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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Comments from CEO Keith McCullough

Greece is back in the Top 3 Most Read next to Buffett pushing his politics and positions. Nice:

  1. GREECE – a not so funny thing happened on the way to the risk mgt forum – w/ Greek stocks down another -1.6% this morning (leading losers globally), they’ve gone from up +23% to +8% YTD in less than 2 weeks. Big Government Intervention perpetuates volatility. Nice.
  2. OIL – 2 down days in a row is as bullish as bullish does for Global Equity markets. Asia acted as well as it has in FEB last night and US Futures like oil down because they should – it’s good for the 71% (Consumption/GDP). The problem, of course, is that Brent and WTIC only have 2-3% downside in the immediate-term and should resume their inflations thereafter.
  3. BONDS – both the UST 10yr and the Yield Spread are telling you all you need to know about US Growth Slowing sequentially here in FEB. The Durable Goods number is a JAN print and doesn’t really matter in my model – the PMI and ISM prints for FEB (wed and thur) do. 10s failed at 2.03% TREND resist and then snapped 1.97% TRADE support. No real support now to 1.89% w/ 10s/2s Spread -4bps already for the wk-to-date.

Higher-Highs are exciting in the SP500 in the meantime (1 range). I’m trading risk aggressively and enjoying it quite thoroughly.

KM

SUBSECTOR PERFORMANCE

THE HBM: DPZ, GMCR, MCD, DRI - subsector

 

QUICK SERVICE

DPZ: Domino’s Pizza reported 4Q11 EPS of $0.52 versus consensus $0.49.  The company-owned domestic store base saw comps increase +8.7% versus consensus +7.5%.  The company raised its “long term guidance” for international comps, net units, global retail sales and capex.  Consistent with the message management sent at ICR in January, the company announced a recapitalization today.

 

THE HBM: DPZ, GMCR, MCD, DRI - dpz pod1

GMCR: Green Mountain coffee holder Lavazza has reduced its stake in the company to 4.99%.  In a 13-D filing, Lavazza stated that it does not currently intend to sell any additional shares.

MCD: McDonald’s is considering selling dim sum bonds in Hong Kong as one option for raising funds to expand in China.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

DPZ: Domino’s traded up yesterday in anticipation of today’s print.

JACK:  Jack in the Box is hosting its Investor Day today – the first one since 2008.

CASUAL DINING

DRI: Darden was maintained “Buy” at Sterne Agee.  The price target is $52.  Sterne highlighted management’s confidence in the Olive Garden turnaround.

DRI: Darden was maintained “Neutral” at DA Davidson.  The firm noted uncertainty persisting for the company’s Olive Garden business.

 

THE HBM: DPZ, GMCR, MCD, DRI - stocks

Howard Penney

Managing Director

Rory Green

Analyst