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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Commentary from CEO Keith McCullough

Most Read (Bloomberg) = Apple – it’s a good thing the US Equity market’s narrowing rally doesn’t depend on its momentum:

  1. INDIA – positive price momentum on the Sensex is nowhere to be found = down another -1.3% last night after the Indian government revealed more about its mounting deficit issues (-5.9% of GDP and rising); countries who are short oil are going to be in a world of hurt on a real inflation adjusted growth basis (India down -6.5% from its Feb 21 top)
  2. OIL – both Brent and WTIC continue to hold all immediate-term price momentum lines of support and this will continue to be the most relevant Global headwind to real inflation adjusted growth going forward. I have no idea how some of the bulls are getting to +3% US GDP in Q1 and Q2; its mathematically impossible in our model using the right GDP Deflator
  3. TREASURIES – monster breakout in bond yields last week – was it the YTD top or can they hold; the intermediate-term TREND line of support for the 10yr = 2.03% and now immediate-term TRADE support = 2.12%.

My immediate-term TRADE range for the SP500 is now 1.

SUBSECTOR PERFORMANCE

THE HBM: YUM, MCD, OSI, CAKE - subsector

 

QUICK SERVICE

YUM: Yum Brands was initiated Outperform at Oppenheimer. The price target is $82.

MCD: McDonalds has apologized to Chinese consumers following the exposure of food safety scandals on Thursday.  Sophia Luan, Vice President of McDonald’s in China, said, "As a member of the managerial staff, I’m very sorry for the loopholes in our system. I apologize to our customers. From today, we will rectify operations of more than 1,400 outlets in China, not only this one."

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

WEN: Wendy’s gained 2.6% on accelerating volume.

PEET: Peet’s coffee continues to benefit from declining coffee costs.

CASUAL DINING

OSI: The parent company of Outback Steakhouse has filed documents with the Securities and Exchange Commission that indicate a possible IPO. 

CAKE: The Cheesecake Factory has unveiled fresh new menu items. Chicken ingredients feature prominently; we believe this trend will continue as operators seek to avoid the inflation in beef prices.

THE HBM: YUM, MCD, OSI, CAKE - stocks

Howard Penney

Managing Director

Rory Green

Analyst