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Thursday, October 12, 2006

The Coffee And Hamburger Economy (SBUX)(TM)(MCD)

Perhaps people cannot afford cars or expensive homes, but the coffee and hamburger markets are fine. McDonald's Corp said that Q3 earnings would be better than expected and that September same-store sales rose 7.7%. Starbucks Corp sales rose 6% in September, better than expected.

Everyone who can read a newspaper, and some who can't but watch TV, knows that car sales are poor this year, unless you are Toyota Motor. In addition, home sales are hampered by rising interest rates, and perhaps the perception that the economy is not doing so well.

But, the smaller ticket items, the cheap meal and the expensive cup of coffee have come into their own.

Now, if only you could trade 1,000 cups of coffee for a new car.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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