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THE HBM: YUM, WEN, DIN

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Consumer

The newly-created Bloomberg U.S. Employment Services Index, comprising the shares of 17 staffing and recruiting companies, has risen 48% since 9/22/11 versus a 31% gain in the Russell 2000.  This follows almost nine months of underperformance, when stocks of these businesses lagged behind the Russell by 28%, according to Bloomberg.

Commodities

The phasing out of crates from the pork industry, under pressure from animal rights activists, by several major pork producers, could lead to higher prices.

 

Commentary from CEO Keith McCullough

So, Mr Bernanke, you’re saying you’re still saving us from Great Depression; great… just great – thanks for the gas prices:

  1. ASIA – oil up, growth slows – US Policy to Inflate continues to wreak havoc on the rest of the living world – while the SP500 hasn’t snapped yet, Asian stock markets are starting to (they stopped going up in Feb fyi); China down hard (-2.65%) last night and India down another -0.8%, taking its draw-down to -7.2% on the Sensex since Feb 21
  2. BOND YIELDS – the one bull case I could actually buy into is Strong Dollar + Rising Treasury Yields (at the same time); that would mean #GrowthSlowing is off the table. Not now, not at $106 oil. The US Dollar Index is down for the 3rd consec wk thanks to daily talk show appearances from the Bernank and the 10yr failed, hard, at long-term TAIL resistance of 2.47%
  3. SENTIMENT – literally ever metric I track is bombing out the bears; hedge fund short interest hitting new lows, VIX 14, and now my Spread in the II Bull/Bear survey hits its widest to the bullish side since Q1 of last year at +2900 basis points wide! With only 22.6% admitting to be bearish (new low), I’m happy to go Lone Wolf.

Intermediate-term tops are processes, not points.

KM

SUBSECTOR PERFORMANCE

THE HBM: YUM, WEN, DIN - subsector

 

QUICK SERVICE

YUM: Yum Brands CEO David Novak is leaving the board of JPMorgan Chase in order to “singularly focus on the continued growth of Yum Brands”, according to a news release from Mr. Novak. 

WEN: Wendy’s has named Craig Bahner as CMO, effective April 2. Previously, Mr. Bahner spent 20 years at Procter & Gamble.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

TAST: Carrols Restaurant Group gained 9.4% on accelerating volume.  Yesterday’s gain was on top of a 12% move

Monday on news that the company has agreed to acquire 278 company-owned Burger King restaurants through an asset purchase agreement with Burger King Corp.

CASUAL DINING

DIN: DineEquity, Inc., parent of the Applebee’s and IHOP chains, has confirmed the departure of several top executives in recent weeks, according to nrn.com.  Shannon Johnson, former VP of culinary and menu strategy has left the company as has Petrick Lenow, former executive director of communications at IHOP, and Jim Peros, former senior VP of operations at IHOP, who retired earlier this month.  DineEquity is looking to fill all three positions.

DIN: On a loan conference webcast, DinEquity said that roughly one third of Applebee’s remodels are complete.  DIN says that 50% of Applebee’s remodels will be done by year end.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

BWLD: Buffalo Wild Wings declined on accelerating volume following Deutsche Bank downgrading the stock.

THE HBM: YUM, WEN, DIN - stocks

Howard Penney

Managing Director

Rory Green

Analyst