THE HBM: YUM, WEN

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Comments from CEO Keith McCullough

 

Consensus expectations for a European solution were what failed this week – this will take time.

  1. CHINA – just a market mess in Asia overnight led by what we know - an acceleration in Growth Slowing in China – Industrial Production came in at +12.4% (lowest report since 2009) and inflation dropped, sequentially, inline w/ our model’s estimate at 4.2%. Deflating The Inflation (positive) will take time too. Chinese stocks hit a 33 month low (down -24.5% from YTD high).
  2. GERMANY – the most important Global Macro factor to solve for when analyzing a country = GROWTH. The Bundesbank cut their Growth estimate huge this morning for 2012 to 0.6% (from 1.8% prior). European Stagflation is what kills Equity multiples, and there is no central plan that can stop gravity (Growth Slowing). Next line of DAX support = 5776.
  3. RUSSIA – I’ve been up for 2 hrs and have yet to see or hear someone mention that the Russian stock market is crashing (that doesn’t mean it ceases to exist) – down -4.3% this morning and down -33.5% from YTD high confirming 2 Big Mac-ro calls we had yesterday: A) Strong Dollar and B) Cutting our Asset Allocation to Commodities back to 0%. Brent Oil snapped its TAIL line of $110.42.

 

With US Stocks down for both November and December, Santa is going to have to have one heck of a rally in the next 2 weeks for us to be wrong. I am hearing that central planners are considering moving the date on Christmas however.

SP500 support 1231; TAIL resistance 1270. Manage your risk around that range.

 

KM

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: YUM, WEN - subsector fbr

 

 

QUICK SERVICE

 

YUM: Yum! Brands was upgraded from Market Perform to Outperform at Bernstein.

 

WEN: Wendy’s tweet related to the annual promotion the company does to raise money for the Dave Thomas Foundation for Adoption was the most retweeted tweet in 2011.

 

THE HBM: YUM, WEN - stocks 129

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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