THE HEDGEYE BREAKFAST MONITOR
MACRO NOTES
Commentary from CEO Keith McCullough
Greek students fighting stray dogs in the streets – nice:
- 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.
- 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.
- 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
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.
Howard Penney
Managing Director
Rory Green
Analyst