Malcolm Knapp released the estimates for August 2011 casual dining comparable restaurant sales and guest counts this morning.


Knapp Track casual dining same store sales increased a meager 0.1% in August.  On a weather-adjusted basis, comparable sales gained 0.7%, implying a 60 basis point impact from the effects of the hurricane during the last week of the month.  Comparable guest counts for August declined -1.5% after three months of traffic gains.


In a break from tradition, the full text report was preceded by a short email with the August estimates. We will publish the usual monthly post, with more specifics, when we receive the full Knapp Track report later on.  These initial numbers are significant, though, because they indicate significant sequential declines in two-year trends for both comparable sales and guest counts.  Even if one includes the weather adjustment, comparable sales came in light in August.


TXRH and BWLD are two casual dining names we like on the short side.



Howard Penney

Managing Director


Rory Green



No change to September forecast of HK$20-22BN, up 35-48% YoY



Last week’s performance was similar to that of the week before with average daily table revenue increasing from HK$675MM to HK$690MM. Our September GGR forecast remains at $HK20-22BN, up 35-48% YoY.  Market share has normalized a bit but MPEL is still way above at 17.9% MTD and up from its post GM share of 15.1%.  Wynn also picked up a few points in a likely low hold month for them but share remains way below recent trends.



Higher-Lows: SP500 Levels, Refreshed

POSITION: Long Utilities (XLU)


It’s sad but it’s true. Provided that the SP500’s immediate-term TRADE line of 1180 holds, I need to cover some high quality short positions ahead of the next Keynesian policy idea. Gaming policy is the game. I will continue to play the game that’s in front of me.


Today I covered our short position in Industrials (XLI) so that makes me only long from a Sector Risk perspective. Across all 3 of our core risk management durations (TRADE, TREND, and TAIL), these are the lines that matter most to me now: 

  1. Long-term TAIL resistance = 1266
  2. Immediate-term TRADE resistance = 1225
  3. Immediate-term TRADE support = 1180 

Higher-lows on the immediate-term TRADE duration are bullish. Lower-highs on the long-term TAIL are bearish. I don’t need to reconcile why (Growth Slowing isn’t a new thesis) inasmuch as I need to maintain these two competing thoughts in my melon and remain actively selling high and buying low.




Keith R. McCullough
Chief Executive Officer


Higher-Lows: SP500 Levels, Refreshed - SPX

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Notable macro data points, news items, and price action pertaining to the restaurant space.






University of Michigan Confidence came in at 57.8 for September versus expectations of 57.




National restaurant chain companies have ethanol tax subsidies in their crosshairs as they push lawmakers to end the Volumetric Ethanol Excise Tax Credit as a means to help reduce the country’s debt, according to




Food processor stocks have been performing strongly over the last two weeks, outperforming peer subsectors on a one-day, one-week, and two-week duration.  Food retail stocks underperformed .


THE HBM:  WEN, SBUX, YUM, KONA, BWLD, CHUX - subsectors fbr





WEN CEO Brolick appeared on CNBC this morning, showcasing the new burger and discussing the company’s prospects.  He underscored growth outside North America as a goal for the company.  Brolick sees same-store sales up 1-3% this



SBUX CEO Howard Schultz, speaking in Madrid, said that Brazil is a “big opportunity” for the company and also sees more stores in Western Europe over the long-term.


YUM is the best company to work for in China, according to Fortune magazine. 





KONA, BWLD, and CHUX gained on accelerating volume Friday.





Howard Penney

Managing Director


Rory Green



TODAY’S S&P 500 SET-UP - September 19, 2011


As we look at today’s set up for the S&P 500, the range is 41 points or -2.71% downside to 1183 and 0.66% upside to 1224.






