THE HBM: COSI, DNKN, RUTH, BWLD

02/10/12 09:04AM EST

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Comments from CEO Keith McCullough

Another day of consensus staring at a Greek tree – the forest of globally interconnected risk ticks on:

  1. CHINA – China just moved into the Top 3 Most Read on Bloomberg this morning for the first time in a while (Greece has dominated news-flow), and given China actually matters to Global Growth, this makes sense. In the last 48 hrs Chinese data did exactly what we said it was going to do: 1. Inflation accelerating sequentially to 4.5% from 4.1% y/y and 2. Growth Slowed, big time, w/ Exports down -0.5% y/y (1st y/y drop in over 2yrs).
  2. FRANCE – we’re short French Equities for the 1st time since late December for 3 reasons: 1. Growth data slowing as inflation data rising 2. CAC failed at its long-term TAIL of 3565 resistance and 3. EUR/USD is bumping up against a wall of resistance at 1.33 (highly correlated to the CAC). European stocks should stop trading on Greek “news” as the economic gravity of the French slowdown becomes more glaring.
  3. 10-year UST – markets tend to push the Pain Trade to its highest pressure points and then put the pain on those who chased. The 10-year yield ripped yesterday all the way up to my 2.03% (intermediate-term TREND line), and then reversed (2.00% this morning and falling). If I’m right and Global Growth slows sequentially as inflation rises here in FEB, I want to be long the long-bond.

SP500 continues to make lower long-term highs (below April 2011’s 1363).

 

SUBSECTOR PERFORMANCE

THE HBM: COSI, DNKN, RUTH, BWLD - subsector

 

QUICK SERVICE

COSI: Cosi initiated a consulting agreement with industry veteran Brad Blum yesterday.   Blum will provide consulting services related to branding, product development, merchandising and marketing in a collaborative effort to maximize long-term shareholder value, according to a company press release.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

DNKN: Dunkin’ Brands declined on accelerating volume after reporting a strong quarter, on the surface, but failing to inspire confidence on the earnings call.  We remain skeptical about the long term growth prospects of the company.

CASUAL DINING

RUTH: Ruth’s Chris reported 4Q EPS of $0.11 versus consensus $0.09.  Company-owned comparable restaurant sales for Ruth’s Chris increased to +7.7%.

THE HBM: COSI, DNKN, RUTH, BWLD - ruth pod1

KONA: Kona Grill reported 4Q11 EPS of $0.12 (excluding severance charges of $0.04) versus $0.01 expectations.  4Q same-store sales gained 7.8%.

THE HBM: COSI, DNKN, RUTH, BWLD - kona pod1

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

BWLD: Buffalo Wild Wings continues to trade higher, gaining 3% on accelerating volume yesterday.

THE HBM: COSI, DNKN, RUTH, BWLD - stocks

Howard Penney

Managing Director

Rory Green

Analyst

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