More From Phalguni Soni
Why investors are preferring high-quality debt
High-quality bonds can be an investor refuge when there’s market volatility. These securities provide relatively stable cash flows. The default probability is low.
Analyzing the Prospects of Nike’s Geographic Segments
Most of Nike’s (NKE) incremental revenue was recorded in its North America market, Nike’s largest geographical segment.
Wage Gains for Retail Trade Outpace Private Sector Payroll Gains
The pace of wage gains for the retail sector has been slower than growth rates experienced in pre-recession times.
Where NIKE And Under Armour Win In The Market Share Stakes
Under Armour’s share of the apparel market rose from 14% to 16%, year-over-year, in the first nine months of 2014.
CVS Health’s Stock Trades at Lower Valuations against Its Peers
CVS Health’s valuations have risen by 13.7% since the start of 2015. Valuations have risen by 6.8% since June 15, when the proposed purchase of Target’s pharmacies and clinics business was announced.
What key PMI indicators mean for stocks and investors
Last week, the Institute for Supply Management (or ISM) and Markit both released their reports on the Purchasing Managers Index (or PMI). The ISM’s report gave its strongest reading since February.
Lululemon: The Outliers Affecting LULU’s Stock Price Movement
On June 11, Lululemon Athletica (LULU) filed a shelf prospectus with the US Securities and Exchange Commission (or SEC).
What are the latest secondary market trends in leveraged loans?
As leveraged loans pay interest on a floating rate basis, the continued low rates environment in 2014 has compelled investors to pull funds out of the asset class.
Must-know update: Are retail sales poised for a spring surge?
For the week ended March 15, retail same-store sales grew 0.7% and 1.5% week-on-week and year-on-year, respectively.
Why SABMiller Rejected 3 Anheuser-Busch InBev Bids
The partial shares option structured with ABI’s proposal is not an advantageous option for many of SABMiller shareholders. This is due to the illiquidity of the restricted shares proposed to be issued by ABI under the option.
Will Walmart’s Store Closures Have a Big Impact on Fiscal 4Q16?
Walmart announced that it would close 269 underperforming stores in the United States and overseas. This number represents about 2.3% of Walmart’s global store count.
Why high-grade debt issuance increased more than three-fold
In the week ending August 8, weekly investment-grade bond (LQD) issuance surged by 222%, week-over-week to come in at $24.975 billion over 19 deals. Issuance was driven by refinancing older and costlier debt, acquisition related financing, share-repurchases, and other general corporate purposes.
Plosser on the use of Taylor-like rules in systematic guidance
In this part, we will discuss Dr. Plosser’s views on the use of systematic tools, for example, Taylor-like rules for setting policy rates and communicating these to markets.
Can Target’s Future Earnings Justify Its Stock Price Spike?
Target’s stock has risen 15.1% year-to-date to $83.60 as of March 30, 2016. Its stock price reacted positively to its fiscal 2016 earnings release.
Pre-Earnings Report: What We Can Expect from Coach in Fiscal 2Q16
Luxury handbag and accessory maker Coach (COH) is scheduled to declare earnings for the second quarter of fiscal 2016 on January 26.
Analyzing Target’s Profitability Record and Potential Gains
Target (TGT) has had one of the most consistent profitability records among consumer discretionary (XLY) companies.
Why issuers stayed away from high-yield debt markets
Issuance slowed to a trickle when market conditions were unfavorable in August. A number of transactions were either postponed, re-priced, or withdrawn from the market altogether. There was an increase in high-yield debt risk perceptions.
Must know: Stress tests and the likely timing for rate increases
On March 26, the U.S. Fed released bank stress test results indicating which banks can increase dividend payouts and share buybacks.
Home Depot Earnings Beat Wall Street in 27 of the Last 28 Quarters
Home Depot’s (HD) slated to report its 1Q16 earnings on May 19. The company has beaten consensus Wall Street estimates in 27 of the last 28 quarters.
Must-know: Ukraine, Europe, and a flattening Treasury yield curve
Economic data was positive for stock. This propelled the S&P 500 Index (SPY) (IVV) to record highs in the week ending August 29. Besides economic data, yields were affected by several other factors. These factors were stronger in determining Treasury yield movements last week.