THE HEDGEYE DAILY OUTLOOK - daily sector view


THE HEDGEYE DAILY OUTLOOK - global performance




  • ADVANCE/DECLINE LINE: +53 (+1586) 
  • VOLUME: NYSE 1813.53 (+88%)
  • VIX:  30.98 -3.1% YTD PERFORMANCE: +74.54%
  • SPX PUT/CALL RATIO: 1.87 from 1.28 (+46.1%)



  • TED SPREAD: 35.13
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 2.08 from 2.08     
  • YIELD CURVE: 1.90 from 1.88


MACRO DATA POINTS (Bloomberg Estimates):

  • IMF/World Bank annual meetings this week
  • FOMC begins two-day meeting tomorrow
  • 10 a.m.: NAHB Housing Market, est. 15, prior 15
  • 11:30 a.m.: U.S. to sell $29b 3-mo., $27b 6-mo. bills



  • EU, IMF inspectors to hold call today with Greek Finance Minister to judge whether Greece is eligible for next aid payment due next month
  • Greek PM George Papandreou canceled U.S. visit that was to begin today
  • AT&T said to approach smaller rivals including MetroPCS, Leap Wireless to sell spectrum, subscribers in bid to save $39b takeover of T-Mobile USA
  • Conagra has said it will withdraw Ralcorp takeover offer unless talks start by today; Ralcorp said not willing to begin them
  • President Obama said to call for $1.5t in tax increases mostly targeting the wealthy over the next decade as part of a plan to cut the U.S federal deficit by $3t
  • GM, UAW reach tentative agreement on 4-yr contract, including $5k bonus for workers; Ford, Chrysler next
  • UTX said to be exploring possible bid for Goodrich
  • Boeing postponed next week’s inaugural delivery of the 747-8 freighter after Cargolux Airlines declined to accept the planes
  • Facebook said to unveil a media platform that will allow people to easily share their favorite music, television shows and movies, NYT says
  • EIA releasing world energy supply and demand projection through 2035
  • Netflix plans to separate its DVD-by-mail service from movie streaming, rename it Quikster
  • UBS said Oswald Gruebel will remain as CEO, boosted estimate of trading loss to $2.3b
  • Siemens drops plan to cooperate with Russia’s Rosatom in field of reactors
  • "Lion King 3D’’ tops N. Amer. box office; “Modern Family” wins 5 Emmys
  • Google Wallet may be introduced today, TechCrunch says 
  • No IPOs expected to price today



THE HEDGEYE DAILY OUTLOOK - daily commodity view




  • Copper Falls to Nine-Month Low in London on Europe Debts, China
  • Hedge Fund Boxer Hall Says Gold to Extend Gains: Commodities
  • Crude Drops to One-Week Low on Signals Oil-Demand Growth Slowing
  • Commodities Fall as Copper Touches Nine-Month Low; Gold Gains
  • Wheat Drops to Lowest Price Since July as Rain Falls in Texas
  • Gold May Gain in New York as European Debt Concerns Boost Demand
  • Freeport Indonesia Resumes Mining as Grasberg Workers Return
  • Hedge Funds Raise Oil Wagers Most Since March: Energy Markets
  • LNG Surges as Japan Vies With China, Exxon’s Shipments Grow
  • Zinc May Fall After Failing to Top Average: Technical Analysis
  • Funds Cut Bullish Commodity Wagers on ‘Contraction’ Concern
  • Wheat Exports From India May Be Capped 500,000 Tons, Group Says
  • Corn, Soybeans May Fall on Higher U.S. Yields, Economic Woes
  • Teck’s Lindsay Favors Coal Mine Expansion as Industry M&A Booms
  • Coffee Falls as European Stockpiles Are High; White Sugar Slides
  • Shipper Navios Outperforms Parent on Soy Trade: Argentina Credit
  • World Corn Growers Top U.S. Farms on Exports: Chart of the Day




THE HEDGEYE DAILY OUTLOOK - daily currency view





THE HEDGEYE DAILY OUTLOOK - euro performance





THE HEDGEYE DAILY OUTLOOK - asia performance





THE HEDGEYE DAILY OUTLOOK - mideast performacne



Howard Penney

Managing Director




In preparation for CCL's 3Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.




  • Orders Include a 132,500-Ton Ship for Costa and Two 125,000-Ton Vessels for AIDA
    • 3,700 passenger ship for Costa scheduled for delivery in Oct 2014
      • All-in cost is 150k euros per lower berth
  • Two 3,250 passenger ships for AIDA scheduled for delivery in Mar 2015 and Mar 2016
    • All-in cost is 140k euros per lower berth
    • The delivery of the new Costa ship in fall 2014 is expected to replace capacity from the sale of certain older Costa ships beginning with the sale of Costa Marina, which will leave the fleet in November 2011. In the third quarter of 2011, the company will record a loss on the sale of approximately $0.02 per share.





