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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Notes from CEO Keith McCullough

2 down days for the USD, 2 up days for Global Equities = Correlation Risk

  1. CHINA – not in headline news for the last few weeks but that doesn’t mean China’s growth slowdown (and implications to global growth) cease to exist; Chinese stocks got hammered overnight, closing down -3.3% close to their OCT lows (down -16.9% YTD). Thailand cut rates aggressively (125bps to 2.5%); expect more Asian rate cute (bullish for USD)
  2. EURO – just a pathetic week for European central planners and their currency’s credibility – rally to 1.34 is gone and now we’re testing intermediate-term lows of 1.32 again; bullish for the USD; bearish for Correlation Risk across Global Macro
  3. GOLD – down this morning because the US Dollar is up; this is a new correlation risk that’s developing and was only this high last in Q4 of 2008; immediate-term inverse correlation to USD now = -0.79 (vs TREND of +0.08). Liquidations and redemptions in the hedge fund business are significant and so is the gross and net long position in Gold. Selling what they can vs should.

Month-end is finally out of the way. Not a good month for most things other than the USD and Long-term Treasuries.

KM

SUBSECTOR PERFORMANCE

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QUICK SERVICE

MCD: McDonald’s Corporation’s “Monopoly” promotion is the subject of a federal patent infringement suit launched by LaserLock Technologies.  LaserLock initiated the suit in 2010 against WS Packaging Group, one of the largest label converting operations in North America.

BAGL: Einstein Noah Restaurant Group announced the acquisition of Kettleman Bagel Company, a five-store bagel chain in Portland, Oregon.  The acquisition of Kettleman is part of the company's strategic growth plan aimed at strengthening its competitive position within the Pacific Northwest market. 

CASUAL DINING

CAKE: The Cheesecake Factory was reiterated “Equal-weight” by Morgan Stanley following a meeting with management.

THE HBM: MCD, BAGL, CAKE - stocks 1130

Howard Penney

Managing Director

Rory Green

Analyst