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:
- 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)
- 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
- 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
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.
Howard Penney
Managing Director
Rory Green
Analyst