THE HBM: SBUX, CMG

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Initial Claims

 

Initial jobless claims came in at 399k versus 375k consensus and 375k (revised up 3k) the week prior.

 

THE HBM: SBUX, CMG - initial claims

 

 

Comments from CEO Keith McCullough

 

The manic attempting to do macro have not realized that the European bond auctions are not where the game is at right now. Squeeze:

  1. CHINA – the biggest Global Macro risk management shift of the last 3 wks has been both China’s high-frequency economic data and the reactions in both the China local and H-shares markets; China reported a CPI level of +4.1% DEC (inline w/ our estimate) – that’s down 10bps vs last mth and, more importantly = 15mth low. Chinese stocks +3.5% for 2012 YTD and we’re long them (CAF) + EWH.
  2. INFLATION – there’s a big difference b/t Q2 of 2011 levels of global food/energy inflation and what you are seeing around the world now – a sequential DEFLATION OF THE INFLATION = big Q1 Macro Theme for us that I went through in the slide deck yesterday. This should continue to auger bullish for both Global Consumption and for the stocks that react to it. Germany’s CPI benign for DEC at 2.1%.
  3. COPPER – the Doctor’s signal that I gave you yesterday was a pure one = breakout > intermediate-term TREND line support of 3.45/lb and obviously getting squeezed to immediate-term TRADE overbought here (3.59 last), but this is one of the epicenters of what’s been a royal short squeeze of everything that didn’t work in NOV/DEC (Financials, Basic Materials, Pandora – the list is long).

 

All of this, of course, builds into a crescendo of short covering at another immediate-term top for the SP500. I have that at 1299, so sell there, and re-load your gross exposure on what’s going to be another inevitable correction towards 1277.

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: SBUX, CMG - subsector fbr

 

 

QUICK SERVICE

 

SBUX: Starbucks is maintaining a coffee sourcing MOU it has with India’s Tata Coffee Ltd. after India’s government formally removed the limit on foreign investment in single-brand retail.

 

SBUX: Starbucks target increased to $52 from $47 at UBS.

 

CMG: Chipotle is starting construction on a second ShopHouse restaurant in a contiguous trade area to the current location.

 

THE HBM: SBUX, CMG - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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