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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Notable news items and price action from the restaurant space, as well as our fundamental view on select names.

MACRO

This morning, jobless claims were above 400k yet again, coming in at 418k.  While this was in line with consensus at 420k, it shows that the employment scenario is still far, far away from improving meaningfully.  4-week rolling claims declined slightly week-over-week but remain elevated at 425k. 

TALES OF THE TAPE: KKD, SBUX, MCD, CPKI - jobless claims77

Wheat prices dropped again yesterday as U.S. weather improved and Russia moved to resume its exports.

QUICK SERVICE

  • KKD’s largest holder Mohamed Abdulmohsin Al Kharafi & Sons files form 144; registers to sell 2.3M shares.
  • SBUX was downgraded at Goldman Sachs to Neutral from the Conviction List.  YUM was downgraded to sell on China uncertainty while the restaurant space was downgraded to Neutral from “Attractive” on valuation.
  • SBUX price target was target raised at Credit Suisse to $46 from $44. FY11 EPS lowered to $1.54 from $1.55 v. Reuters $1.50 and FY12 EPS reduced to $1.92 from $1.97 v. Reuters $1.80.
  • SBUX Baristas at outlets in Chile plan to strike on Thursday because their wages are so low that they cannot afford to buy lunch, the Wall Street Journal reported Wednesday. This would mark the first strike at a Starbucks-owned store in Chile.
  • MCD is rated Buy by Bank of America, the price target was raised to $96 from $85.


FULL SERVICE

  • CPKI’s acquirer, Golden Gate Capital, has completed the tender offer for California Pizza Kitchen.

TALES OF THE TAPE: KKD, SBUX, MCD, CPKI - stocks 77

Howard Penney

Managing Director

Rory Green

Analyst