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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Commentary from CEO Keith McCullough

Greek students fighting stray dogs in the streets – nice:

  1. SPAIN – despite the concept that all is fine in no-volume rallies until it isn’t, the rest of the world’s deficit/debt problems do not cease to exist. The recent breakdown in Spanish stocks and bonds show you that in pictures – now the Euro is failing to overcome $1.32 resistance as well. Sov Debt risk never goes away, but its intensity focuses the mind when country currencies, stocks, and bonds do the same thing at the same time.
  2. US Deficit – I know it doesn’t matter anymore, right? Right. At -$237B for FEB that’s a new US record for monthly deficit print and should remind genius growth forecasters that tax revenues are collected on a real-basis too. Inflation at the pump finally running as headline headwind for Obama even in the NY Times poll this morning. US Tax revs are down y/y in FY 2012 vs FY 2012, despite the GDP “recovery”… spin.
  3. TREASURIES – either 2s and 10s are testing a breakout in the US this morning b/c credit risk is rising on the margin (deficit) and/or Bernanke is going to be less dovish than he has been for the last 6yrs at today’s FOMC whisperings. Asymmetric risk lives on as long as this ridiculously short-sighted game of chasing yield does. Breakout lines for 2s and 10s = 0.26% and 2.03%, respectively.

Bullish on strays.

KM

SUBSECTOR PERFORMANCE

THE HBM: MCD, DRI - subsector

 

QUICK SERVICE

MCD: Per our post this morning, McDonald’s is launching baked goods offerings in New England.  The strategy is directly aimed at Dunkin’s market share.

MCD: McDonald’s was maintained “Buy” at Deutsche Bank with a price target of $108. 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

COSI: Cosi gained 4.9% on accelerating volume.

DNKN: Dunkin’ Brands gained 2.4% on accelerating volume.

GMCR, CBOU: Green Mountain and Caribou declined -4.6% and -2.3%, respectively, on accelerating volume.

CASUAL DINING

DRI: Olive Garden introduced a new $6.95 lunch special yesterday on its Facebook page called “Create Your Own”.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

RUTH: Ruth's Chris gained 2.7% on accelerating volume.

THE HBM: MCD, DRI - stocks

Howard Penney

Managing Director

Rory Green

Analyst