THE HBM: PNRA, DIN, BWLD, PFCB

THE HEDGEYE BREAKFAST MONITOR

 

PORTFOLIO POSITIONS

 

LONGS: PFCB, EAT, JACK, SBUX

SHORTS: MCD

 

MACRO NOTES

 

ICSC Sales

 

The ICSC sales index jumped 3.8% last week; the strongest weekly gain since late 2000.  The year-over-year growth is now 4.2% from 2.7% last week. Sales this week were supported by unseasonably warm weather and strong demand for Easter apparel. Rising gasoline prices continue to be a concern.  Customer traffic was reportedly stronger at wholesale clubs, office supply stores, grocery stores and department stores.

 

 

Commentary from CEO Keith McCullough

 

Commodity inflation rips. Great, we sold our long oil position into that yesterday. Don’t confuse that w/ real economic growth:

  1. CHINA – explicit comments from Chinese central bank head Zhou this morning telling the Fed that Bernanke has a “responsibility to consider global effects” of its dollar debauchery policy. I called this Bernanke’s War last wk and from a Global Macro perspective, it’s on. Japan just printed its lowest money supply number in 3yrs. Japanese Liquidity drying up.
  2. ITALY – joins Spain this morning as the 2nd major Global Macro Equity market to snap its intermediate-term TREND line (15,961 was TREND support for the MIB Index). On a no volume rally in US Equities (down -17% vs my intermediate-term TREND avg yesterday), do not forget how bad those European PMI prints for March were yesterday.
  3. INFLATION – inflation slows growth. Yesterday’s US Equity move was led by Basic Material and Energy stocks + the CRB Index was up 2x what the SP500 was. The Bond market agrees. The 10yr and the Yield Spread (10s – 2s) wouldn’t be down 3bps for the wk to date if US growth was still 2.5-3%).

Since debt structurally impairs growth, it doesn’t take much inflation on the margin to slow the world. China saying the same.

 

KM

 

 

SUBSECTOR PERFORMANCE

 

THE HBM: PNRA, DIN, BWLD, PFCB - subsector

 

QUICK SERVICE

 

PNRA: Panera Bread was cut to Underperform at Raymond James

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:


PEET/GMCR/CBOU/SBUX/THI: All of the coffee names were down except Starbucks and Tim Hortons.  We continue to like Starbucks while maintaining a bearish view of GMCR.

 

CASUAL DINING

 

DIN: DineEquity was cut to Outperform from Strong Buy at Raymond James.

 

DIN: Applebees is offering 75 Pick ‘N’ Pair Lunch options starting at $7.29.

 

BWLD: Buffalo Wild Wings was cut to Underperform at Raymond James.

 

PFCB: P.F. Chang’s launched a new lunch menu yesterday.  At participating locations, the new menu features more than 20 lunch combos, each for less than $10. 

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

 

BWLD: Buffalo Wild Wings declined on accelerating volume on the back of the downgrade. 

 

THE HBM: PNRA, DIN, BWLD, PFCB - stocks

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst

 


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