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Comments from CEO Keith McCullough

In a consensus world that was begging for the next Big Government Intervention (and didn’t get it), dead cats can still bounce:

  1. DEAD CATS – in real-time risk management speak, crashing is defined by draw-downs of 20% or more vs a recent high; while the dead cats didn’t bounce in Asia overnight (China -21% YTD, India -25.2% YTD etc), we’re seeing the higher impact Correlation Crash bounce (European Equities and Commodities), sort of…
  2. EUROPE – contextualizing a dead cat’s bounce matters; don’t forget last week alone the CAC, MIB, and FTSE were all down between -5.9-6.3%, so a +30-90bps bounce is what it is – another round of lower highs. Fitch downgrading France actually still matters to insolvent French banks who are going to have the negative P&L impact of ratings uplifts going away (higher funding costs).
  3. COMMODITIES – amidst all of the final countdown to year-end markup fun (or are they markdowns?), Dr Copper is down another -0.7% this morning – that’s pretty sad considering Copper dropped -6.2% last wk; Brent Oil is now in a Bearish Formation w/ immediate-term downside to $101.98/barrel; Gold’s refreshed range = $1.

In between now and the end, Deflating The Inflation through King Dollar will be good for US Consumption. The only problem between now and whenever the Correlation Crash ends is real-time prices.




THE HBM: CMG, BWLD, BJRI - subsector fbr



CMG: Chipotle Mexican Grill’s co-CEO, Monty Moran, is making headlines as a champion of immigration reform.  The Wall Street Journal is highlighting Mr. Moran’s interactions with political leaders in Washington D.C. aimed at overhauling immigration policies in the U.S.


BWLD: Buffalo Wild Wings is featured in an article in the Wall Street Journal today, pitching it as a long idea and an alternative to Chipotle Mexican Grill which is, according to the article, too expensive.  The author does caution readers on the risk of rising wing prices but highlights higher EPS growth in (full year) 2009 despite elevated wing prices.  This article is lacking, in our view, in that it does not highlight the risks to analysts’ expectations which, we believe, are overly optimistic.  We remain bearish on BWLD for 4Q and – in particular – 1Q12.

BJRI: BJ’s Restaurants are testing a new limited-menu variant called BJ’s Grill which is about 4,500 square feet, around half the size of a regular BJ’s.  One of the most noticeable aspects of BJ’s Grill is the open kitchen, separated from the 150-seat dining room by clear glass, allowing guests full visibility.  Servers at the restaurant are piloting the use of wireless hand-held tablets to take orders.

THE HBM: CMG, BWLD, BJRI - stocks 1219

Howard Penney

Managing Director

Rory Green