Story of the Week

Mars to acquire snack maker Kellanova in $36 billion deal

Mars will acquire Kellanova for $35.9 billion in cash, tying together some of the largest U.S. candy and snack brands, the companies announced. The M&M owner Mars is acquiring the Kellogg spinoff company for $83.50 per share, according to the press release. The addition of Kellanova, which separated from its parent company in 2023, will bring massive brands like Pringles and Cheez-Its to Mars’ snacking unit. “Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realization of our full potential and our vision,” said Steve Cahillane, chairman, president and CEO of Kellanova, in a statement. The move comes after Kellogg separated its business last year, with its cereal segment trading under WK Kellogg Co, and the remaining snacking and plant-based brands under Kellanova. Net sales in 2023 for Kellanova topped $13 billion.

Apparel & Footwear

On Holding’s 2024 Outlook Is On Track After Record Q2 Sales

On Holding had another stellar quarter as the Swiss brand continued to defend its prime spot in the ultra-competitive running market. In the second quarter, the running shoe company reported record net sales of 567.7 million Swiss francs, up 27.8 percent from the same period a year ago. (Sales increased 29.4 percent on a constant currency basis.) Q2 gross profit margin was 59.9 percent, which was up from 59.5 percent in the year-ago period. Net income came in at 30.8 million Swiss francs, and adjusted diluted earnings per share increased to 0.14 Swiss francs from 0.04 Swiss francs a year ago. Adjusted EBITDA was 90.8 million Swiss francs.

Victoria’s Secret Names Hillary Super CEO, Hiring Savage x Fenty Exec

Rihanna clearly borrowed something from Victoria’s Secret & Co. when she launched into lingerie with Savage x Fenty. Now Victoria’s Secret has returned the favor by hiring away Savage x Fenty’s chief executive officer Hillary Super as its own CEO, putting her in charge of one of fashion’s most high-profile reinventions. Super starts on Sept. 9 and takes over from Martin Waters, who’s leaving the company. Donna James, chair of Victoria’s Secret, said in a statement that Super would “power the business’ next chapter and deliver the foremost tenet of our transformation strategy: accelerating growth in our core business in North America.”

Powered by Coach, Tapestry’s Q4 Earnings Top Wall Street Estimates

Tapestry Inc. — in the midst of a fight with the Federal Trade Commission to keep its $8.5 billion deal to buy Capri Holdings — topped Wall Street’s estimates in a fiscal fourth quarter that illustrated how the parent of Coach, Kate Spade and Stuart Weitzman could benefit from the deal. Net income for the quarter fell 28.9 percent to $159.3 million, or 68 cents a share, from $224.1 million, or 95 cents, a year earlier. However, adjusted earnings of 92 cents a share came in better than the 88 cents analysts projected, according to Yahoo Finance.

 

 

Athletic & Sporting Goods

Extraordinary Brands Expands Fitness Footprint with Acquisition of Neighborhood Barre

Extraordinary Brands announced the acquisition of Neighborhood Barre, marking the fourth boutique fitness brand to join the fast-growing fitness conglomerate alongside Premium Service Brands. Neighborhood Barre is rooted in the brand’s commitment to delivering results-driven classes for all fitness levels and now stands alongside pūrvelo cycle, Eat the Frog Fitness, and Row House in the expanding lineup at Extraordinary Brands.  Neighborhood Barre was founded and created in 2011 by Katy Richardson, with the first studio in Knoxville, TN. There are currently 22 studios open and several in development. The unique workout combines the elements of dance conditioning, Pilates, and resistance training, offering a comprehensive fitness experience suitable for all fitness levels.

Equinox Group’s Blink Fitness Unit Files for Bankruptcy to Facilitate Sale

Blink Fitness, Equinox Group’s low-cost gym chain subsidiary, has reportedly filed for Chapter 11 bankruptcy protection.  Blink Fitness said it had “decided to execute an efficient and value-maximizing sale process to optimize its footprint and position the business for long-term success.” To facilitate the sale process, Blink voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the District of Delaware.  Throughout its sale process, Blink said it “intends to continue to provide members with the high-quality fitness experience they have come to expect. The company remains committed to its recently announced strategic initiatives to reinvigorate its most popular gyms, elevate its member experience and deepen its community connections, with a continued focus on democratizing fitness for all.”