Why the 26-week T-bills auction saw the lowest coverage in a year
The US Department of the Treasury held the weekly 26-week, or six-month, Treasury bills (or T-bills) auction on November 10. T-bills worth $28 billion were on offer.
Must-know: How will this week’s JOLTS report impact US debt?
JOLTS (the “Job Openings and Labor Turnover” report) produces monthly estimates of job openings, hires, quits, layoffs and discharges, and other separations.
Fed’s twin targets—are negative real interest rates needed?
The Federal budget deficit (the difference between budget collections and the government’s commitments) has also been a key source of uncertainty to both businesses and households.
Why coverage declined for 1-month T-bills despite higher bidding
Last week’s U.S. Department of the Treasury auction for one-month Treasury bills (or T-bills) was held on October 21. Treasury bills (MINT) worth $34 billion were auctioned, which was $1 billion more than the previous week. Despite the higher supply, the bid-to-cover ratio came in higher than the previous week, and market demand rose.
Home Depot Outlook Depends on the Consumer
If it’s to increase sales, in-store execution, omni-channel efforts, and better customer service will be critical for Home Depot (HD).
Is simpler and more transparent regulation better for investors?
Over the course of his speech, Plosser provided several reasons why simplicity and transparency can enable markets to price risks in a more informed manner.
The Rationale for Consolidation among Packaged Food Firms
Consolidation activity in the packaged foods space has been high. There have been multiple transactions in 2014 and 2015.
Lululemon’s Digital Update: e-Commerce Sales Climb in Fiscal 1Q17
In fiscal 1Q17. Lululemon’s (LULU) e-commerce sales rose by 16.7% to $97.6 million in the quarter, representing 19.7% of its revenue.
Labor market predominates again in deciphering extent of recovery
In this part, we will discuss Janet Yellen’s views on labor market slack, one of the “three broad questions” posed by the Fed Chair, the answers to which are likely to shape the future monetary policy.
Bid-to-cover ratio strong for 4-week T-bills despite high supply
For the August 19 auction, the U.S. Treasury auctioned one-month T-bills worth $50 billion—unchanged from last week. The high discount rate for the auction came in at 0.035%—down from 0.04% the previous week. Demand for the bills was stronger—the bid-to-cover ratio came in at 3.86x—compared to 3.73x last week.
Must-know trends that affect pricing at T-bill auctions
The U.S. Treasury holds weekly auctions for the four-week, 13-week, and 26-week Treasury bills. But its auctions for 52-week Treasury bills (SHY) take place only once a month.
Why Could Some of VFC’s Segments Face Sales Headwinds?
VF Corporation (VFC) expects sales headwinds from its Imagewear, Sportswear, and Contemporary Brand segments to impact its 4Q15 and 2015 results.
Important releases hone in on rates and consumer spending
The hottest topic for market players right now is the interest rate hike. Last week’s labor releases spurred the recovery. Many investors had thought the recovery was flagging.
Why direct bidding was strong for the 10-year T-notes auction
The US Department of the Treasury holds a ten-year Treasury (IEF) notes auction every month. The ten-year Treasury (UST) yield is a benchmark yield for financial markets.
Why 1-month Treasury bills see higher demand on indirect bids
The percentage of indirect bids to competitive bids increased, coming in at ~27%, compared to ~10% recorded in the July 8 auction.
Coach’s Stuart Weitzman Purchase: Why It’s Bad For KORS
Although Coach currently has a licensing deal with Jimlar for footwear, the Stuart Weitzman acquisition is likely to accomplish several objectives.
Mondelēz’s Sales Aspirations: Is Cheese and Grocery a Good Fit?
Mondelēz may be looking to sell its Europe cheese and grocery business. It plans to invest in profitable power brands as part of its transformation agenda.
How will this week’s consumption indicators impact debt securities?
This week, markets will be looking at any clues revealing hints for the outcome of the Fed’s next Federal Open Market Committee Meeting (or FOMC) slated for March 18–19.
Lululemon’s 2Q16 Revenue Rises 15.9% Despite Forex Headwinds
Lululemon Athletica (LULU) reported sales revenue of $453 million in 2Q16, up 15.9% year-over-year. Excluding the impact of adverse foreign currency movements, sales would have increased by 21%.
