EU CONSUMER CYCLICALS: Adidas; tariff impact
(A3/A-; Stable) (Equities -10%)
For Adidas supply chain exposure (by volume) to (Vietnam, Indonesia, China) is (27%, 19%, 16%) respectively (this is at group level including footwear and apparel). The three are facing (46%, 32%, 54%) tariffs respectively.
This is a industry wide issue; Nike Footwear (65% of group sales) has higher (50%, 27%, 18%) exposure and its Apparel arm (27% of group) has (28%, 16%, 15%) exposure. It is also stuck with higher NA exposure; 42% vs. Adidas at 22%.
On ~1/5th exposure to US, double digit sales growth last year, guidance for HSD sales growth this year and n/g 1.5x/2.5x levered balance sheet credit may be able to remain low vol (only +5-6 today). We'd note weaker margins (gross 50%, EBIT mid-5% - vs. Nike 12%) and levels (10y at MS+80) offsets some of that.
Lululemon: -13% (pre-market)
Under Armour: -10% (pre-market)
Nike: -10% (pre-market)
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OUTLOOK: Price Signal Summary - Gilts Remain Above Support
- In the FI space, Bund futures on Monday pulled back from their recent highs and the contract remains below last week’s peak. The move down undermines a recent bullish theme. A continuation lower would expose the next key support at 131.26, the Feb 19 low. Clearance of this level would be viewed as an important short-term technical break. Two important resistance points remain intact for now; 133.46, the Feb 28 high, and 133.71, the Feb 5 high.
- A bull cycle in Gilt futures remains intact - for now. The contract has recently traded higher and this highlighted scope for a test of resistance at 93.39, the Feb 13 high. It has been pierced, a clear break of it would open 93.83, the high on Feb 6 and a bull trigger. On the downside, key short-term support has been defined at 91.79, Feb 20 low. Clearance of this level would highlight a bear threat. First support lies at 92.57, the Mar 3 low.
FED FUNDS FUTURES: BLOCK: May'25 FF Sale
- -10,000 FFK5 95.775, sell through 95.78 post time bid at 0708:57ET. The May contract trades 95.785 last (+0.030)
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Mar05 $1.0294-10(E1.6bln), $1.0430-50(E1.3bln); Mar06 $1.0400-10(E1.7bln), $1.0440(E1.1bln), $1.0500(E1.5bln), $1.0535-50(E1.4bln)
- USD/JPY: Mar05 Y151.00($1.1bln), Y151.85-00($1.2bln)
- GBP/USD: Mar05 $1.2500-20(Gbp1.1bln)
- EUR/JPY: Mar05 Y161.75(E1.2bln)
- AUD/USD: Mar05 $0.6350(A$1.3bln); Mar07 $0.6300(A$2.2bln)
- NZD/USD: Mar07 $0.5795(N$1.1bln)
- USD/CAD: Mar05 C$1.4495-00($1.9bln); Mar07 C$1.4350-61($2.6bln)
- USD/CNY: Mar06 Cny7.2000($1.3bln), Cny7.2800($1.4bln); Mar07 Cny7.3600($1.3bln)
