A cautious session is expected for Tuesday, after the worst slump since June for the major indices.
That’s when a growing number of investors see the Fed moving from rate hikes to a daunting challenge in the face of stubbornly high inflation and a global growth mess. We’ll find out on Friday when Fed Chairman Jerome Powell speaks at the lavish Jackson Lake Lodge in Wyoming on Friday.
Our call of the day of billionaire hedge fund manager Bill Ackman argues that some US fast food chains can withstand the heat of inflationary pressures, as detailed in the semester letter for the European listed portfolio, Pershing Square Holdings
Although not a traditional hedge fund like Ackman’s Pershing Square, PSH is still run in that vein. The closed-end fund reduced a loss from 26% at the end of June to 11% in mid-August.
A difficult year was cushioned by the portfolio’s high exposure to interest rate swaptions, an option on an interest rate swap that bets on higher rates and hedges against global macroeconomic risk. Take to Twitter last monthAckman said inflation remains the biggest risk to the economy and the Fed must maintain its resolve on higher rates.
Regarding these corporate bets, Pershing discussed his stake in Restaurant Brands
owner of Burger King, Tim Hortons and Popeyes. These chains have seen comparable sales increase 20% from pre-COVID levels, and QSR has stepped up its cash to “position them for long-term sustainable growth”.
But the company can continue to expand its business with minimal capital required, its franchisees open new units. “QSR’s franchise-based royalty model is particularly attractive in an inflationary environment. QSR’s revenues benefit when its franchisees raise prices, but its cost structure is not subject to the same inflationary pressures,” Pershing said.
And thanks to improved same-store sales growth and strong unit growth, “QSR’s earnings are now above pre-COVID levels and growing at an attractive pace, despite significant inflation at the l industry and comparable store sales that are just recovering to pre-COVID levels.
The other choice is burrito king Chipotle Mexican Grill
which “continued its impressive performance in 2022 thanks to the continued recovery of in-restaurant sales, price increases to cover cost inflation and successful menu innovation, including pollo asado,” Pershing said.
“We believe Chipotle is one of the best-positioned consumer companies in today’s inflationary world,” the fund said, noting that management had raised August menu prices by 4% to account for the rise. food and labor costs, repeating a measure taken in March.
“The company has tremendous pricing power due to the superb quality of its food
priced lower than many competitors with lower offerings, marketing focused on food quality and freshness rather than cost, and a customer base that over-indexes to higher-income consumers, some of whom negotiate more expensive alternatives,” Pershing said.
As for what doesn’t work? Pershing has withdrawn from its stake in Domino’s Pizza
due to a “relatively high valuation in the context of a volatile market environment”. A victim of its own success, Domino’s “significant improvement” has been a boost for stocks and valuation – more than 28 times Pershing’s estimate of earnings over the next 12 months.
gradually increasing, while bond yields
are stable, the dollar
is slightly lower and oil prices
rebound. Also watch US natural gas futures
which operated $10 per million British thermal units, a new 14-year high.
also delivered an earnings beat. Nordström
and Urban Outfitters
the results are still ahead.
the stock is skyrocketing a strong vision.
The U.S. manufacturing and services purchasing managers’ indexes are due at 9:45 a.m. Eastern, followed by new home sales at 10 a.m.
Government Reportedly Recovered More Than 300 Classified Documents From Former President Donald Trump Mar-a-Lago at home this year.
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Bond markets are now tilting for a 75 basis point rise at the Sept. 21 Fed meeting, and agricultural investors need to be careful. “This rise in inflation expectations is important because index funds – the WHALES in agricultural markets – track inflation measures closely. When inflation rises, index funds buy,” Peak Trading Research tells clients in a note.
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