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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Commentary from CEO Keith McCullough

Most Read this morn = #1 Apple, #2 Asian Stocks Drop, and #3 Romney Wins:

  1. ASIA – generally weak session in Asian Equities after the Hang Seng snapped my line yesterday; Asian Growth Slowing is a reality right now; the perma-bulls refused to accept it in Q1 of 2011 and are at their own risk doing so now.
  2. YEN – easily the ugliest chart in all of Global Macro right now – also something consensus has not moved towards addressing/understanding yet; we’ll be in Boston all day explaining why we think the Yen’s -9.2% drop since FEB is similar to the initial steep decline of the Euro in April/May of 2011. #SovDebtRisk
  3. SENTIMENT – I’ve been on the road in Canada and Minnesota for the last 3 days and the feedback loop was frothy; allegedly, markets can’t go down because they haven’t yet – with Growth Slowing and seasonality playing negative like it did in Q1 of 08, 2010, and 2011, we look ripe for a counter consensus move (II Bullish/Bearish Survey = 2500 bps wide to the Bull side this morn)

Oil prices > $100 have never not slowed real (inflation adj) growth, globally – ever.

KM

SUBSECTOR PERFORMANCE

THE HBM: SBUX, DPZ, MCD, CMG, EAT, RT - subsector

 

QUICK SERVICE

SBUX: Starbucks is hosting its AGM today.  The company, along with Green Mountain, announced an expansion of their strategic relationship for “the manufacturing, marketing, distribution and sale of Starbucks-branded Vue packs for use in GMCR’s recently introduced Keurig Vue Brewer.

DPZ: Domino’s Pizza CFO, Michael Lawton, spoke at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Conference yesterday.  The company spoke about international strength, particularly in India, and the recent warm weather in the U.S. as being unfavorable for its business.  The company guided to 1-3% comparable restaurant sales in the U.S.

MCD: McDonald’s is seeking a 50% rent reduction at its location on Dublin, Ireland’s main retail thoroughfare, Grafton Street.  The company is currently paying a rent of 1.15 million euros per annum.  The landlord, as the date for MCD to sign the new lease approaches, is hoping for a 20% reduction. 

CMG: Chipotle Mexican Grill is opening a new restaurant at 71 Spring Street, in Manhattan.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

COSI: Cosi continues to outperform, gaining 6.1% on accelerating volume yesterday.

YUM: Yum gained yesterday on accelerating volume despite China weakness.

DPZ: Domino’s declined almost 3% on accelerating volume yesterday.

CASUAL DINING

EAT: Brinker International saw its price target increased from $31 to $33 at J.P. Morgan today.  The firm is maintaining an Overweight rating on EAT.

RT: Ruby Tuesday was raised to Outperform at Raymond James.

THE HBM: SBUX, DPZ, MCD, CMG, EAT, RT - stocks

Howard Penney

Managing Director

Rory Green

Analyst