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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Consumer

According to the Office for National Statistics, the number of people claiming jobless benefits in the U.K. during the month of January rose by 6,900 to 1.6 million, the highest since January 2010.

Comments from CEO Keith McCullough

Consensus news-flow is still focused on Greece, weird:

  1. JAPAN – the Nikkei busted a surprisingly bullish move = +2.3% overnight as the Yen remained under central planning pressure (-0.2% at 78.15 USD/YEN); the Nikkei getting squeezed like France’s CAC did right up to its long-term TAIL of resistance (TAILS: Nikkei = 9397, CAC = 3556) is what it is – largely a Pain Trade that tends to capitulate as the end of the rally nears. We’re long China, short Japan.
  2. OIL – Brent or WTI, take your pick – both are in what we call a Bullish Formation (bullish TRADE, TREND, and TAIL) – and both have a systematic ability to infect (slow) Consumption growth both in the US and around the world. Feels like Q1/Q2 of 2011 all over again where consensus is still anchoring on the last 2 quarters of US GDP growth being good (it was).
  3. 10yr – the bond market says Growth Slowing is a bigger problem than inflation rising. UST 10yr is now breaking my only line of remaining support (1.96%) into a Bearish Formation (bearish yields on all 3 risk mgt durations – TRADE, TREND, and TAIL), so this will be a very interesting day. Bond yields breaking down have front run US Growth expectations for a long time now.

S&P futures excited about something that I can’t see. Last price doesn’t lie though; neither do lower long-term highs.

KM

 

SUBSECTOR PERFORMANCE

THE HBM: GMCR, SBUX, PEET, MCD, RRGB - subsector

 

QUICK SERVICE

GMCR: Green Mountain has announced an expansion of its line of Keurig Single Cup Brewers with the addition of the Keurig Vue brewer.  The Keurig Vue brewer is designed with the ability to brew “stronger, bigger, and hotter”.

SBUX: Starbucks will open stores in the majority of Target stores across Canada.  Under the terms of an agreement between the two companies, 125-135 Target locations will feature Starbucks licensed stores.

PEET: Peet’s Coffee reported 4Q EPS of $0.42 versus $0.43 consensus.  COGs (coffee and milk) weighed down earnings but management backed its 2012 outlook.  The company expects to earn between $1.70 and $1.80 per share, which implies 14% to 21% growth over 2011 EPS of $1.49.  The company guided to 4% coffee inflation in 2012.

MCD: The Ukrainian Journal is reporting that the second busiest McDonald’s outlet, after the Moscow Pushkin Square location, is in Vokzaina Square in Kiev.

 

CASUAL DINING

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

RRGB: traded down -1.6% on accelerating volume.

THE HBM: GMCR, SBUX, PEET, MCD, RRGB - stocks

Howard Penney

Managing Director

Rory Green

Analyst