EU CONSUMER CYCLICALS: Pandora | RV
(Baa2/BBB)
Our lowest beta pick among retailers, Pandora, has moved through Kering for the first time ever - on both the 3y and 5y.
In the 5 years since Covid the affordable Jeweller has increased sales by +45%, earnings by +36% and added €8b in market cap, tripling its value. Meanwhile Kering has grown sales 8%, halving earnings to achieve that (-47%) and wiping €55b in market cap.
Pandora was a reference point for us beyond which Kering will not have any close comp's to justify the width. We will circle back on it. Please keep in mind high-beta earnings 1.5 months away.
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BONDS: BTP Block trade, BTP/Bund spread falls below 100.00bps
BTP Block trade, suggest buyer:
- IKM5 1.66k at 119.34.
The Italian BTP is still outperforming, BTP/Bund spread ticks just below the 100.00bps handle.
FOREX: USD Slips, FX Strategy in Focus in Light Data Day
- An early phase of USD weakness came alongside reports that the US and South Korea had discussed FX policy as part of trade talks - a standout report considering negotiations with both Japan and China has explicitly not covered currency issues. The move in the greenback was isolated to currency markets given the relative stability in equities and the front-end of the US curve. EUR/USD showed to a new weekly high in response, but USD/JPY is more notable - the price is close to fully erasing the entirety of the China-triggered rally from early Monday morning on healthy volumes.
- USD/JPY slippage Wednesday confirms the bearish technical bias for the pair. A further reversal lower would refocus attention on 142.36, the May 6 low, below which April's pullback low comes into contention.
- EUR/AUD is firmer off lows into the NY crossover, however price printed a fresh monthly low at 1.7248 overnight, keeping focus on 1.7198, the 61.8% retracement of the upleg posted off the February low. A further stabilisation for equities here could see this level come under pressure.
- The data slate is clear Wednesday, leaving more focus on Trump's extended visit to the Middle-East and the central bank speaker schedule - Fed's Waller, Jefferson, Daly and Goolsbee are all set to make appearances, as well as ECB's Villeroy and Holzmann.
- Trump is continuing to talk up relations with Gulf allies, while adding further pressure to Tehran to conclude their commitment to nuclear weapons development in return for closer and freer ties with Western markets. Further negotiations between Tehran and Washington are set for the coming days - progress within which would represent any de-escalation of geopolitical tensions.
SONIA: Put Ladder buyer
SFIM5 95.90/95.85/95.80p ladder, bought for 1.5 in 3.88k.