Cosmetics & Pharmacy

Crown Laboratories and Revance Announce Entry Into Merger Agreement

Crown Laboratories, Inc., a privately held, global innovative leader in the skincare industry, and Revance Therapeutics, Inc., a biotechnology company aimed at setting the new standard in healthcare with innovative aesthetic and therapeutic offerings, announced that they have entered into a merger agreement pursuant to which the companies seek to merge the two complementary organizations. Under the terms of the agreement, which has been unanimously approved by Revance’s Board of Directors, Crown will commence a tender offer to acquire all outstanding shares of Revance’s common stock for $6.66 per share in cash, representing a total enterprise value of $924 million. “This is a significant step forward in Crown’s vision to become a fully integrated global aesthetics and skincare company, bringing innovative solutions to physicians, patients and consumers in the incredibly dynamic aesthetics and skincare market,” said Jeff Bedard, founder and Chief Executive Officer of Crown.

e.l.f. Beauty Reports Strong Q1 Results

e.l.f. Beauty forecasted lower-than-expected annual sales and profit for 2025, citing concerns over potential tariff hikes on imports from China if Donald Trump returns to power, leading to a 10% drop in its share price. While the company reported a robust 50% increase in Q1 net sales, reaching US$324.5 million, and an adjusted profit of US$1.10 per share, it acknowledged the possibility of raising prices due to expected tariffs and rising transportation costs. CEO Tarang Amin noted that the tariff impact could primarily affect the company in fiscal 2026. Despite strong quarterly performance, the company’s cautious outlook reflects broader market concerns about potential trade policy changes and their impact on supply chain costs, which could dampen consumer demand for e.l.f.’s affordable products.

Morphe Cosmetics Sold to Forma Brands

Morphe Cosmetics has been sold to Forma Brands UK Limited. This sale preserves the brand’s online and wholesale operations, ensuring that Morphe continues to serve its customer base. The sale was confirmed by Mark Blackman and Benjamin Wiles of Kroll, appointed Joint Administrators on July 31. Unfortunately, due to unsustainable market conditions and high rent obligations, Morphe’s eight retail stores, including one in Holland, have been closed immediately. Despite this, the parent company, Forma Brands LLC, has ensured that all impacted staff receive an enhanced redundancy package.

The Honest Company Posts Strong Q2 Results Amid Strategic Growth

The Honest Company reported robust financial performance for Q2 2024, with a 10% revenue increase, reaching US$93 million, and significant gross margin improvement. CEO Carla Vernón highlighted the company’s success in adhering to its “Transformation Pillars,” resulting in the highest quarterly revenue and a gross margin of 38.3%. The company also reported a narrowed net loss of US$4 million compared to US$13 million in the same period last year, with adjusted EBITDA turning positive at US$8 million. With US$37 million in cash and no debt, The Honest Company raised its full-year 2024 outlook, expecting mid-to-high single-digit percentage growth in revenue and adjusted EBITDA between US$15 million and US$18 million.

 

US prestige beauty sales sparkled, while mass remained flat in H1

US prestige beauty sales rose 8% year over year to $15.3 billion in the first half of 2024, while mass beauty sales were flat, according to Circana. The performance indicates “an accelerated bifurcation” in beauty, Larissa Jensen, global beauty industry advisor at Circana, said in a statement, as consumers continued to seek “elevated value” within prestige. Makeup continues to be the largest category in prestige. Sales grew 5% YoY, while mass makeup sales dipped 4%. Standout segments in prestige include lip balms and oils, liquid blush, and stick foundation and eyeshadow, while lip gloss and liner boosted sales in mass.

Discounters & Department Stores

Walmart e-commerce sales surge 21%, but profitability remains elusive

Walmart’s second quarter consolidated revenue rose 4.8% year over year to $169.3 billion, the retailer said in a recent earnings announcement. Total operating income was $7.9 billion, up 8.5%. U.S. net sales rose 4% to $115.3 billion from a year ago. Global e-commerce sales grew 21% and rose 22% for the company’s U.S. business segment. U.S. comparable sales, excluding fuel, rose 4.2%, which Chief Financial Officer John David Rainey credited to strong traffic and unit growth across stores and digital. Walmart also issued Q3 guidance and raised its full-year outlook. The retailer forecasts third-quarter net sales will increase 3.25% to 4.25%. Full-year net sales are now expected to increase 3.75% to 4.75%, up from the prior outlook of a 3% to 4% increase.

