THE HBM: YUM, JACK, PNRA, MCD, SBUX, WEN

THE HEDGEYE BREAKFAST MONITOR

 

MACRO NOTES

 

Consumer

 

The ADP National Employment Report print this morning showed that Private Nonfarm employment gained by 216k in February versus 215k consensus.

 

 

Comments from CEO Keith McCullough

 

Whatever happened to Greece? Growth Slowing Globally getting some attention now…

  1. USD – this is not a political comment, it’s a correlation one – Romney’s momentum rising/falling is starting to track the US Dollar Index and our new Hedgeye Election Index (Obama at 58.4% before Super Tuesday results). The back-test is meaningful – send me a note if you want the data series. US Dollar Index = +2% since Romney won Michigan/Arizona and you see what happened to inflation in the face of that (deflated, fast).
  2. OIL  - both Brent and WTIC continue to hold all 3 durations of support  (TRADE, TREND, TAIL) in my model w/ Brent Oil’s refreshed risk management range = $120.83-123.98. It would have to break $118 (and WTIC break $102) for me to consider this a tailwind of Deflating The Inflation for the benefit of US Consumption.
  3. SPAIN – never mind Greece, pull up a chart of the IBEX = straight down and, more importantly, this is the 1st major European stock market to snap its intermediate term TREND line (8499). Spanish Equities are down -4% all of a sudden YTD. Debt structurally impairs growth – these economies and markets are stagflating, big time – and even a Keynesian can’t stop gravity in perpetuity.

13 LONGS, 7 SHORTS. Yesterday was a Short Covering Opportunity. 1359 is now my TRADE line of resistance for the SP500.

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: YUM, JACK, PNRA, MCD, SBUX, WEN - subsector

 

 

QUICK SERVICE

 

YUM: Yum Brands reaffirmed its EPS growth forecast for 2012 of at least 10%.

 

JACK: Jack in the Box was raised to “Neutral” at Credit Suisse. 

 

PNRA: Panera Bread Chairman Ronald Shaich appeared on CNBC last night and said that gas prices are yet to have any adverse impact on comps.

 

COSI: During the appearance of Shaich on CNBC, Jim Cramer asked him if Panera would buy Cosi as a way to penetrate Manhattan.  Shaich offered an example of the company doing something similar in the past, when it bought a bakery in Phoenix to penetrate that market.  He said “we are open to that…it’s got to be the right deal for Panera”.

 

MCD: Sterne Agee raised its PT for MCD to $112 from $109.

 

SBUX: Starbucks opened a “laboratory” store in Amsterdam (story).

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

WEN: Wendy’s declined -2.8% on accelerating volume yesterday.

 

 

CASUAL DINING

 

CAKE: Cheesecake Factory spoke yesterday and guided to EPS growth of 10-16% in 2012 assuming 1.5-2.5% comp store sales growth.  We see downside risk to 1Q12 comps at Cheesecake Factory.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

DIN: Dine Equity declined -3.6%, underperforming the space, on accelerating volume.

 

 

THE HBM: YUM, JACK, PNRA, MCD, SBUX, WEN - stock

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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