Coffee Costs


Brazil’s next coffee crop will be 2.6% larger than estimated in November, according to Terra Forte Exportacao e Imporacao de Café Ltda. Brazil is the world’s largest producer of coffee.  As we can see in the chart below, coffee costs have been coming down which will benefit PEET and other coffee retailers.  Starbucks has been locking in coffee costs for FY13 (ending September) having locked in all expected requirements for FY12 during calendar year 2011.





Comments from CEO Keith McCullough


2 of the Top 3 Most Read on Bloomberg this morn are about China – no Greece. Analytical progress:

  1. INDIA – obviously a country that is short oil is a country that is going to have a stagflation problem with oil prices ripping like this. That wasn’t new to the Indians last week, but evidently it mattered  to their stock market today – at down -2.8% in a straight line, that’s the problem w/ bearish market SKEW. India’s Yield Curve has gone to flat.
  2. FRANCE – another +0.6% sequential ramp in producer prices this month is only going to perpetuate the stagflation we see in France, Spain and Italy. Who cares about Greece when these 3 majors will have a much larger say in global growth expectations. The CAC’s TAIL remains broken and now the immediate-term TRADE line is under fire (3439). We re-shorted France (EWQ) late last wk.
  3. 10YR – its been a while since the 10-yr bond yield was more wrong than the US stock market on growth expectations. At every turn in the last year, bond yields have told you all you need to know about US Growth Slowing. After failing at the 2.03% TREND line last wk, snapping the 1.97% TRADE line puts 1.91% back in play.

Friday’s close > 1363 SP500 was bullish for a few hours. Prices need to confirm though, so we’ll see about that this week. I’ve not yet re-shorted the SPY or any Sector ETFs. We’re long Financials XLF – and I’m worried about it.






THE HBM: DNKN, SBUX, DRI - subsector





DNKN: Dunkin’ Brands was rated “New Buy” at Citi, price target $36.


SBUX: Starbucks Europe President, Michelle Gass, said in an interview published over the weekend that the company is to announce a multi-million pound overhaul and expansion of its European business which will see hundreds more cafes opening in both the UK and across the continent. 





JACK: Jack in the Box traded higher on accelerating volume.  The company is hosting an Investor Day tomorrow in California.





DRI: Darden’s Analyst Day in New York on Friday provided a high level of detail on the company’s future plans.  We will be posting our thoughts on the event in a separate post shortly.





TXRH: Texas Roadhouse traded down -2.7% on accelerating volume after a strong day’s trading Thursday on strong 4Q EPS.






Howard Penney

Managing Director


Rory Green



Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more