Commentary from SAFM earnings call


Joe Sanderson, CEO of Sanderson Farms, is not getting bullish:


“…you can pick up bits and pieces that would make you be optimistic, I think there is a huge desire, more of a desire to be optimistic than there are facts that would make you optimistic.”


SAFM is cautious on soft demand from the food service industry and the overall macro environment.



Comments from CEO Keith McCullough


Higher-Highs into another month-end markup – how exciting:

  1. MONTH-END – with an oversupply in the asset management industry we continue to see the last 6 days of the mth, trade significantly higher than the 1st 6 days of the new mth – this was the case on the way down (May-Sep 2011) inasmuch as it is on the way up. The SP500 has been up for 4 consecutive days, so they may as well make it 5 into mth-end and get it over with. AAPL is only up +17.5% for the mth. Probably doesn’t impact the indices, right?
  2. US DOLLAR – the next move here will be as critical as the down move has been since Bernanke signaled his Policy To Inflate on January 25th. Don’t forget that the USD is down -4.3% from its YTD high (that’s a lot) and that has had a huge impact on inflation expectations (TIP, GLD, OIL, etc). As we push past the LTRO (530B this morn) and into the March sov debt maturity spike in Japan (53T Yen), the USD should start trading on fresh factoring.
  3. OIL – 2 down days does not even a hyper short-term TRADE make. Both Brent and WTI have corrected to their most immediate-term TRADE lines of support ($122.01 and $105.46, respectively) and bounced. Bernanke’s semi-annual USD Debauchery speech is today, so that should be interesting to watch in real time vs TIP, GLD, OIL, etc. Inflation from here is not growth. Déjà vu Q1 2011.


India’s GDP growth dropped to 6.1% and is now a good 200-300bps below its inflation rate – that’s stagflation and that’s why India’s Yield Curve is now flat.







THE HBM: SAFM, JACK, DPZ, MCD - subsector





JACK: Jack in the Box Domino’s Pizza held its first Investor Day since 2008.  We got a picture of how the company will look post Jack in the Box refranchising.  The company is going from cash flow negative to cash flow positive and generating $75 million in Free Cash Flow beginning in 2015.  We will have a detailed post up later today.  The company is anticipating nearly 100% profit flow-through on incremental sales at Jack in the Box.


DPZ: Domino’s Pizza was downgraded to “Neutral” from “Overweight” at J.P. Morgan.  The price target is $38 per share.


MCD: McDonald’s announced that half of the 225-250 new units in China opening this year will be drive-thrus.  The company is also launching a new ad campaign in China touting food quality in an attempt to compete with KFC. 




DPZ: Domino’s traded up yesterday on the strong 4Q EPS beat. 


TAST: Carrols underperformed on accelerating volume.







DRI, PFCB, EAT: Casual diners gained on accelerating volume yesterday.





Howard Penney

Managing Director


Rory Green



7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

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