The Fed starts monetary tightening: What’s next for junk bonds?
Key implications of the Fed’s QE3 exit for junk bonds and leveraged loans The Fed’s policy statement at the end of its October Federal Open Market Committee (or FOMC) last week stressed the improving economy. In a first, it also mentioned that measures of labor market slack had reduced. The risk of inflation falling persistently […]
Can manufacturing activity in the northeast increase the pace?
The Philadelphia Fed will release the results of its Business Outlook Survey for June, on Thursday, June 19.
Why demand increased for the 3-month Treasury bills auction
Market demand for the three-month T-bills increased to ~24.3% of the competitive accepted bids. This was a result of higher bidding from indirect bidders.
Why smaller oil and gas firms are foraying into high yield debt
High yield debt markets saw $6 billion worth of new supply issued across 12 transactions in the week ending October 24.
Seeking fresh supply: Why pending home sales were flat in January
The indicator increased marginally, by 0.1% to 95 in January from an upwardly revised 94.9 in December, and came in 9% below January 2013’s reading.
Europe and China ready to jump-start their economies
Unconventional stimulus measures from central banks usually end up injecting liquidity in global financial markets. They’re especially relevant to emerging market economies.
Protect your returns by studying the key risks in bond investing
Since long-term bonds offer investors a longer and more certain income stream, the longer the maturity of the portfolio and the benchmark, the lower the income risk.
Must-know: Mid-cap companies that issued high-yield debt lately
AECOM Technology (ACM) is an engineering and construction company. It had the week’s largest issue. ACM plans to use the proceeds from the issue to repay existing debt.
How Markets Are Pricing Under Armour Stock
Markets expect the strong growth trend to continue, and value Under Armour stock higher than the overall market and comparable firms.
Why leveraged loans aren’t a win-win for issuers and investors
Leveraged loans are basically issued on a floating rate basis.
Will consumer spending affect the yield curve and Fed funds rate?
The Bureau of Economic Analysis will release its personal income and outlays report for March on Thursday, May 1. The report measures individuals’ income and expenditure levels.
Why high-grade bond issuance dropped to the lowest level in 2014
With the earnings season in full swing, issuance levels have fallen over the past few weeks—a number of corporate borrowers are subject to blackout periods preceding their quarterly earnings releases.
Must-know: Credit risk retention in securitization transactions
In its most basic form, securitization pools similar forms of debt—like credit cards, car loans, or real estate mortgages (IYR) (VNQ)—into special purpose vehicles (or SPVs). The cash flow from the debt in the SPV is divided into tranches. The tranches have different risk and return characteristics.
Which Businesses Are Expected to Drive VFC’s Sales Growth?
DTC channel sales’ contribution to VFC’s revenue pie is rising. It represents sales made online and through the company’s owned retail stores.
Must-know: Market’s reception of the Fed’s July FOMC statement
Treasury yields on the long-end of the curve, were down since the conclusion of the Fed’s last FOMC meeting on June 18—30-year and ten-year Treasury yields had fallen by 12 bps and three basis points (or bps), respectively over the period June 18 to July 30.
Why corporate bonds reacted to the QE3 exit and GDP surprise
Bond yields and prices move in opposite directions. Due to the increase in yields last week, returns on investment-grade bonds were negative.
Mondelēz’s Cheese and Grocery Business: A Performance Analysis
Mondelēz’s cheese and grocery category is the smallest consumer segment for the company. It earned 8.8% of total company sales in 2014.
March manufacturing releases are critical in assessing a recovery
The Purchasing Managers Manufacturing Index (or PMI) is based on a monthly survey of selected companies that provide an advanced indication of what’s really happening in the private-sector economy.
Why you need to look out for service purchasing managers’ indexes
Services consist of industries like banking, insurance, transportation, and scientific and technical services. The services sector accounts for almost 80% of the U.S. gross domestic product or GDP (Source: CIA).
Can Lululemon Boost Its Products through Management Changes?
In October and November, Lululemon Athletica announced several top-level management changes.
Coach Returns A Mixed Bag To Shareholders
Shareholders used to benefit from Coach’s strong results through both stocks and dividend payouts. But in the past few years, returns have been eroded.
Why does Richard Fisher advocate for Delphic forward guidance?
