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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

It’s February, welcome to round 2 of the inflation/deflation/reflation game of expectations:

  1. CHINA – immediate-term growth expectations are coming down in a hurry now that commodity inflation expectations are rising – last night’s PMI print of 50.5 was not only a miss vs uninformed whispers (sad), but was a sequential deceleration in the slope of improvement (hard to beat the DEC v-bottom vs NOV). Chinese stocks closed down -1.1% on the news, and they should have.
  2. GERMANY – just absolutely ripping this morning on a big breakout above my long-term TAIL line for the DAX of 6503. Germany’s stock market is now up +11.7% YTD! (vs SPX +4.3%) as the old Bundesbankers prove out that there is an economic model that resides right of left-center (Keynes).
  3. TREASURIES – kaboom! US Growth expectations are getting hammered into the hole now w/ 10yr yields hitting YTD lows this morn at 1.81%. A lot of people will convince themselves that US stock futures up is whatever they want it to be, but I see that simply as inflation expectations rising which, in turn, slow growth even further. The Yield Spread hitting its lowest YTD at 161bps wide – should put a lid on the Financials at $XLF 14.24.

After 4 consecutive down days in the SP500, we’re due for another low-volume bounce to another lower long-term high. Immediate-term resistance = 1323.

 

SUBSECTOR PERFORMANCE

THE HBM: WEN, JACK, MRT - subsector fbr

 

QUICK SERVICE

WEN: Wendy’s was cut to “Neutral” at Roth Capital.

JACK: Jack in the Box was initiated “Buy” at Lazard.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

WEN: Wendy’s traded down -6.4% on accelerating volume. See our note from Monday; this concept needs $3.7 billion to right itself and become competitive again. 

CASUAL DINING

MRT: Tilman Fertitta announced today that this wholly-owned company, Fertitta Morton’s Restaurant’s, Inc., has successfully completed a tender offer for all of the outstanding shares of common stock of MRT at $6.90 per share.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

BWLD: Traded up 2.2% a week ahead of earnings.  We think the forward commentary will be bearish for the stock.

KONA:  Traded down -13% on accelerating volume after appointing Berke Bakay as president and CEO

THE HBM: WEN, JACK, MRT - stocks

Howard Penney

Managing Director

Rory Green

Analyst