THE HBM: WEN, SBUX, YUM

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Commodities

 

The world is running out of time to make sure there is enough food, water and energy to meet the needs of a rapidly growing population and to avoid sending up to 3 billion people into poverty, a U.N. report warned on Monday. As the world's population looks set to grow to nearly 9 billion by 2040 from 7 billion now, and the number of middle-class consumers increases by 3 billion over the next 20 years, the demand for resources will rise exponentially. Even by 2030, the world will need at least 50 percent more food, 45 percent more energy and 30 percent more water, according to U.N. estimates, at a time when a changing environment is creating new limits to supply. – Cattle Network

 

 

Comments from CEO Keith McCullough

 

Everything has a time and a price – good spot to buy on yesterday’s lows; don’t chase into today’s month-end:

  1. GERMANY - Contrast of The Day: Italy's unemployment rate hits an 8yr high of 8.9% as Germany's hits 20yr low of 6.7% - the Germans are absolutely killing it right now – gaining big political power, seeing a +10.2% YTD stock market move, and unemployment fall #winning
  2. COMMODITIES – anyone long inflation has to be right fired up again this morning (I am – bought Energy yesterday); the Bernank Tax is obviously very bad for the country/economy, but great for commodity longs – Gold and Copper have gone vertical since the FOMC statement, up +11.4% and +12.5% for JAN respectively!
  3. MONTH-END – you know it, I know it – it is what it is. Today is the day where anyone can suspend disbelief that the best JAN for stocks since 1997 is going to straight line as what happens for the rest of the year. From an immediate-term TRADE overbought perspective, this looks a lot like FEB 2011 – lower long-term highs right as Growth Expectations start slowing.

Treasuries agree w/ me on that last part. 10 and 30yr collapsing again to 1.85% and 3.01% respectively – both remain in a Bearish Formation as US policies to inflate have funds flowing to US Treasuries instead of US Stocks.

 

SUBSECTOR PERFORMANCE

 

THE HBM: WEN, SBUX, YUM - subsector

 

QUICK SERVICE

 

WEN: Wendy’s held its annual Analyst Day in New York City yesterday.  As we wrote in our note, published last night, at least $3.7 billion of spending is needed to carry out the remodeling program, according to the company’s figures.

 

WEN: Wendy’s was reiterated “Sell” by Goldman after the Analyst Day.  The firm feels that “resources were lacking and that there is still a risk to guidance.”

 

SBUX: Starbucks plans to raise prices of some espresso-based beverages and fresh-brewed coffee products by 1 Yuan to 2 Yuan in China.

 

SBUX: Starbucks has officially backed gay marriage, according to media reports.  Starbucks EVP Kalen Holmes expressed the company’s support for legislation in Washington State recognizing marriage equality for same-sex couples, saying that the legislation is “core to who we are and what we value as a company.”

 

YUM: Pizza Hut expects to surpass 2 million pizzas sold on Super Bowl Sunday.

 

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

PNRA: Steps up expansion in CDA – reporting EPS on 2/7 AMC

 

YUM: 2nd day of strong volume – reporting EPS on 2/6 AMC

 

GMCR: 2nd day of strong volume – reporting EPS 2/1 AMC

 

SBUX: Tata surged 10% on JV with SBUX

 

WEN: See my note from yesterday – my outlook for WEN has diminished

 


CASUAL DINING


KONA: Kona Grill named Berke Bakay president and CEO.  Bakay is the investment manager to BBS Capital Fund, Kona Grill’s largest shareholder (15.2% stake).

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:


CHUX: Trading well heading into EPS – reporting 2/7 BMO

 

BBRG: Another good day: up 12% over the past month

 

THE HBM: WEN, SBUX, YUM - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more