In this article, we’ll discuss Fisher’s take on Delphic forward guidance. According to Fisher, Delphic forward guidance is more obscure and enigmatic.
Web Performance May Usher In New Era for Walmart’s Sam’s Club
Walmart’s (WMT) Sam’s Club segment posted sales of $14.7 billion in 2Q16. That was down 0.9% compared to 2Q15. Results were affected by lower energy prices.
What Are Lowe’s Supply Chain and Inventory Management Policies?
Lowe’s inventory turnover came in at 4.1x in fiscal 2015 compared to 4.9x for Home Depot (HD).
Must-know: Janet Yellen’s take on the Fed’s forward guidance
Central bankers usually provide markets with indications about their economic projections. They also provide information about their future monetary policy stance. The Fed wants to reduce volatility (VXX) in markets by indicating its monetary policy stance. As a result, rate changes won’t surprise the markets as much.
How Does Lowe’s E-Commerce Performance Compare to Rivals?
Lowe’s (LOW) derived about 2.5% of its sales from the e-commerce channel, or an estimated $1.4 billion, in fiscal 2015.
How Digital Campaigns Are Powering Sales for Sportswear Firms
Nike (NKE) has a digital community of almost 70 million women around the world. What’s more, 54% of the runners logging a run in the Nike+ Running Club are women.
Why Lowe’s Is Bullish on Its Prospects in the Medium Term
Lowe’s (LOW) expects year-over-year sales growth in fiscal 2016 to come in between 4.5%-5%.
Restoration Hardware’s New Luxury Retail Mantra: Bigger Is Better
On its 1Q16 earnings call, Restoration Hardware unveiled RH Modern, a new luxury retail concept store. It will be six to eight times the size of its other stores.
Analyzing Earnings per Share Growth Trends for Mass Merchandisers
Target’s adjusted earnings per share came in at $4.69 in fiscal 2016, up by 11.3% YoY. That was higher than the retailer’s earlier guidance, which envisioned a range of $4.45–$4.65 in fiscal 2016.
Understanding Coach’s Marketing Strategies
To support its direct marketing initiatives, Coach has a database of 24 million households in North America and 10 million in Asia.
Why leveraged loan deals are seeing a strong calendar
Leveraged loans are commercial loans. They’re provided by a group of lenders. The loan is usually secured. It’s structured, arranged, and administered by investment and commercial banks—the arrangers. An example of an arranger is JPMorgan (JPM). Then, the loan is syndicated to other banks or institutional investors.
Can Under Armour’s Growth Model Cope With These Threats?
Key threats to the company include higher labor costs and greater regulation. After the Bangladesh factory tragedy, stricter regulations can be expected.
Why the Fed’s policy remains the key driver for US Treasuries
On August 15, yields on ten-year notes (IEF) and 30-year bonds (TBT) both fell by ten basis points to 2.34% and 3.13%, respectively. This was also their lowest level in over a year.
Why demand is rising for 3-year Treasury notes
The U.S. Department of the Treasury holds auctions for three-year Treasury notes (or T-notes) each month. Three-year notes are at the short-end of the yield curve.
Pricing Impact Of A Potential Staples-Office Depot Combination
Pricing pressures come from rival superstores as well as a variety of discount stores and online retailers. Therefore, a merger likely won’t result in higher prices for consumers.
Under Armour’s Upbeat Prospects for Direct-to-Consumer Sales
Retail and e-commerce sales—DTC or direct-to-consumer sales—are growing at a faster clip than the average growth rate for the company.
A guide to Yellen’s Delphic speech and the Odyssean FOMC guidance
In this article, we’ll discuss how the Fed’s Odyssean and Delphic guidance in March has impacted financial markets.
E-Commerce and Appliances Could Spur Home Depot’s Comps
Home Depot is projecting same-store sales growth of 4.1%–4.9% for full-year fiscal 2016. Its global comps were 6.1% and 4.2% in 1Q16 and 2Q16.
Home Depot Makes a Pro Play with Its Interline Brands Purchase
On July 22, The Home Depot (HD) announced that it had entered a definitive agreement to acquire Interline Brands.
Trian’s Track Record and Sysco’s Opportunity Set
Trian Fund Management and Nelson Peltz bring significant experience to Sysco (SYY) in orchestrating turnarounds. Trian’s track record includes transforming several large-cap consumer companies.
