Comments from CEO Keith McCullough


Higher-Highs are predicated on higher oil prices now – we’ve seen this setup before:

  1. RUSSIA – the most popular man w/ Putin right now has to be The Bernank. Putin gets paid in Petro-Dollars, and with the Petro straight up, Dollar straight down, what more could our comrade want heading into this weekend’s election? Russia +25.2% YTD. That’s probably a depression or deflation signal, or something.
  2. OIL – down 1% this morning but the lines that matter most continue to hold as the US Dollar’s bid remains fleeting. If Iran doesn’t send a missile somewhere soon, we’re going to need another line of storytelling out of Washington, fast. Immediate-term supports for Brent and WTI = $123.29 and 106.12, respectively.
  3. YEN – this is easily the most recognizable downward dog pattern that consensus still isn’t talking about. Straight down again (-0.46%) vs the USD this morning, the Japanese are about to engage in selling more sov debt than even the Americans and Europeans could. We have a 100 slide deck and conf call on Japan at 11AM EST today if you want to get up to speed on it.


ISM slowed (growth) from 54.1 to 52.4 and Prices Paid (inflation) ripped to 61.5 in FEB vs 55.5 JAN. Markets will do what they do until they don’t, but our Fundamental Global Macro Research Model has not changed. Growth Slows As Inflation Accelerates.







THE HBM: WEN, MCD, DIN - subsector





WEN: Wendy’s shareholder, Trian Fund Management LP, sold nearly a fifth of its H.J. Heinz Co. holdings, cashing out $11.2 million.  Nelson Peltz, who founded Trian, has been paring his holdings of HNZ since fall 2011. 


WEN: Wendy’s management hosted an earnings call yesterday and stated that prices have been raised on certain sandwiches to “better drive sales”.  The “W” sandwich is now priced at $3.19 versus $2.99 beforehand and the combo price was increased by 29 cents.  Management highlighted a need to achieve better “drag along” sales of fries and Coca-Cola.  Wendy’s is also shifting in its TV advertising approach to take on the Big Mac head on.  We are unsure of how successful that will be; time will tell.  The company is ramping up its capex for 2012 to $225mm versus $147mm in 2011. 


MCD: McDonald’s reports February sales next Thursday and, according to Barron’s a good strategy is to buy March $100 calls on McDonald’s sometime soon.  The publication notes that for the past seven years, buying calls ahead of McDonald’s sales reports has been profitable.





JACK: Jack in the Box took a step back, declining -2.1% on accelerating volume after posting a +11% gain for the month of February.


JMBA: Jamba also posted a strong February, gaining 36%, but declined -4.2% yesterday on accelerating volume.


PEET: Peet’s Coffee gained on strong volume. Declining coffee costs are good for Peet’s.





DIN: Dine Equity reported 4Q EPS of $0.91 versus consensus $0.87.  DIN said that food inflation and labor costs hurt 2011 margins but management stated that raising prices is one strategy that they can take to match inflation.  Debt reduction is an important goal for the company and free cash flow will continue to be dedicated to that end.





DIN: Dine Equity gained on accelerating volume following earnings.


TXRH: Texas Roadhouse declined on accelerating volume as beef prices continue to soar.  The supply side of beef is expected to remain constrained for a couple of years.  For now, demand for US beef remains strong.


THE HBM: WEN, MCD, DIN - stocks



Howard Penney

Managing Director


Rory Green



Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more