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:
- 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.
- 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).
- 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
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
Howard Penney
Managing Director
Rory Green
Analyst