 

Dillard’s Q2 disappoints as net income plunges

Dillard’s reported that total retail sales, excluding its construction business, fell 5% to $1.4 billion; comps also fell 5%, a 300 basis point decline from the previous quarter, per a UBS analysis. Cosmetics performed best in the period, with accessories, shoes and men’s apparel the weakest, according to Dillard’s financial filing. Retail gross margin contracted to 39.1% from 40.4% last year. The Southern department store in June closed its Eastwood Mall Clearance Center in Niles, Ohio; it now runs 273 Dillard’s stores, including 28 clearance centers, across 30 states.

How Target made grocery a $24B business

Target says its food and beverage business is booming, with sales growing by more than $8 billion since 2019, to $24 billion, the retailer shared in a blog post and video August 7. Food and beverage items are in more than 55% of shopper baskets, indicating that the grocery category helps drive trips to the retailer, John Conlin, Target’s senior vice president of merchandising for food and beverage, said in the video. Digital grocery sales are also hot for Target. Online sales for food and beverages have grown more than tenfold since 2019. In fiscal Q1, Target’s digital comparable sales grew 1.4% compared to the same period last year, with pickup growth fueling the nearly 9% increase in same-day services.

Walmart opens ocean shipping network to marketplace sellers

Walmart’s ocean shipping service is now generally available to all Walmart Fulfillment Services sellers, according to a LinkedIn post from Scott Humanek, senior director of the retailer’s global inbound program. Walmart Marketplace sellers can now use the retailer’s cross border ocean shipping solution to transport China-made goods to the company’s U.S. fulfillment center network. “Our pilot exceeded our expectations in terms of feedback and volumes, and we are excited to the let the world know that [Walmart Cross Border] is ready to help all [Walmart Fulfillment Services e-commerce] sellers grow your business in the [Walmart Marketplace],” Humanek said.

 

 

Emerging Consumer Companies

Warby Parker notches highest e-commerce growth in 13 quarters

Building on a plan introduced at the beginning of the year, Warby Parker announced its e-commerce business has returned to growth. Revenue from that segment of its business grew 4.4% year over year in the second quarter, while revenue from its stores grew 17.8%. Overall, the company’s net revenue increased 13.3% year over year to $188.2 million and its gross margin improved 140 basis points to 56%. Warby Parker also narrowed its losses during the period, with operating loss improving 50.9% from the year-ago quarter to about $9 million and net loss decreasing 57.5% to $6.8 million.

 

Unified Commerce acquires Greats from Steve Madden

Unified Commerce Group, the direct-to-consumer operator that owns Spiritual Gangster and Frank And Oak, has acquired Greats, the born-in-Brooklyn sneaker brand, from Steve Madden, which itself bought the business in 2019. As part of the deal, Madden will take a stake in the Unified business. Unified also made a strategic investment in Utah-based womenswear retailer Böhme, which was founded by Vivien and Fernanda Böhme and has 14 stores across Utah, Idaho, Montana and Arizona.

 

 

Food & Beverage

Tilray to acquire 4 craft beer brands from Molson Coors

Cannabis company Tilray Brands has agreed to acquire four craft beer makers from Molson Coors: Hop Valley Brewing Company, Terrapin Beer Co., Revolver Brewing and Atwater Brewery. Tilray CEO Irwin Simon said in a statement the purchase will allow the company to “drive revenue, generate cost synergies, and expand national distribution reinforcing our leadership position in craft beer.” Last August, Tilray acquired eight beer brands from AB InBev, becoming the fifth largest craft brewer in the U.S. with a 4.5% market share in the category. The move comes as cannabis companies seek to diversify their product portfolios to achieve new revenue flows.

Conagra Brands acquires premium meat stick brand Fatty

Conagra Brands purchased Sweetwood Smoke & Co., the maker of Fatty Smoked Meat Sticks, for an undisclosed amount, the Chicago company said in a statement. The packaged food giant said Fatty is positioned as a premium, better-for-you product. It contains responsibly sourced grass-fed beef, antibiotic-free pork and does not have gluten, unnecessary sugars, nitrates and MSG. Since Sean Connolly took over as Conagra’s CEO in 2015, he has doubled down on the company’s strong presence in snacks and frozen foods while reconfiguring its portfolio to accelerate growth.

