THE HBM: EAT, RT, CBRL

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Jobs

 

The Change in Nonfarm Payrolls came in at 200k versus 155k consensus with gains in retail, manufacturing, construction, transport and others.  The unemployment rate came in at 8.5% versus 8.7% consensus.  The labor force participation rate was unchanged at 64% in December. 

 

 

 

Comments from CEO Keith McCullough

 

Don’t be perma-bearish or bullish in 2012. Be right.

  1. JAPAN – down -1.2% last night puts Japanese Equities into the cellar of the major/liquid markets for the 1st week of the year. Away from being grounded by Keynesian policy, Japan has more issues than Time Magazine – so watch this market (because consensus isn’t). Japan needs to rollover 31.2% of its sov debt in 2012 – that’s 3 TRILLION Yens (a lot of yens = $566B USD)
  2. GERMANY – both bunds and stocks starting to act like the fiscal champ Germany has become; no matter what the fanfare and/or finger pointing is here in the US re the Europeans, Germany’s employment and fiscal position is better than USA’s and now the DAX is holding TRADE and TREND lines of support. Haven’t bought it yet, but I will.
  3. TREASURIES – let the masses focus on whatever it is they flip to day to day; today, I’ll be focused on 1 line in the sand and that’s the intermediate-term TREND line of 2.03% resistance on the 10yr UST; a sustained close > than 2.03%, combined w/ repeated closes > 1267 for the SP500 will have me doing more of what I have been doing for a month (buying stocks, selling bonds).

 

Sold my Growth Slowing position in Fixed Income yesterday (US Treasury Flattener – FLAT = +28% gain). I’d held that position for a year and felt all warm and fuzzy about the buy-and-hold on conviction thing. Onto the next.

KM

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: EAT, RT, CBRL - subsector fbr

 

 

CASUAL DINING

 

EAT: Brinker is one of JPM’s Thomas Lee’s Best Ideas for 2012.

 

RT: Ruby Tuesday reported 2QFY12 EPS last night after the close.  Comps came in at -4.2% at company-owned restaurants while EPS was -$0.02 versus consensus -$0.05.  The company is now moving to a sale leaseback strategy and plans to close 5-7 company restaurants and 15-17 franchise restaurants in FY12. For the year, the company now expects EPS of $0.55 to $0.65 versus consensus of $0.59 for FY12.  3QFY12 EPS is expected to come in at $0.12-$0.16 versus consensus of $0.25.

 

CBRL: Cracker Barrel was downgraded to Market Perform at Raymond James.

 

THE HBM: EAT, RT, CBRL - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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