ET, DV01 $280,000. The 5Y contract trades 106-17.25 last (+2.5).