Buyout firm acquires Glenn Wayne Bakery

Tide Rock, an unlevered buyout firm, announced its acquisition of Bohemia, NY-based Glenn Wayne Bakery, a family-owned and operated wholesale manufacturer of baked goods including donuts, muffins, Danish, pastries, cookies and brownies. Established in 1990, the bakery’s commitment to efficient operations and quality has allowed it to become a nationwide distributor of baked goods. “From our humble beginnings in a 1,000-square-foot building, we have always prioritized innovation and quality,” said Glenn Alessi, one of the founders of Glenn Wayne Bakery. “Over the years, we’ve invested heavily in building a strong business with high-quality products, operationally efficient processes and well-run facilities.

Upside Foods sues Florida over cultivated meat ban

Since cultivated meat’s entry into the U.S. market in June 2023, the product has sparked debate. So much so that Florida Gov. Ron Desantis, who signed a law on July 1, said that cultivated meat “is designed to be a threat to agriculture as we know it” and the state was “snuffing this out at the beginning.” Now, the Institute for Justice, a nonprofit, public interest law firm, has partnered with Upside Foods, one of the leading cultivated meat companies, to challenge the Florida law, which bans the production, distribution and sale of cultivated meat products.

 

 

Grocery & Restaurants

Starbucks replaces CEO Laxman Narasimhan with Chipotle CEO Brian Niccol

Starbucks announced on August 13th that it’s replacing CEO Laxman Narasimhan with Chipotle CEO Brian Niccol, sending its stock soaring 24.5%, its best day ever. Chipotle’s stock fell over 10% on the news that Niccol would leave after a successful tenure at the burrito chain. Narasimhan’s departure is effective immediately. Starbucks CFO Rachel Ruggeri will step in as interim chief executive until Sept. 9, when Niccol officially assumes the top job. Narasimhan took over as chief executive in March 2023.

Scott Boatwright named Chipotle’s interim CEO after Niccol departure

Scott Boatwright has been named Chipotle’s interim chief executive officer in the wake of Brian Niccol’s departure for the CEO role at Starbucks, effective Aug. 31. Boatwright has served as Chipotle’s chief operating officer since 2017 and has been instrumental in driving restaurant operations for the company’s more than 120,000 employees at over 3,500 restaurants. Also, with the news of Niccol’s departure, chief financial officer Jack Hartung has agreed to remain with the organization indefinitely as president of strategy, finance, and supply chain to ensure a smooth transition. In this new role, he will support Boatwright and continue his current oversight of Adam Rymer, vice president of finance and incoming CFO, as well as Carlos Londono, global head of supply chain. Hartung previously announced his intention to retire from Chipotle in 2025 after serving as CFO since 2002. The company noted it will continue to execute its strategic plan without interruption.

Home & Road

Home Depot expects sales to weaken as consumers grow more cautious

Home Depot topped quarterly expectations, but cautioned that sales will be weaker than expected in the back half of the year as high interest rates and consumer uncertainty dampen demand. The home improvement retailer said it now expects full-year comparable sales to decline by 3% to 4% compared with the prior fiscal year. It had previously expected comparable sales, a metric that takes out the impact of store openings and closures and other one-time factors, to decline about 1%. Home Depot’s total annual sales will get a boost from its recently completed acquisition of SRS Distribution, a company that sells supplies to professionals in the landscaping, roofing or pool businesses.

Veteran-owned S.C. retailer closing after half a century

Whit-Ash Furnishings, founded by brothers and military veterans Whitney and Gerry Black, is going out of business after 52 years. Planned Furniture Promotions is handling the sale details for the retailer, founded in 1972. “Whit-Ash is one of the most respected retailers in our industry,” said Tom Liddell, senior vice president of PFP. “We feel honored that Whitney and Gerry chose PFP to manage this important event, and we will ensure this sale maintains their impeccable reputation.” Whitney Black founded Whit-Ash Furnishings in 1972 after returning from military service in Vietnam, leaving behind a career in professional photography. His brother, Gerry joined the business in 1973 after his own military service.

Jewelry & Luxury

Spot Gold Price Hits $2,500, Setting New Record

The spot price of gold set a new record on August 16th, inching past the $2,500 mark, to briefly hit $2,500.99 an ounce. At the time of publication, the spot price of gold was trading just under $2,500, at $2,499 an ounce. The new benchmark was not unexpected, especially after gold futures hit $2,500 the prior week. Still, it’s yet another indication of the ongoing strength of the yellow metal. Its spot price first crossed the $2,100 mark in December 2023, and initially hit $2,400 in April. A J.P. Morgan note from mid-July predicted gold would be the best-performing commodity this year. It pointed to a number of reasons for bullion’s remarkable resilience, even though the bank admitted that the rally has “come earlier than expected.”

