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Monday Mashup

Monday Mashup - CHART 1 new new

 

We are removing KKD from the LONG bench.  The company reported a very challenging quarter last week and provided little guidance that suggests that the issues they face are one time in nature.

 

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

Friday, September 11

KKD | Announced it has signed a development agreement with Fraliment S.R.L to open 12 Krispy Kreme shops in Bolivia over the next five years (click here for article)

CMG | Linked to salmonella outbreak in Minnesota (click here for article)

LOCO | Continued south Texas expansion with new location in New Pharr (click here for article)

SBUX | Mobile order and pay to be rolled out nationally to all locations by the end of September (click here for article)

 

Wednesday, September 9

KKD | Reported 2Q16 results, earnings per share ex-items was $0.15 versus FactSet estimates of $0.18. Revenue came up short of estimates as well, reporting $127.3mm versus consensus of $131.2mm. Same-store sales were +2.3% versus consensus of +2.6%, due to this poor performance management lowered full year EPS guidance down to $0.76 - $0.80 versus previous guidance of $0.80 - $0.85 (click here for press release)

MCD | Announced it will fully transition to cage-free eggs in the U.S. and Canada over the next 10 years (click here for article)

JMBA | Increases share repurchase program to $45mm (click here for article)

 

Tuesday, September 8

PLAY | Dave and Buster’s reported a great 2Q15, led by an 11.0% same-store sales built up by 12.1% increase in walk-in sales and a 2.2% increase in special events sales. Due to the strong numbers management is raising guidance, total revenues are now expected to be $844mm to $853mm versus previous range of $822mm to $831mm (click here for article)

PBPB | Announced a $35mm share repurchase program (click here for article)

DNKN | Named Michael Shutley Vice President, Federal & State Government affairs (click here for article)

 

SECTOR PERFORMANCE

Casual Dining and Quick Service stocks that we follow widely outperformed the XLY last week. The XLY was up +1.2%, top performers on a relative basis from casual dining were BOBE and TXRH posting an increase of +4.2% and +2.6%, respectively, while SHAK and PBPB led the quick service group this week up +13.4% and +7.8%, respectively.

Monday Mashup - CHART 2

Monday Mashup - CHART 3

 

QUANTITATIVE SETUP

From a quantitative perspective, the XLY looks bearish from a TRADE and TREND perspective, TRADE support is 73.19.

Monday Mashup - CHART 4

 

CASUAL DINING RESTAURANTS

Monday Mashup - CHART 5

Monday Mashup - CHART 6

Monday Mashup - CHART 7

 

QUICK SERVICE RESTAURANTS

Monday Mashup - CHART 8

Monday Mashup - CHART 9

Monday Mashup - CHART 10

 

Keith’s Three Morning Bullets

Bets continue to mount on a Dovish Fed meeting…

 

  1. USD – US Dollar Index closed on its low for the wk (-1.1% on the wk) and is seeing follow through selling this morning vs. both Euros and Yens – what’s most interesting about this to me is that on 30-day correlation, SPX has a POSITIVE correlation to USD of +0.8 (meaning a Dovish Fed could be bad for stocks)
  2. JAPAN – Down Dollar is definitely bad for Japanese Stocks – that INVERSE correlation has not changed; Yen +0.3% took another -1.6% out of the Nikkei overnight – it’s -12.5% in the last month with the US Dollar -2.7% (and Yen +3.8%)
  3. UST 2yr – yield tested a “breakout” above 0.75% for the 6th time in 6 months last wk… and failed; back down to 0.71% on Dovish Fed spec this morning and, with Fed Fund Futures this low, I still think the Fed could train wreck macro markets if they tighten

 

SPX immediate-term risk range = 1; UST 10yr Yield 2.13-2.24%

 

Please call or e-mail with any questions.

 

Howard Penney

Managing Director

 

Shayne Laidlaw

Analyst

 


Dovish Fed Meeting?

Client Talking Points

USD

The U.S. Dollar Index closed on its low for the week (-1.1% on the week) and is seeing follow through selling this morning vs. both Euros and Yens. What’s most interesting about this to us is that on 30-day correlation, SPX has a POSITIVE correlation to USD of +0.8 (meaning a Dovish Fed could be bad for stocks).

JAPAN

Down Dollar is definitely bad for Japanese Stocks – that INVERSE correlation has not changed; Yen +0.3% took another -1.6% out of the Nikkei overnight – it’s -12.5% in the last month with the U.S. Dollar -2.7% (and Yen +3.8%).

UST 2YR

Yield tested a “breakout” above 0.75% for the 6th time in 6 months last week… and failed; back down to 0.71% on Dovish Fed spec this morning and, with Fed Fund Futures this low, we still think the Fed could train wreck macro markets if they tighten.

 

 

**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET - CLICK HERE

Asset Allocation

CASH 70% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 6%
FIXED INCOME 24% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
MCD

MCD is one of Sector Head Howard Penney's favorite names. He thinks McDonald's is finally emerging from the doldrums and is doing everything they need to do to fix the company domestically.

 

Penney believes there is not only a huge inflection point coming for the profitability of the company, but also for their sales. He thinks this means Wendy’s, Jack In the Box, Sonic will suffer a bit as MCD begins to take its market share back.

PENN

Bottom Line here? September regional gaming revenue growth should accelerate meaningfully from August and provide a catalyst for the stock. Our bull thesis on PENN appears very much intact.

TLT

In a higher volatility, growth-slowing environment, you want low-beta exposure (stocks that move less than the market) and a larger allocation to long-term Treasuries.

 

In the recent Macro Overlay video series exclusively for Investing Ideas subscribers, Keith rank-orders our top investing ideas positions from a fundamental macro and style factor perspective (low-beta, big cap liquidity, slower growth):

  1. Treasuries (TLT)
  2. “Something that looks like Treasuries” (EDV)
  3. Gold (GLD)
  4. Low-Beta, Big-Cap liquidity: McDonalds
  5. Low-Beta, Big Cap Liquidity: General Mills

Three for the Road

TWEET OF THE DAY

McGough: Why Restoration Hardware Shares Are Headed Even Higher | $RH https://app.hedgeye.com/insights/46315-mcgough-why-restoration-hardware-shares-are-headed-even-higher-rh… via @HedgeyeRetail cc @KeithMcCullough

@Hedgeye

QUOTE OF THE DAY

Creativity is thinking up new things. Innovation is doing new things.

Theodore Levitt

STAT OF THE DAY

According to the American Pet Products Association Americans spent $58.04 billion on their pets last year.


The Macro Show Replay | September 14, 2015

 


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

September 14, 2015

September 14, 2015 - Slide1

 

BULLISH TRENDS

September 14, 2015 - Slide2

September 14, 2015 - Slide3

September 14, 2015 - Slide4

 

BEARISH TRENDS

September 14, 2015 - Slide5

September 14, 2015 - Slide6 

September 14, 2015 - Slide7

September 14, 2015 - Slide8

September 14, 2015 - Slide9

September 14, 2015 - Slide10

September 14, 2015 - Slide11


McGough: Why Restoration Hardware Shares Are Headed Even Higher | $RH

In a special guest appearance on The Macro Show on Friday, Hedgeye’s Retail Sector Head Brian McGough discusses why Restoration Hardware’s stock has worked (and why this is just the beginning of the RH growth story).


The Week Ahead

The Economic Data calendar for the week of the 14th of September through the 18th of September is full of critical releases and events.  Here is a snapshot of some of the headline numbers that we will be focused on.

 

CLICK IMAGE TO ENLARGE.

 

The Week Ahead  - zz 09.11.15 Week Ahead


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