THE HBM: PEET, MCD, DRI

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Commentary from CEO Keith McCullough

Finally! The Japanese Yen is the Most Read story on Bloomberg (ahead of Angry Birds):

1. JAPAN – currencies lead bonds, then currencies/bonds lead stocks – that’s what happened into the European Sov Debt Crisis and I don’t know why that would change in Japan. The Yen looks awful and finally the Nikkei broke an impt line of immediate-term support (10,065) last night.
2. SPAIN – the Spanish IBEX continues to flag negative divergences vs most major markets of the world (down -2% YTD vs Russia +20%) and Spain’s bond yields continue to move up into the right. German Finance Minister on Spain and Italy yest: “they are too big to save”… alrighty then.
3. US TREASURIES – the top in bond yields came last week when Credit Suisse said “buy stocks b/c bond yields are rising”; now its game time w/ TRADE line support for 10s at 2.27% and the long-term TAIL of resistance up at 2.47%. I’m expecting to see a battle royal in this 20bps range.

SP500 down 3 days in a row after the 2ndlargest down day of 2012 yesterday. When -0.72% is the 2ndworst day you’ve seen, mean reversion thoughts should be dancing in your head. This is not normal.

KM

SUBSECTOR PERFORMANCE

QUICK SERVICE

PEET: Peet’s Coffee estimates were raised at Jeffries.  The price target was raised to $88 from $68.

MCD: McDonald’s Japan plans to introduce a service that will enable customers to place an order and pay for it using their mobile phones, according to Bloomberg.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

SBUX: Starbucks gained 2.6% on accelerating volume.

DPZ: Domino’s Pizza declined 8.8% on accelerating volume.  The stock was downgraded on Tuesday by BofA following the announcement of a special dividend that investors were baking in.  JP Morgan also lowered its price target to $37 from $40.

SONC: Sonic is facing a tough compare (sales and margin) next quarter and investors are less-than-convinced by the strategies being put forward by the current management team.

CASUAL DINING

DRI: Darden Restaurants reports 3QFY12 EPS of $1.25 versus expectations of $1.24. Blended US same-restaurant sales for Olive Garden, Red Lobster, and LongHorn Steakhouse came in at 4.1% versus guidance of approximately 4% provided a month ago. 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

RT: Ruby Tuesday declined 2% on accelerating volume.

Howard Penney

Managing Director

Rory Green

Analyst