The Daily Dose: Fine-Tune Your Antenna

 | Mar 11, 2014 | 8:00 AM EDT
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The markets felt weird around Sunday evening. How do you attain that feel for the markets nowadays? Trolling Twitter, keying in on assorted sources for reputable news. 

That odd feel extended to the entire session on Monday. Suddenly, headlines have the market tanking 5% in short order for any number of risks: geopolitical, a slowdown in U.S. growth, the arrival of the long-awaited pop of the China asset bubble. When push comes to shove, here is what you really need to be watching to see if the market is about to enter a pullback period.

  • Tesla Motors' (TSLA) stock.
  • Social media stocks.
  • Industrial names that have enjoyed strong runs.
  • Decline in Treasury yields and in yields on defensive stocks.

Remember, when the fundamental backdrop begins to shift, companies trading at inflated valuations that don't deserve those valuations are going to fall hard. Those things are not occurring at present, or not to a degree that I would deem portfolio-threatening...


McDonald's (MCD) had a brutal same-store sales release for February. Some blame a multitude of unhealthy food options on the menu. Others point to new food offerings by the competition. While those are part of the reasons, I tend to blame this: an absurdly complex menu that is victimizing McDonald's restaurants.

Here are the three areas of concern:

Point of order: The customer still has to first interact with a McDonald's employee, who then places the order for a likely a new complex product. At Chipotle Mexican Grill (CMG), the customer immediately interacts with the food preparer, and then shuffles off to checkout.

Giant menu: As McDonald's lines build during peak hours of breakfast and dinner, the line slows down, because of the small font on the menu, which is due to ever-expanding options. Slower line speed, less likely to order the extra item. McDonald's needs the extra item.

No social buzz: Search Chipotle, Starbucks (SBUX) and Panera Bread  (PNRA) on Twitter, and you will find big-time buzz, around the clock, when each one of these chains opens a new store or releases a new product. Then search McDonald's. There isn't the same excitement. For a business that has slim profit margin, McDonald's needs the shot of sales adrenaline that's usually associated with new products.

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