McDonalds (MCD)

Trading at 15X versus 20X for Tim Hortons (THI-T). 3.3% yield. Disappointing same-store sales was primarily because of currency. Still selling hamburgers in Europe but were getting Euros for them which were worthless when they got them back to North America. Looking for it to reach mid-$90’s.

(Market Call Minute.) It is not often you can get a stock of this calibre when it is down 15%.

One of the things that has made this market tricky is that a number of key themes have continued to work (more or less, the yield themes) but the market has narrowed meaning fewer and fewer of these themes continue to work. One of these is the consumer discretionary theme. This stock has had a very strong move over the last couple of years and over the last few months has started to disappoint on the revenue and earnings sides. You want to give this theme more time.

(A Top Pick Aug 18/11. Up 5.5%.) Sold his holdings at $97 and it has been backing off since then. Not the place to be now.

Has given up a little bit this year because of their European exposure. They are fantastic operators. For the stock to really do well and take off from here, you need to see acceleration in the US economy and stabilize Asian and ultimately a recovery of the European economy.