Pandora Calls Its U.S. Business “Robust”

Pandora’s latest financial results showed its hot streak continuing, with like-for-like sales rising 8% and U.S. comps growing a strong 5% in the second quarter. The Copenhagen-based company said its overall revenue in the quarter ended June 30 was 6.7 billion Danish kroner (approximately $986 million), up 15% from that period last year. Revenue in the U.S. jumped 14%. On a conference call following release of the financial report, CEO Alexander Lacik said Pandora is pushing ahead with its goal of being perceived as a “full jewelry brand,” which sells more than charms. “We have always had a wide variety of collections, but that hasn’t been the consumer perception,” he said. “We are moving away from specific product-centric marketing to driving desirability and affinity to the entire Pandora brand.

Bloomingdale’s to Buy, Sell Pre-Owned Luxury Goods Via Rebag

Bloomingdale’s, a division of Macy’s Inc., is partnering with luxury resale platform Rebag to offer secondhand handbags, watches, and fine jewelry. The collaboration will democratize the luxury goods market, said the companies, while promoting “sustainability and circularity.” Customers can shop a curated selection of more than 2,500 designer handbags, watches, and fine jewelry online at Bloomingdales.com. More than 500 items will be available in five Bloomingdale’s locations. There will be Rebag areas on the accessories floors of stores in The Mall at Short Hills in New Jersey; the location in White Plains, New York; Town Center in Boca Raton, Florida; Westfield Fashion Square in Sherman Oaks, California; and Fashion Valley Mall in San Diego.

Luxury-goods brands fear their golden goose — China — has been grounded

Liu Wenning wanted to get his girlfriend of four years a ring for China’s Valentine’s Day, which was Saturday, August 10th. Because of China’s tepid economy and Liu’s precarious employment at a Beijing internet firm, he concluded that spending so much during insecure times would be beyond irresponsible. “We went to a movie and dinner instead. I’m lucky that she [his girlfriend] understands the difficulty in China’s current economy,” he said. China, once a cash cow for luxury brands, has lost its appetite, or ability, to consume in the current financial climate. Last month, leading luxury brands reported huge declines in their China sales, walloping their bottom lines.

 

Office & Leisure

Party City taps turnaround vet as CEO

Party City on August 12th said that it has tapped turnaround veteran Barry Litwin to be president and chief executive officer. Litwin most recently was CEO of Global Industrial Company, which manufactures and sells commercial and industrial supplies. Before that he was CEO of photo retailer Adorama, and has also had executive stints at Sears, Office Depot, Avnet and Fannie May Candies. Chief Commercial Officer Sean Thompson had been serving as interim CEO since Brad Weston left the post last year following Party City’s bankruptcy.

Toy sales stabilize in first half of year

Toy sales performance is in a different place than it was a year ago. Last year, sales in the category dropped due to a number of factors including inflation, depleted customer savings and rising consumer credit card debt. While the first part of 2024 has been strong, Circana warns that some of those same factors may trip up the second half of the year. “With toy sales beginning to stabilize in 2024, the tide is turning for the industry as we are moving from a state of correction to one of consistency,” Juli Lennett, vice president and U.S. toys industry adviser at Circana, said in a statement.

Keywords acquires Wushu Studios

Keywords Studios has acquired Wushu Studios for an undisclosed sum. The Liverpool-based studio was founded in 2017 by Alan McDermott and provides work-for-hire services to publishers and developers in addition to porting, remaster, and live support services. Wushu has worked on games including Baldur’s Gate 3, Fall Guys, Forza Horizon 5, The Ascent, and State of Decay 2. “The acquisition aligns with our strategy to build our game development offer globally,” said Keywords CEO Bertrand Bodson. “We now have two studios in Liverpool which is a key regional hub for talent in the UK.

