Monday Mashup: CHUY, SBUX and More

Monday Mashup: CHUY, SBUX and More - 1


Recent Notes

10/27/14 Monday Mashup: BWLD, BJRI and More

10/28/14 New Best Idea: Short CHUY

10/31/14 SBUX: Short Thesis Firmly Intact

11/02/14 New Best Idea: Long YUM – Vulnerable to Activism


Events This Week

Monday, November 3rd

  • TXRH earnings call 5:00am EST

Tuesday, November 4th

  • BKW earnings call 8:30am EST
  • BLMN earnings call 9:00am EST
  • ARCO earnings call 10:00am EST
  • RRGB earnings call 10:00am EST
  • FRGI earnings call 4:30pm EST
  • JMBA earnings call 5:00pm EST
  • PBPB earnings call 5:00pm EST
  • CHUY earnings call 5:00pm EST

Wednesday, November 5th

  • PZZA earnings call 8:00am EST
  • DAVE earnings call 8:30am EST
  • TAST earnings call 8:30am EST
  • THI earnings call 10:30am EST
  • RUTH earnings call 4:30pm EST
  • NDLS earnings call 4:30pm EST

Thursday, November 6th 

  • WEN earnings call 9:00am EST
  • LOCO earnings call 4:30pm EST
  • BBRG earnings call 5:00pm EST


Chart of the Day

SBUX global traffic has now decelerated for five consecutive quarters, coming in at 1% in 4QF14.


Monday Mashup: CHUY, SBUX and More - 2


Recent News Flow

Monday, October 27th

  • DIN upgraded to buy from neutral at Longbow.
  • DIN increased its quarterly cash dividend by 17% to $0.875 per share of common stock; share repurchase authorization increased to $100 million.
  • PLKI announced the launch of its new Buttermilk Biscuit Butterfly Shrimp.

Tuesday, October 28th

  • CAKE announced the opening of its newest restaurant (8,000 sq. ft.) at the Fayette Mall in Lexington, Kentucky.
  • BWLD upgraded to outperform at RW Baird with a $180 PT.

Wednesday, October 29th

  • DIN downgraded to market perform at Telsey Advisory Group.
  • JMBA upgraded to outperform from neutral at Wedbush with a $17 PT.
  • LOCO names Mark A. Belanger, CFE, as Vice President, Franchise.  Belanger will oversee the company's franchising efforts, including sales and franchisee relations.

Thursday, October 30th

  • EAT declared a quarterly dividend of $0.28 per share which will be payable Dec. 26, 2014 to shareholders of record as of Dec. 5, 2014.


Sector Performance

The XLY (+2.6%) underperformed the SPX (+2.7%) with both casual dining and quick service stocks, in aggregate, outperforming the SPX.


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Monday Mashup: CHUY, SBUX and More - 4


XLY Quantitative Setup

From a quantitative setup, the sector remains bearish on an intermediate-term TREND duration.


Monday Mashup: CHUY, SBUX and More - 5


Casual Dining Restaurants

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Monday Mashup: CHUY, SBUX and More - 7


Quick Service Restaurants

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Monday Mashup: CHUY, SBUX and More - 9


Howard Penney

Managing Director


Fred Masotta


Commodities Weekly Sentiment Tracker

Note: Using the z-score in the tables below as a coefficient of variation for standard error helps us flag the relative market positioning of the commodities in the CRB Index. It is not intended as a predictive signal for the reversion to trailing twelve month historical averages. For week-end price data, please refer to “Commodities: Weekly Quant” published at the end of the previous week. Feel free to ping us for additional color.    



1.       CFTC Net Futures and Options Positioning CRB Index: The Commodities Futures Trading Commission (CFTC) releases “Commitments of Traders Reports” at 3:30 p.m. Eastern Time on Friday. The release usually includes data from the previous Tuesday (Net Positions as of Tuesday Close), and includes the net positions of “non-commercial” futures and options participants. A “Non-Commercial” market participant is defined as a “speculator.” We observe the weekly marginal changes in the overall positioning of “non-commercial” futures and options positions to assess the directionally-biased capitulation risk among those with large, speculative positions.


The SOYBEANS, COTTON, AND WHEAT markets experienced the most BULLISH relative positioning change in the CRB week-over-week

The SUGAR, COCOA, AND HEATING OIL markets experienced the most BEARISH relative positioning change in the CRB week-over-week


Commodities Weekly Sentiment Tracker - chart1 CFTC Positioning


2.       Spot – Second Month Basis Differential: Measures the market expectation for forward looking prices in the near-term.

  • The ORANGE JUICE, CORN, AND WHEAT markets are positioned for HIGHER PRICES near-term
  • The COTTON, LIVE CATTLE, AND HEATING OIL markets are positioned for LOWER PRICES near-term

Commodities Weekly Sentiment Tracker - chart2 spot 2nd month basis


3.       Spot – 1 Year Basis Differential: Measures the market expectation for forward-looking prices between spot and the respective contract expiring 1-year later.

  • The SUGAR, CORN, AND WHEAT markets are positioned for HIGHER PRICES in 1-year  
  • The LEAN HOGS, LIVE CATTLE, AND SOYBEANS markets are positioned for LOWER PRICES in 1-year  

Commodities Weekly Sentiment Tracker - chart3 spot 1 yr bassi


4.       Open Interest: Aggregate open interest measures the amount of opened positions in all actively traded futures contract months. Open interest can be thought of as “naked” or “directionally-biased” contracts as opposed to hedgers scalping and providing liquidity. Most of the open interest is created from large speculators or participants who are either: 1) Producers/sellers of the physical commodity hedging their cash market exposure or 2) Large speculators who are directionally-biased on price.


