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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

 

Comments from CEO Keith McCullough

From here, after a 100% rally from the 2009 lows, Larry Fink says go “100% Equities” – interesting concept of real-time risk management:

  1. RUSSIA – Putin loves this Dollar Down = Oil up thing (so does Fink – he wants Geithner’s job and says we need Qe3 if the “dollar gets too strong”); the Russians are running neck and neck w/ the Greeks w/ their stock markets inflating +19.5% and +20.2% respectively for 2012 YTD. We’ve seen this movie before – inflation expectations slow growth, and I expect most who missed that LY to disagree w/ me again.
  2. OIL – ze almighty Petro Dollar makes ze world go round, eh. My oh my, Brent Oil busted a move above my long-term TAIL line of resistance this week and didn’t look back, trading $116.35/barrel this morning = +6.5% since Bernanke’s Policy to Inflate through 2014 was introduced on Jan 25. Wow. Thanking the heavens that I just sucked it up and bought Energy (XLE) and Gold (GLD). This won’t end will for the other 90% of Global Consumers.
  3. SENTIMENT – to a degree, the Fink comment (he was bullish in Feb of last year too) summarizes a lot about where sentiment is going right now – it’s a chase. With the VIX testing 16 (the level selling Equities has paid off for 4yrs) and this morning’s II Bullish/Bearish Spread (survey) hitting its widest Bullish Spread since April of 2011, we can argue about anything in the rear-view here, but +2300 basis points wide (Bulls vs Bears) is very very wide.

Santorum Sweep is bullish for Obama, bearish (on the margin) for the US Dollar today too.

KM

 

SUBSECTOR PERFORMANCE

THE HBM: MCD SALES, PNRA, YUM, GMCR, BWLD - subsector fbr

 

QUICK SERVICE

MCD: McDonald’s global same-store sales for January came in at 6.7%.  U.S. comps grew 7.8% in January while Europe and APMEA comps grew 4.0 and 7.3%, respectively.  We would note that the calendar shift/trading day adjustment was -1.9% to -0.5%, varying by area of the world, in January. 

THE HBM: MCD SALES, PNRA, YUM, GMCR, BWLD - MCD US

 

THE HBM: MCD SALES, PNRA, YUM, GMCR, BWLD - mcd eu

 

THE HBM: MCD SALES, PNRA, YUM, GMCR, BWLD - MCD APMEA

 

MCD: McDonald’s Japan January same-store sales grew 1.3% in January.

 

PNRA:  Panera Bread reported 4Q11 EPS of $1.42 excluding extraordinary items versus $1.42 consensus.  Company comps came in a little light at +5.9% versus consensus of +6.3% in 4Q as operating margins also missed at 20.4% of sales versus 21.3% consensus.  Company-owned comparable net bakery sales in the first 41 days of 1Q were up 8.9%, including roughly 350 basis points from favorable weather comparisons.

MCD: McDonald’s is making its Shamrock Shake, a beverage sold around St. Patrick’s day, available nationally this year for the first time. 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

YUM: Yum gained on strong 4Q11 results, as we published on yesterday. 

GMCR: This stock has been on a wild ride.  There is still a broad range of opinions on the stock and plenty of unexplained capex being spent by management.  We don’t think this story is resolved.

 

CASUAL DINING

BWLD: Buffalo Wild Wings reported 4Q11 EPS of $0.73 versus $0.67 consensus.  An artificially low tax rate accounted for 4 cents of the beat but top line strength, including 8.9% company-owned same-store sales and strong year-over-year new unit volumes, helped the company finish out the year strong.  Trends in 1Q to-date show comps up 12.9% versus last year including 3% from an expanded gift card program.  From here, whether or not the company can overcome wing price inflation as the impacts of the gift card program and favorable weather versus a year ago wear off.   While we were looking for the stock to underperform, Keith covered the BWLD short position on red yesterday intraday.  

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

PFCB: P.F. Chang’s gained 2.3% on accelerating volume yesterday. 

THE HBM: MCD SALES, PNRA, YUM, GMCR, BWLD - stocks

Howard Penney

Managing Director

Rory Green

Analyst