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Post Labor Day Mashup - CHART 1

RECENT NOTES

9/01/15 MCD | ALL DAY BREAKFAST IS OFFICIALLY LAUNCHING ON 10/6

8/28/15 ZOES | Entering the Big Leagues

8/24/15 SBUX | DO THE NEW FOOD OFFERINGS DRIVE INCREMENTAL TRAFFIC?

RECENT NEWS FLOW

Thursday, September 3

DIN | Announced strategic plan to consolidate operations at its Glendale, CA location, intended to improve organizational speed and effectiveness. They are expecting pre-tax charges of $3mm in FY15 and $10mm in FY16 (click here for article)

FOGO | Will open five new restaurants in the United States, this is all part of their effort to increase company-owned restaurant count by 10% per year. The new locations will be in Summerlin, NV, Woodlands, TX, San Francisco, CA, Naperville, IL and New Orleans, LA (click here for article)

BWLD | Opened first restaurant in Dubai (click here for article)

Wednesday, September 2

CMG | Lawsuit challenges Chipotle’s G.M.O. claims, claiming that the meat products come from animals which feed on G.M.O. corn and soy. Chipotle has said little except for that they intend to fight the suit (click here for article)

 

Tuesday, September 1

MCD | Announced all day breakfast will be nationally launched at all locations on October 6th (click here for Hedgeye note)

BOBE | The company along with its external advisors have decided that performing a sale-leaseback transaction of up to $200mm is the most appropriate path to enhancing shareholder value (click here for article)

SHAK | Announced the first Tokyo Shack will open this winter in Meiji-Jing Gaien park (click here for article)

SECTOR PERFORMANCE

Casual Dining and Quick Service stocks that we follow widely outperformed the XLY last week. The XLY was down -2.3%, top performers on a relative basis from casual dining were BOBE and RT posting an increase of +5.7% and +4.9%, respectively, while GMCR and ARCO led the quick service group this week up +10.2% and +5.1%, respectively.

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QUANTITATIVE SETUP

From a quantitative perspective, the XLY looks bearish from a TRADE and TREND perspective, TRADE support is 71.09.

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CASUAL DINING RESTAURANTS

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QUICK SERVICE RESTAURANTS

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RESTAURANT PERFORMANCE INDEX

Restaurant performance index capital expenditures have been accelerating due an increase number of IPO’s and restaurant expansion across the country.

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Keith’s Three Morning Bullets

Dovish Fed article out of @WSJ as another wanna be hawk (Williams) fades alongside stocks:

  1. VIX – does an explicitly more dovish Fed tone down short-term volatility here? My risk range model actually implies it could as the top-end of my range on front-month VIX no longer has a 4-handle in front of it (range still elevated, but 22-36)
  2. FX – Down Dollar = Up Yen = Nikkei Down (another -2.4% overnight), so not everyone is a winner; risk ranges are narrowing though as volatility across asset classes does this am (risk range for EUR/USD narrows to $1.10-1.14)
  3. RATES – UST 10yr dropped to 2.11% on the slowest rate of change in Non-Farm Payrolls since the Labor Cycle gains peaked in FEB, then back up this morning to 2.15% with Spanish 10yr +7bps approaching parity w/ UST at 2.14%

SPX immediate-term risk range = 1; UST 10yr 2.07-2.19%

 

 

Please call or e-mail with any questions.

Howard Penney

Managing Director

Shayne Laidlaw

Analyst