  • “A 10% change in the price of fuel for the remaining half of 2011 represents a $0.14 per share impact. And with respect to FX, a 10% change in all currencies relative to the U.S. dollar for the remaining half of 2011 would impact our P&L by $0.16 per share.”
  • “Costa, with a significant commitment to MENA ports of call in 2011, was by far the most affected of our company. Other brands were also affected by MENA, but to a much lesser degree.”
  • “The redesigning of the MENA cruises and offering them at greatly reduced prices was clearly the greatest contributor to reduced European revenue yields.”
  • “Most of the reduced North American revenue forecast relates to MENA and Japan, with the balance attributable to lower-than-expected pricing from Mediterranean cruises. This was partially offset by better-than expected pricing for – in Alaska and other cruise lines.”
  • “Fleet-wide local currency pricing for the second half bookings is nicely higher year over year, more significantly so for North American brands and slightly higher for EAA brands. Occupancies for the second half of the year are lower, slightly lower for North American brands and lower for EAA brands. Looking at the booking window over the last six weeks, however the picture is showing solid improvement on a fleet-wide basis. The booking volume is significantly higher year over year for North America and EAA, and with stronger pricing for North America brand and lower pricing for EAA brands.”
  • “We are greatly encouraged with the recent strength of our North American brand performances here, that is from a bookings standpoint, which bodes well for our 2012 business outlook.”
  • “With respect to our exposure to Greece, it looks like roughly 8% or 9% of our capacity touches Greece in the back half of the year”
  • [Alaska] “Capacity was reduced after the referendum passed. Took a number of years for that reduced capacity to actually roll through. And I think that has helped. And second, historically when Europe weakens, those people that are looking for sightseeing destinations, Alaska becomes a very positive alternative. And so Alaska winds up benefiting from the negative issues that occur when North Americans travel into Europe. And you’ve got the combination of that, plus higher airfares to Europe, which are not quite the case to Seattle and Vancouver. You put all that together, and they wound up to be a very, very strong Alaska season.”
  • “We’re seeing a couple of percentage points improvement in onboard spending. We’re expecting, on a normalized basis, a couple of percent for the year. And really it’s – I think I said this on the last call – it’s across all categories of onboard except for the casinos. And we talked about the challenges that we have with the casinos. So nothing’s changed much from March guidance or the June guidance in terms of onboard….we expect to be 2% higher this year in yield.”
  • “The reality is that we made a move to merge the back office of Seabourn into Holland America, for example, and create significant cost synergies that we disclosed earlier. But the costs of all that was in the first half of this year, where all the redundancy payments and everything was done the first half of this year, and all the synergies will flow through the second half of next year. A similar thing we’re working on in Australia, between Princess Australia and Princess – and P&O Australia. Similarly, we merged our two different hotel businesses in Alaska, and that happened this spring, and the synergies hopefully will flow through next year. So you’ve got these kinds of things happening that can give you a bump in a quarter or two, but hopefully over the long term, keep us closer to zero than zero – inflation.”
  • “It’s been strong across the board. Stronger at better pricing, at higher prices in North American brands, and stronger at lower prices for certain of our European brands that are trying to fill their ships, especially the southern Europe brands. But overall the volumes have been strong, which is very encouraging.”
  • “We’re very encouraged by what we’re seeing, even at the luxury end. So the premium luxury cruises, and even the contemporary products in North America, the demand is very strong right now.”
  • “I think the only area that I think is a little bit disappointing, but it’s also the MENA effect is the European business for the North American brands, which started off very, very strong and then seemed to have tapered off during this period of the political unrest. And so we lost a little bit of momentum. But the impact of that is, to be honest with you, is not all that significant in the overall numbers.”

