THE HBM: YUM, GMCR

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Gasoline Use

According to MasterCard Inc., U.S. Gasoline demand fell by 1.4% WoW and 4.1% YoY to the lowest level in more than seven years of records.

 

Comments from CEO Keith McCullough

Romney wins big and continues to be a Stable/Strong US Currency trade. Obama is going to have to deal w/ that too:

  1. HANG SENG – in my core multi-factor model, this index carries a heavy-weight as a leading indicator – so seeing last night’s follow through buying (on volume, ahead of more Chinese data this week) is just bullish. Hang Seng +0.8% to 19,151 matters because it’s an explicit confirmation of an intermediate-term TREND breakout > 18,616 support. China Growth Slowing at a slower pace.
  2. COPPER – the Doctor is in the Global Macro house this morning! Ringing the alarm clocks on the bears early (and loudly), up +1.1% isn’t the point as much as an intermediate-term TREND breakout > $3.45/lb – we’ll see if that holds (still below TAIL resist of $3.98), but Copper likes what it sees out of China all of a sudden.
  3. TREASURIES – literally the only major leading indicator in my macro model that has not yet confirmed bullish immediate-to-intermediate-term slopes of growth and inflation readings. TRADE line support for 10yr yields = 1.96% (so we’re above that), but the TREND up at 2.03% is the biggest line in the sand that has not yet been traversed. Stay tuned.

Ron Paul won the youth/change vote (18-27 yr olds) again last night on Hayekian economics.

SUBSECTOR PERFORMANCE

THE HBM: YUM, GMCR  - subsector fbr

 

QUICK SERVICE

YUM: Yum! Brands’ Taco Bell chain is in the news today as details emerge about its new menu aimed at taking share from Chipotle.  Mike Brugamin, a former Yum! Brands senior project manager and Taco Bell store-owner, was quoted by Bloomberg as saying “they have a tough road ahead of them… [Taco Bell] has always been about value.”  Such a turnaround obviously required capital in order to produce the new menu items and that can be expensive for franchisees.  In our view, the company’s efforts are aimed at improving brand perception. As the Bloomberg article states, Taco Bell scored the lowest in food quality and atmosphere among limited-service Mexican eateries, including Chipotle and Qdoba, according to a September survey by Nation’s Restaurant News and consultant MD Partners.

YUM: Yum! Brands is adding 100 KFC restaurants to its Africa division, opening up in seven new countries.

GMCR: Green Mountain will report 1QFY12 earnings on February 1st, after the market close.

THE HBM: YUM, GMCR  - stocks

Howard Penney

Managing Director

Rory Green

Analyst