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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Unemployment

We will have a more detailed post up on employment data pertaining to the restaurant group later this morning.  Nonfarm payrolls came in at 243k versus 140k consensus.  The unemployment rate came in at 8.3%, below consensus 8.5%.  This is a positive for consumer confidence, since the unemployment rate is the most often cited labor statistic in mainstream media, but there are a lot of moving parts behind the final print. One worth monitoring is the Labor Force Participation Rate.  In January, it fell to 63.7% from 64%.  This may not seem material but, as the second chart below shows, adjusting the LFPR to the ten year average (January ’02 through January ’12) implies a much higher unemployment rate for January.

THE HBM: JOBS, MCD, PEET, SBUX - lfpr

 

THE HBM: JOBS, MCD, PEET, SBUX - Urate LFPR adj

 

Commodities

Coffee prices in Brazil, the world’s largest producer, declined this week as growers sold after holding onto beans in a bid to boost prices, according to sources quoted by Bloomberg.  Prices are declining on speculation that global supplies will improve with large crops in Brazil and Vietnam.

SUBSECTOR PERFORMANCE

THE HBM: JOBS, MCD, PEET, SBUX - subsector

 

QUICK SERVICE

PEET: Peet’s coffee was upgraded to Outperform by Baird.

MCD: McDonald’s paid a record low on 30-year bonds – just 3.7% - as it tapped the debt market for $750 million in a two part offering.

SBUX:  “Starbucks can follow Satan if they want to”, says USA Christian Ministries head Steven Andrew in a statement addressing the company’s support of gay marriage in Washington State.  If Christians unite behind his cause, he predicted, Starbucks would lose 80% of its clientele.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

GMCR: Earnings short squeeze.  High level of short interest in this stock and yesterday was a painful day for the shorts.

COSI: The CEO bought stock a couple of days ago.   This stock is up over 27% over the past week.

WEN: Gained yesterday after a strong sell off after the Analyst Day. 

YUM:  Besides news in the media about the salmonella incident in Oklahoma that media reports are attributing to Taco Bell, there was no news on YUM.

CMG: EPS just was not good enough for this priced-for-perfection stock.

BAGL: The Chief Marketing Officer left the company.

 

 

CASUAL DINING

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

BWLD: This stock is trading well into earnings next week.  4Q results are likely to come in strong but, in our view, the forward looking commentary needs to bring FY12 expectations lower.

KONA:  Management changes are disruptive to operations.

THE HBM: JOBS, MCD, PEET, SBUX - stocks

Howard Penney

Managing Director

Rory Green

Analyst