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    MARKET EDGES

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

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Comments from CEO Keith McCullough

Raging European bears are begging for bad news and they just aren’t getting it 4 days into the year, yet…

  1. ASIA – after 2 solid up days to start 2012, the 3rd was not a charm – China down -1.4%, HK -0.8%, and India -0.5% reminds us that Equity market bottoms are processes, not points. December data implies growth slowing at a slower rate in Asia (but it’s still slowing).
  2. GERMANY – shaping up on the long side after really impressive employment data this wk (6.8% unemployment rate for DEC amidst the mayhem) and a better than bad Services PMI this morn (52.4 DEC vs 52,7 NOV). German 10yr bond auction was solid too.
  3. 10YR – really bullish for German Bunds to see 4.06B of 10yr paper printed 4bps below 10yr UST’s (1.93% on Bunds vs 1.97% on USTs). I’m watching 10yr UST’s like a hawk for a confirmation that Growth’s Bottom (2011 Slowdown) is in. I’d need to see a sustained breakout > 2.03% to sell my TLT and keep ramping up Global and US Equity exposure (moved to 12% Global Equities yest).

Don’t be perma-anything but permanently managing real-time risk.

KM

SUBSECTOR PERFORMANCE

THE HBM: DNKN, MCD, CMG, YUM, WEN, SBUX, GMCR, BWLD, PFCB, CAKE - subsector fbr

 

QUICK SERVICE

DNKN: Dunkin’ Brands today announced that it signed a “long-term agreement” with National DCP LLS to be the exclusive procurement and distributor of its products to help with its rapid expansion.  National DCP is a Dunkin’ Donuts franchisee-owned cooperative.

DNKN: Dunkin’ Brands raised to Neutral versus Sell at Goldman.

CMG: Chipotle Mexican Grill was added to the Conviction Buy List at Goldman. The PT is $400.

YUM, WEN: Yum! Brands and Wendy’s are not well-positioned in 2012, according to Goldman. Both stocks are rated Sell.

MCD: McDonald’s has launched a geotargeted promotion that uses mobile ads to reach potential customers in an effort to boost McCafe beverage sales and in-store traffic.

SBUX: Starbucks has named Ian Cranna as its new UK marketing chief following the promotion of Brian Waring, who previously held the post, to an international role.

GMCR: Green Mountain was reiterated “Buy” at Canaccord Genuity with a PR of $94.

CASUAL DINING

BWLD: Buffalo Wild Wings was down yesterday as a note from Oppenheimer suggested elevated earnings risk in 2012.

PFCB: P.F. Chang’s was upgraded to “Buy” at Miller Tabek & Co.  The twelve-month price target is $38.

CAKE: The Cheesecake Factory is a Sell in 2012, according to Goldman.

THE HBM: DNKN, MCD, CMG, YUM, WEN, SBUX, GMCR, BWLD, PFCB, CAKE - stocks

Howard Penney

Managing Director

Rory Green

Analyst