September 12, 2024 09:07 GMT
Tapestry (TPR; Baa2/BBB; double Neg) Court proceedings for injunction; day 3
CONSUMER CYCLICALS
Capri +7% vs. SPX +1%
Strong close again and moves it to pricing 58% chance of beating the FTC - it was at 42% to start the week and has rallied +36% (on px) from its train-wreck earnings (earnings which may now be a blessing).
On Wednesday FTC's economist said the cost to "consumer welfare" from the merger would be $365m/yr. The economist is modelling a +17% price hike on average and has TPR+CPRI holding a 58.3% market share in the "accessible luxury" handbag market.
To reiterate for TPR bonds this is all now effectively event risk and investors should be prepared to bear potential total return losses (-3.9pts on 31s). Above moves in the absence of a strong driver we see as noise and still see equities pricing coin-toss odds.
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