Commodities Weekly Sentiment Tracker - chart4 agg. open interest         


Ben Ryan


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  1. How Japan's economic demise (and Central Planning, in general) is contributing to the nascent downfall of active management
  2. Peeling back the U.S. equity market and observing leadership from a sector and/or style-factor perspective leads us to conclude that meaningful downside risk remains amid rising concern over the economic outlook


Best of luck out there,


Darius Dale

Associate: Macro Team

European Banking Monitor: Sovereign Swaps Tighter, Financials Swaps Unchanged

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor".  If you'd like to receive the work of the Financials team or request a trial please email 




European Financial CDS - It was a fairly uneventful week for EU bank swaps as they were higher by 1 bp, on average. Greek banks, however, saw swaps rise by 38 bps on the week and are now higher by an average of 114 bps on the month.


European Banking Monitor: Sovereign Swaps Tighter, Financials Swaps Unchanged  - chart1 Financials CDS


Sovereign CDS – Sovereign swaps mostly tightened over last week with Portugal the outlier at +19 bps to 209 bps (and now +41 bps m/m). The US also widened, though by a modest +2 bps to 19 bps.


European Banking Monitor: Sovereign Swaps Tighter, Financials Swaps Unchanged  - chart2 sovereign CDS


European Banking Monitor: Sovereign Swaps Tighter, Financials Swaps Unchanged  - chart3 sovereign CDS


European Banking Monitor: Sovereign Swaps Tighter, Financials Swaps Unchanged  - chart4 sovereign CDS


Euribor-OIS Spread – The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. The Euribor-OIS spread widened by 2 bps to 9 bps.


European Banking Monitor: Sovereign Swaps Tighter, Financials Swaps Unchanged  - chart5 Euribor OIS Spread


Matthew Hedrick 



Ben Ryan




Retail Callouts (11/3): KORS, LB/Free Shipping, WMT

Takeaway: We’re not comfortable enough on next year’s numbers to get constructive on KORS, but it checks out into tomorrow’s print.



Retail Callouts (11/3): KORS, LB/Free Shipping, WMT - 11 3 chart2B






We don't have a call on KORS right now, but we're positively predisposed headed into the print tomorrow. We all know that KORS is one of those companies that can't just 'beat the quarter'. It's the kind of company that does not know how to miss, having beat estimates by an average of 29% since the IPO. The closest it came to missing was a beat of only 5%, or $0.03ps. That was almost exactly a year ago. It was KORS' weakest comp, wholesale growth, and margin performance of the year. As we anniversary that event, we don't think estimates correctly reflect the leverage on the upside. Furthermore, our internet tracking indicator is shoring continued strength on a sequential and on a year/year basis.   We're modeling $1.00, vs the Street at $0.88 and guidance of $0.85-$0.87. We don't have enough confidence in next year's numbers to make a big bullish call on this one. But into the quarter, we're not concerned. 


Retail Callouts (11/3): KORS, LB/Free Shipping, WMT - 11 3 chart1


Retail Callouts (11/3): KORS, LB/Free Shipping, WMT - 11 3 chart3



LB - Free Shipping Offer

VS has used Free Shipping as an offensive weapon in the past (one of the first to do so, actually), but this is a continuation of the trend that we think will plague the rest of retail. Though LB is a high-end brand with a very loyal customer base, we'd note that even a powerhouse like Victoria's Secret can't easily absorb free shipping costs due to a relatively low average basket size. It's high-ticket retailers like Nordstrom and Brands like Nike and Ralph Lauren that could absorb shipping costs without a material hit to margins.

Retail Callouts (11/3): KORS, LB/Free Shipping, WMT - 11 3 chart4






WMT, TGT, AMZN - Walmart holiday plans include reduced prices on 20,000 products, free shipping on hot items



  • "Walmart is upping the ante on holiday shopping. The chain announced that, starting Saturday, Nov. 1, it will reduce prices on more than 20,000 items. Walmart is also launching its holiday promotions on the first weekend in November to get a jump on what is expected to be a highly competitive selling season."
  •  "Walmart said it would provide free shipping for online orders of some 100 hot gift items, and free shipping for all online purchases over $50."
  • "The move follows Target Corp.’s offer of free shipping on all items, from late October through Dec. 20."
  • "Walmart has also expanded its digital offerings to include 7 million items---one million more than last holiday season. Deals typically reserved for Black Friday and Cyber Monday will start on shortly after midnight Pacific Time on Monday, Nov. 3."


MEO - Metro Holds Talks With Karstadt Owner



  • "German retail giant Metro AG, which owns the Kaufhof chain of department stores, on Saturday said it had held exploratory talks about purchasing rival Karstadt, adding it was not aggressively pursuing a deal."


KORS - Michael Kors Joins Tech-Accessories World



  • "Michael Kors’ expansion into tech accessories goes beyond the smartphone and iPad holders he already offers." "This month, the designer is launching a collection of phone-charging cases, earbuds and two chargers that are designed to resemble women’s cosmetics, as in a lipstick and a compact case."


LVMH - Anthony Ledru to Head Louis Vuitton Americas



  • "Louis Vuitton named Anthony Ledru president and chief executive officer of the Americas, effective Jan. 1."
  • "Ledru was most recently senior vice president, North America, at Tiffany & Co."


U.S. Gasoline Average Less Than $3 for First Time Since 2010



  • "For the first time in almost four years, U.S. drivers are paying less than $3 a gallon at the pump."
  • "That’s down from this year’s peak of $3.696 in April, and the first time the average has dipped below $3 since December 2010."


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