After the market closed yesterday, Capri Holdings (CPRI), a judge ruled against the planned sale to Tapestry (TPR). In response, the stock plunged by over 50%, while TPR stock should gain at least 10% this morning.
The judge granted the Federal Trade Commission’s motion for a preliminary injunction. In April, the FTC said that the deal would eliminate needed competition in the accessible luxury market. The brands involved are Coach, Kate Spade and Michael Kors.
The court found that the proposed merger had anticompetitive harm.
When CPRI stock opens at around $21 today, it will trade at prices not seen since the pandemic in 2020.
In the aerospace sector, Boeing (BA) has elevated risks. Despite offering a 35% pay hike to its workers, 65% of the union members rejected the deal. The six-week strike will continue.
The union’s pressure on Boeing creates a problem for the central bank. Higher wages are the biggest culprits of inflation. If more workers in the industry follow, wage levels will spiral higher, feeding permanent inflation. It would force the Fed to raise interest rates at an emergency meeting.
Investors should avoid BA stock. The rising operating costs are not sustainable. Customers will leave, citing concerns about Boeing’s product quality.
