COMMODITY CHARTBOOK

Takeaway: Commodity price action over the last week has strengthened our conviction in remaining bearish on $TXRH.

Coffee prices continue to lead to the downside as the majority of the agricultural commodities – that we track as part of our process – declined as the dollar index strengthened.  Beef and dairy prices remain the ones to watch for the restaurant industry in 4Q.  The strength in beef prices is negative for TXRH, BLMN, WEN, JACK, CMG and others. 

 

Summary View

 

Beef prices gained 1.3% over the last week.  The USDA’s WASDE report, released yesterday, was bullish for beef prices as lower expected cattle placements in the third quarter is expected to translate into lower supplies of fed cattle next year.   Importantly for beef prices, and proteins more broadly, corn prices surged yesterday as the USDA reported that global inventories are expected to drop more than expected as the U.S. drought cuts output

 

Coffee prices continue to show weakness as coffee producers in Brazil are reportedly waiting for better prices.  According to Bloomberg, the Brazilian Coffee Council is also concerned with low government inventories of the product and is proposing an auction for as many as 6 million bags of Arabica coffee.  The continuing weakness in coffee prices is a positive for SBUX, PEET, DNKN, THI, CBOU, GMCR and other coffee retailers. 

 

COMMODITY CHARTBOOK - commod

 

 

Gasoline Prices

 

Gas prices are up 12% year-over-year and we believe that this will have an impact on spending growth.  On a regional basis, it is important to note that this impact is likely to be greater in some areas than others; in California gas prices are up 22% year-over-year and could have a significant impact on discretionary spending.   Following a peak last week of over $5 per gallon in Southern California, recent prices now seem to be subsiding.

 

COMMODITY CHARTBOOK - gasolien

 

 

Correlation

 

COMMODITY CHARTBOOK - correl

 

 

Charts

 

 

COMMODITY CHARTBOOK - crb foodstuffs

 

COMMODITY CHARTBOOK - corn

 

COMMODITY CHARTBOOK - wheat

 

COMMODITY CHARTBOOK - soybeans

 

COMMODITY CHARTBOOK - rough rice

 

COMMODITY CHARTBOOK - chicken whole breast

 

COMMODITY CHARTBOOK - chicken broilers

 

COMMODITY CHARTBOOK - chicken wings

 

COMMODITY CHARTBOOK - coffee

 

COMMODITY CHARTBOOK - cheese

 

COMMODITY CHARTBOOK - milk

 

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more