Video game industry faces sluggish 2024 sales growth, Newzoo says

The global video game market is set for sluggish annual growth this year amid weak sales of gaming consoles, according to a new report from market research firm Newzoo. In a recent blog post, Newzoo said the games industry is set to grow 2.1% year over year to an estimated $187.7 billion. That is slightly down from an earlier January forecast in which the firm said it expects the video game industry to grow 2.8% to $189.3 billion in 2024. Almost half of all consumer spending on games in 2024 is expected to come from the U.S. and China, Newzoo said, with the U.S. generating $47 billion of sales and China accounting for $45 billion. Though it’s a step up from last year’s growth rate of 0.6%, the games industry isn’t experiencing the same growth rates it saw in the heady days of the Covid-19 pandemic. Newzoo’s principal games market analyst, Michiel Buijsman, said despite the sluggish growth expected in 2024, next year is expected to be a major one for the gaming industry.

Technology & Internet

Alibaba earnings miss expectations despite cloud acceleration

Alibaba missed top- and bottom-line expectations for the June quarter of 2024 as it continues to face headwinds in its core e-commerce business amid rising competition and a cautious Chinese consumer. Revenue was up 4% year on year, while net income dropped 29%. Alibaba said the net income fall was “primarily due to a decrease in income from operations” and “increase in impairment” from its investments. Alibaba has been looking to reignite growth after a tumultuous 2023, when it carried out its largest-ever corporate structure overhaul. This was followed by high-profile management changes, with Eddie Wu taking over the reins as chief executive in September. The e-commerce giant has been grappling with a cautious Chinese consumer, along with increased competition from rivals such as JD.com and Temu owner PDD. Since taking over the reins, Wu has been trying to get Alibaba’s core China e-commerce business back on a stable footing. It’s currently going through a transition phase where the company is planning to put more focus on third-party merchants selling via its platforms — Taobao and Tmall — in China, while reducing reliance on its direct sales business.

Trove Acquires Recurate to Expand Resale Market Presence

Branded resale company Trove has acquired Recurate, a “significant” player in its industry. “This acquisition underscores Trove’s commitment to making branded resale more accessible and easier to launch and scale for brands,” the company said in a Tuesday (Aug. 13) news release. The deal, Trove said, integrates its capabilities like store trade-ins, digital trade-ins, returns processing and non-new inventory management, with Recurate’s peer-to-peer expertise, operational network and Shopify integrations. The acquisition, the company added, gives Trove command of 75% of U.S. branded resale traffic, as well as 29 new brands, including Steve Madden, Frank & Eileen, Frye, Coyuchi, Clare V. and Michael Kors. “Branded resale is increasingly proving its value, not only as an environmentally sustainable initiative but also as a profitable business strategy,” the release said. “Trove’s branded resale programs, known for driving revenue growth, attracting new customers, and improving margins, can now launch in as little as four weeks and scale effortlessly to any level.”

 

Finance & Economy

Consumer spending jumped in July as retail sales were up 1%, much better than expected

Consumer spending held up even better than expected in July as inflation pressures showed more signs of easing, the Commerce Department reported.  Advanced retail sales accelerated 1% on the month, according to numbers that are adjusted for seasonality but not inflation. Economists surveyed by Dow Jones had been looking for a 0.3% increase. June sales were revised to a decline of 0.2% after initially being reported as flat.  Excluding auto-related items, sales increased 0.4%, also better than the 0.1% forecast.  There was also good news on the labor market front: Initial unemployment benefit claims for the week ending Aug. 10 totaled 227,000, a decrease of 7,000 from the previous week and lower than the estimate for 235,000.

 

Three-year inflation outlook hits record low in New York Fed consumer survey

Consumers grew more confident in July that inflation will be less of a problem in the coming years, according to a New York Federal Reserve report that showed the three-year outlook at a new low.  The latest views from the monthly Survey of Consumer Expectations indicate that respondents see inflation staying elevated over the next year but then receding in the next couple of years after that.  In fact, the three-year portion of the survey showed consumers expecting inflation at just 2.3%, down 0.6 percentage point from June and the lowest in the history of the survey, going back to June 2013.

 

The big ‘carry trade’ unwind is far from over, strategists warn

It’s too early to give the all-clear to the rapid unraveling of “carry trades,” strategists have said, warning investors that the unwind may still have further room to run. Carry trades refer to operations wherein an investor borrows in a currency with low interest rates, such as the Japanese yen, and reinvests the proceeds in higher-yielding assets elsewhere. The foreign exchange strategy has been hugely popular in recent years, particularly as investors expected the Japanese yen to remain cheap and for Japanese interest rates to remain low. However, the yen-funded carry trade began aggressively unwinding last week, as interest rate hikes by the Bank of Japan strengthened the yen — and led to a dramatic sell-off in global markets.