Why falling junk bond yields aren’t benefiting all issuers
Yields on high yield debt decreased by 24 basis points or 0.24% over the week ending October 24, to come in at 5.98%.
Why Skechers Is Thriving in a Competitive Footwear Market
Skechers grabbed the number two spot in the US footwear market last year. The company’s brands were also ranked number one in walking and work footwear.
Lululemon Shows Sports Apparel Is Outpacing Retail Sector Growth
Sports apparel as a category has been outpacing growth in 12 other retail segments for several months now. This should benefit sales for Lululemon (LULU).
Will VF Corporation’s Vans Brand Spur Higher Growth in 3Q15?
VF Corporation saw sales of $2.5 billion in 2Q15, up 4.7% year-over-year. Its performance was boosted by top brands The North Face, Timberland, and Vans.
What Led to Home Depot’s Record Results in Fiscal 2016?
Home Depot (HD) reported record results in fiscal 2016. Sales reached a new high of $88.5 billion in fiscal 2016, up 6.4% year-over-year (or YoY).
Under Armour’s Upbeat Outlook and Stock Price Performance
Under Armour’s (UA) stock price hit several record highs this year. The stock has provided total returns of 54.9% over the past year.
Walmex – Walmart’s Recent Initiatives In Mexico
Walmex also looking at higher sales through the e-commerce channel. It launched e-commerce in Mexico in 2013. The growth has been moderate.
Analyzing Treasury yields ahead of the Fed’s September 2014 FOMC
Markets chose to treat the less-than-satisfactory labor market data as a blip. Job creation had been very strong in 2014. Total non-farm payrolls had crossed pre-recession levels.
Can Walmart Beat Wall Street Expectations in 3Q16?
Walmart (WMT) is scheduled to release its earnings report for 3Q16 on November 17, 2015. Analysts project Walmart’s adjusted EPS to come in at $0.98 in 3Q16, a decline of 14.9% year-over-year.
Must-know: Why did the Indian rupee free-fall in 2013?
India’s current account deficit rose to 4.8% of GDP in 2012–2013, largely financed through hot money flows, and exceeded the government’s target level of 2.5% to 3% of GDP.
Why Walmart and Target Saw Same-Store Sales Growth in 3Q16
Same-store sales growth came in at 1.5% in 3Q16 for Walmart US compared to 0.4% in 3Q15. Target’s (TGT) same-store sales grew 1.9% in 3Q16, driven by both higher traffic and transaction size.
Coach Raises Guidance on Upbeat Results from Stuart Weitzman
Stuart Weitzman’s results were one of the brightest spots in Coach’s (COH) fiscal 2Q16 earnings release.
Costco Looks to Maintain Leadership with New Warehouse Clubs
Costco has grown its top line at a CAGR of 8.4% over the past five years. But revenue is projected to rise by only 4.3% to $28.6 billion in fiscal 2Q16.
Skechers’ China Sales Rise: What’s the Growth Outlook?
China has been an important element in Skechers’ success in international markets. Sales from China rose to $220 million in 2015 from $86 million in 2014.
Why Under Armour Expects to Take on More Debt to Fund Growth
As we discussed in the previous articles of this series, Under Armour (UA) is expecting to significantly grow both its top and bottom lines over the next few years.
Must-know: Future impacts of financial stability measures
The Fed currently uses considerable staff resources in monitoring financial markets for risks arising from financial instability.
Overview: High-yield debt market borrowers set new 2014 records
Despite a holiday-shortened week, issuance volumes for leveraged loans surged by almost 49%, week-over-week, to $21.3 billion.
Why investors piled into junk bond funds
High market volatility usually increases risk perceptions for junk bonds (PHB). This increases spreads and yields. As a result, bond prices decrease.
Can Project Jacquard Revive Premium Denim?
Google and Levi Strauss unveiled a new collaboration. It embeds touch-enabled interactive technology in fabrics. It may revive the denim industry.
Must-know: Key return drivers for high-yield bond ETFs
High-yield or junk bonds are issued by borrowers that have a lower ability to service their debt obligations. They’re rated BB+ and below—according to Standard & Poor’s credit ratings system.