Aww yeah, QE2 is finally on the way in news less surprising than learning another politician is a hypocrite, banks may have forged documents and been untruthful about disclosures, and Bar Refaeli is hot.  QE2 became official when Ben Bernanke got in front of a room of top economists at their annual coven and clam bake in Boston (where Money McBags hears both the incantations and the soup were delicious) and said he would do whatever it takes to help drive inflation up (and the credibility of the dollar down in his back door attempt to return the US to the gold standard).  Of course the Fed’s reliance on core inflation (which strips out food, energy, and things referred to as “necessities,” which have actually seen strong price increases) as a metric to evaluate the economy remains more confusing to Money McBags than this Real Houswives of wherever phenomenon (also known as the apocalypse) or candwiches, but whatever.  So woo-fucking-hoo, the Fed is back to save the day, just like they did the last time.  Wait, what’s that?  This is still the last time?  Oh shit.  Well at least we have gold.

In his speech to his fellow wiccans and currency whores, Bernanke said Given the committee’s objectives, there would appear — all else being equal — to be a case for further action.“  Of course unbeknownst to the market was that the committee’s objectives are to figuratively break in the Fed’s new printing presses to make sure they get the proper return on that investment and to optically push the market higher which will likely be as successful as trying to catch the horizon.  With interest rates already at record lows, Benny B. is going to try to push them lower by buying more longterm goverment bonds and violating the oldest rule of pimping: “Don’t get high off your own supply.”

But as always, Money McBags’ favorite part of any conversation with economists was the old “this doesn’t work in the real world caveat” which was spouted by every single one of Money McBags’ Economics professors back in the day when Money McBags was just a wee tyke and hadn’t realized that the whole study of Economics is more fictitious than the boogeyman, Christine O’Donnell’s resume, or sex after marriage.  This was reinforced when Benny B said: “One disadvantage of asset purchases relative to conventional monetary policy is that we have much less experience in judging the economic effects of this policy instrument, which makes it challenging to determine the appropriate quantity and pace of purchases and to communicate this policy response to the public.”

In short, they have no fucking idea if what they are doing will work, but they aren’t getting paid to sit on their laurels (though if this were their laurel, then that would be a pretty sweet gig), so they feel like they have to do something while the economy sinks, the U6 unemployment gets uglier than an Amy Winehouse-Beeltejuice love child, and fiat currency still exists with all of the paper cuts it can give people.  So quantitative ease on, as hyperinflation is a thing of the past (until it’s not).


Elsewhere, there was enough macro news released today to make a B(L)S’ statistician’s head spin as if Katherine Jenkins had just shown him both sides of her hypothesis test including her standard box model (and Money McBags has no idea what that means).  Retail sales beat guesses of .4% as they were up .6% thanks to increased discounts and promotions such as tax free Tuesdays and “buy one and we won’t fire your neighbor” Wednesdays.  Business inventories rose .6% as well, as the Commerce Department once again distributed the same memo to its numbers manipulators as to what to hard code in for both retail sales and business inventory data.  The downside to the rise in business inventories is that they outpaced sales and thus the inventory to sales ratio is the highest it has been in over a year which means companies are about as likely to hire as Lou Dobbs’ is to employ an illegal immigrant (umm, maybe scratch that one).. Finally, consumer sentiment dropped again to it’s weakest level since July and below analyst guesses because as always, consumers only remain confident that things are getting shittier than Betty White’s adult diaper first thing in the morning.

In the market, stocks were mixed with financials eating a bag of dicks (and not any bag, but a herpes ridden bag) while technology stocks soared thanks to GOOG which had its way with earnings like Nipsey Russell had his way with female contestants on the 1970s game show circuit.  GOOG’s net income rose 32% and they demolished analyst guesses of $5.3MM revenue and $6.69 eps by bringing in $5.5MM of revenue and $7.64 eps (ex one-timers like stock options, restructuring charges, and that hefty girl they met out late Tuesday night that they were way too drunk for and promise they will never do again).  When asked about their success, CEO Eric Schmidt simply said: “We’re fucking Google, dingbat.”

As many of you know, Money McBags is an owner of GOOG because in this structurally fucked market, one has to own something just in case a miracle happens and he firmly believes that regardless of what happens to the economy and the currency, people are still going to use the fuck out of the internet to find jobs, friends, and entertainment.  So while Money McBags has been frustrated with GOOG’s recent MSFT-like ways (trying to find growth anywhere they can such as that awful Buzz facebook competitor and driver-less cars), their core business remains strong with paid clicks up 16%, so if you’re going to have equity exposure, you might as well own GOOG.

In small cap stocks, QCOR finally got approval to put IS on label and shot up ~4% which is a nice to have and good to finally get that out of the way in what was turning out to be a bigger clusterfuck than Bill O’Reilly joining those hags on The View (and if Money Mcbags knew all he needed to do to make Whoopi Goldberg go away was to show her Bill O’Reilly, he would have done that years ago).

Money McBags has written exhaustively about this stock (just throw it in to the search engine on the award winning WGP) and getting IS on label is a check-the-box thing that they just needed to do.  They already have ~40% of the IS market, but this allows them to finally market to doctors who treat IS so they could see as much as 20%-30% market share gains and as the only other driver of IS is birth rates, this should be a nice growth area for that mature business.  Money McBags had IS growing by 10% in his model as he was pretty sure they would eventually get approved but wasn’t exactly sure when, so if he now ups that growth to 20% for 2011, he gets to an EPS of ~$.82 and QCOR is only trading at ~13x that which is cheap for the potential growth they have in MS and nephrology.  This remains a nice little company that investors may miss over the next two Qs as their earnings should get hit due to doubling their sales force ahead of revenues, so you might find an attractive entry point for QCOR over the next few months (though not likely as attractive as this entry point).

Money McBags has to keep his small cap analysis brief today, his brain is fried and he is still a bit shaken by how abortionally bad yesterday’s column was which has caused him to question everything in which he believes (and forensic readers will notice there was not one porn star reference in this column, so sorry about that forensic readers).  That said, he will break down WGO’s Q next week and dive into JOEZ as they disappointed once again as Money McBags predicted after their last Q.  The company simply hates making money no matter how fast they grow as perhaps their jeggings are too tight and have cut off circulation to the strategic thinking part of their brains.

Anyway, enjoy the weekend and Money McBags hopes to be back refreshed on Monday.

Share and Enjoy:
  • Print
  • Digg
  • Facebook
  • Google Bookmarks
  • Netvibes
  • Tumblr
  • Twitter
  • StumbleUpon
  • Yahoo! Buzz