MCD - Holding The Line On The $ Menu

The news flow from the McDonald's annual meeting was consistent with past comments, but uncertainties remain.

Jim Skinner, McDonald's CEO, said the company remains committed to its low-price dollar menu. "This is not the time to be passing that on to consumers. They have long memories. We're the value leader. We always have been, and they expect us to continue to be the value leader. The company's low-price dollar menu, which offers items like double cheeseburgers for $1, has been popular with cash-strapped customers. The menu drives traffic to stores, and the additional volume has helped protect profits by knocking out some of the pressure from higher commodity costs.

Given the inflation pressures the company is seeing, holding the line on the Dollar menu puts the McDonald's system in a difficult position. In 1Q08, despite 2.9% same-store sales, higher commodity costs drove U.S. margins down 20 basis points for the quarter. In 1Q08, in the U.S. cheese costs rose 30% while beef and chicken both increased nearly 4%. For 2008, McDonald's expect U.S. chicken prices to rise nearly 6%, cheese up 14% and beef up slightly.

We understand the need to drive traffic, but at what cost and who is paying the price?

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