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Monday Mashup - CHART 1

We are adding Dave & Buster’s Entertainment (PLAY) to the Hedgeye Restaurants SHORT bench. Over the coming weeks we will walk through our fundamental thesis on why we are BEARISH on PLAY.

RECENT NOTES

12/6/15 CMG | STARTING TO COME CLEAN

12/1/15 DFRG | HEADED NORTH

11/23/15 Restaurant Industry Macro Note (Sales, Confidence, Employment and Commodities)

11/23/15 CMG | SHORT THE FUNDAMENTALS

11/20/15 WEN | REMOVING THE SHORT | GOING LONG

SECTOR PERFORMANCE

Casual Dining and Quick Service stocks that we follow outperformed the XLY, last week, which was down -0.3%. Top performers on a relative basis from casual dining were DFRG and BWLD posting increases of +2.2% and +1.1%, respectively, while YUM and PNRA led the quick service group this week up +4.7% and +2.3%, respectively.

Monday Mashup - CHART 2

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XLY VERSUS THE MARKET

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QUANTITATIVE SETUP

From a quantitative perspective, the XLY looks BULLISH from a TRADE and TREND perspective, TREND support is 78.42.

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CASUAL DINING RESTAURANTS

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QUICK SERVICE RESTAURANTS

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COMMODITIES

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Keith’s Three Morning Bullets

In rate of change terms, at 1.88% y/y that was the slowest NFP print since the cycle peaked in Q1, but the Fed is going to hike on that:

  1. EURO – that’s why I signaled buy USD on last week’s Euro ramp of +2.7% - it’s back down -0.6% this morning to $1.08 and has no immediate-term support to $1.05; the data doesn’t matter to the Fed – the SP500 does
  2. OIL – #StrongDollar (rate hike catalyst DEC 16th) driven #Deflation Risk definitely matters to most asset classes – after a -3.8% decline last week, Oil is down another -1.1% this morning to $39.53 and the Commodities complex remains in crash mode
  3. EM – Japanese Equities +1% on the Dollar Up move overnight – EM Asia continued lower (no likey Up Dollar); Thailand -0.7% (-6.4% in the last month is one of the ugliest); EM (MSCI Index) deflated another -0.9% last wk to -14.3% YTD

SPX immediate-term risk range = 2057-2112; UST 10yr Yield 2.19-2.33%

 

Please call or e-mail with any questions.

Howard Penney

Managing Director

Shayne Laidlaw

Analyst