3Q 2011

  • “Turning to the third quarter, capacity in the third quarter is expected to increase by 4.8%. 3.3% of that is in North America, 7.2% for EAA brands. On a fleet-wide basis, third quarter occupancies are running slightly behind last year, with fleet-wide local currency pricing nicely ahead year-over-year, despite the challenges in Europe. That’s the current picture. For North American brand capacity, in the third quarter is 36% in the Caribbean, which is down from 41% last year, 25% in Europe, an increase from 17% last year, and 23% in Alaska, which is about the same as last year.”
  • “Pricing for North American brand business in the third quarter is well ahead of last year on the same year-over-year occupancies. And booking volumes for the last six weeks have been strong with very little inventory left to sell. More specifically, pricing for Alaska itineraries is running significantly higher than last year. Pricing for Caribbean itineraries is lightly better than a year ago, which is a nice improvement from the first half of the year. And pricing for North American brand European itineraries is lower than a year ago.  We are forecasting that North American brand pricing for the third quarter will be nicely higher than a year ago.”
  • “EAA brand capacity is 83% in European itineraries. At the present time, EAA local currency pricing is slightly ahead of last year on lower occupancies. EAA brand bookings over the last six weeks have been strong with pricing running lower than a year ago. Despite all the challenges in Europe, we are currently forecasting that EAA revenues will come in only slightly lower than last year by the time the third quarter closes.”
  • “We are forecasting third quarter local currency yields to be higher, in the 1% to 2% range, driven by stronger North American brand yields.”

4Q 2011

  • “On a fleet-wide basis, capacity is up 5.8%, 3.2% of North America, 10% for EAA brands. Local currency pricing on a fleet-wide basis for the fourth quarter is nicely higher year-over-year to the similar pattern to the third quarter. Occupancies are lower than last year, slightly lower for North American brands, and lower for EAA brands. North American brands are 42% in the Caribbean, down from 50% last year, 14% in Europe versus 9% last year and 10% in Orient Pacific, which is about the same as last year. The balance of the itineraries in various other places. Pricing for North American brand itineraries in the fourth quarter is nicely higher than a year ago, and the booking volume for North American brands in the fourth quarter continues to be strong. By the time the fourth quarter closes, we expect North American brand pricing to be nicely higher. EAA brands are 71% in Europe versus 64% last year, with the balance in other itineraries.”
  • “Fourth quarter local currency pricing for EAA brands at the current time is higher than a year ago, but given the current lower occupancy versus last year, we expect EAA pricing on a local currency basis for the fourth quarter to continue to decline. While booking momentum has picked up, it has been at the lower price point, so by the time the quarter closes, we expect EAA local currency pricing to be lower than a year ago.”
  • “On an overall fleet-wide basis for the fourth quarter, similar to the third quarter, we are forecasting higher local currency revenue yield driven by the stronger pricings from the North American brands.”

 1Q 2012

  • “For the first quarter of 2012, capacity is 5.5% higher than last year, 4.5% in North America, 7.2% in EAA brands. At the present time, on a fleet-wide basis, local currency pricing is nicely higher with occupancies running slightly behind last year.”
  • “For North American brands, we are 65% in the Caribbean, which is about where we were last year, with the balance in various other itineraries. Caribbean pricing is nicely higher than a year ago on slightly lower occupancies. Pricing for all other itineraries is also higher than a year ago, also at slightly lower occupancies. EAA brands are 22% in the Caribbean, about the same as last year, 20% in Europe, down from 23% last year, 18% in South America, up slightly from 16% last year, and 40% in a variety of other itineraries around the world. For all EAA itineraries taken together, local currency pricing is slightly higher than a year ago at slightly lower occupancies.”
  • “From an overall fleet-wide standpoint, booking volumes and pricing in the last six weeks for the first quarter of 2012 have been strong. And at this time, it appears that Q1 is off to a good start.”
  • "But for Q1, they reposition a number of cruises away from the Med. They repositioned an additional ship down to South America for this winter and the first quarter, another ship into the Caribbean. All sourced from the European market, by the way, and they made a few other – and those ships came out – the knock-on effect is those ships came out of the Middle East or North Africa. So there’s less dependence in the first quarter on those itineraries."


  • “I do not have the deployment by market for 2012. I can tell you that our North American brands’ capacity is up 3.5% and our European brands’ capacity for next year is up closer to 8%. From an industry perspective, we are showing North America up less than 3% and Europe up 6%. But that is, again, brand sourcing, European passengers, not necessarily the deployments.”

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