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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Commentary from CEO Keith McCullough

Greece, slowly, but surely falling off Most Read (Bloomberg) news wk-over-wk; China and Global Growth Slowing back in vogue:

  1. CHINA – worst Trade Deficit in 22yrs (let’s call that ever – and ever is a long time) at -$31.5B after last week saw that big sequential drop in Chinese IP growth (to 11% vs 14% in JAN despite Lunar shift). Growth Slowing. Chinese stocks looking for a rate cut.
  2. ISRAEL – someone knows something or someone thinks they do – what I can’t see here makes me call it out as the Tel Aviv25 Index not only moved to red for 2012 YTD last week, but is down another full 1% this morning (down -4% in since Feb 21). Iran?
  3. USD – the most important (and bullish on the margin for US Consumption Growth) recovery in the last few weeks has been the US Dollar Index recovering its intermediate-term TREND support of $79.36. With short-term Treasuries (2yr) breaking out above 0.26% TREND support and Gold struggling relative to oil, I’m out of Gold for now. Considering the short side GLD and looking to buy USD back.

VIX 15-17 range has proven to be the right zone to take down both gross and net for the last 4yrs.

KM

SUBSECTOR PERFORMANCE

THE HBM: GMCR, MCD, RUTH - subsector

 

QUICK SERVICE


GMCR: Green Mountain Coffee was downgraded to Neutral from Buy by BofA on Friday. The price target was lowered to $63 from $70.

MCD: McDonald’s featured in a Barron’s article this weekend where “the Trader” column detailed why the stock may be overpriced. 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

GMCR: Green Mountain declined almost 16% on accelerating volume as SBUX announced the arrival of its new brewer and David Einhorn said that Green Mountain’s install base has no “true protection”.

SBUX: Starbucks gained 2.9% on accelerating volume.

CASUAL DINING

RUTH: Ruth’s Chris announced 10% buyback of its 10% convertible preferred stock.  Retiring the 10% convertible preferred stock cost the company $60.2mm in cash which was funded by its $100mm senior revolving credit facility.  This move prompted Jeffries to raise its PT by $1 to $8.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

RUTH: Ruth’s Chris gained 6.8% on accelerating volume.

THE HBM: GMCR, MCD, RUTH - stocks

Howard Penney

Managing Director

Rory Green

Analyst