The market quieted down today as European investors apparently have turned their focus from Ireland’s spiraling deficit to wondering if they will be charged international rates for voting in Argentina’s Dancing with the Stars while also strangely trying to find out who killed Tycho Brahe (and for the record, Money McBags is going with Johannes Kepler, with a tripod, in the Study).

In US macro news, the data today was more underwhelming than Apple’s big announcement yesterday that they were going to be adding the Beatles to iTunes (and excuse Money McBags while he tries to stop yawning over that one) or the Science Cheerleaders‘ latest experiment of seeing if anyone gives a shit about science cheerleaders (with that hypothesis test of course having a sample size of double D).  Basically all of the data today pointed to a continued slowing economy where no matter how many long-term bonds the Fed buys, consumer spend will remain weak because buying bonds doesn’t create jobs, except for maybe Brian P. Sack (and yes Money McBags typed “P. Sack” huhuhuhuh) and his band of merry market manipulators.

As for the data itself, the CPI rose .2% which was slightly below guesses and driven by rising gas prices (which we have now seen in retail sales, PPI, and the rate card for increasingly popular Will the Farter).  Of course excluding food and energy and looking at the confusingly named core CPI (and it’s confusingly named because it strips out the actual core things that people need to consume, but Money McBags understands that economics and logic go as well together as Tony Parker and Eva Longoria or caffeine and malt liquor), the index was flat for the third consecutive month and has now risen by the smallest amount in a year since 1957 when one could still buy happiness for only a nickel (though one had to walk uphill both ways to do so).

In other macro news, housing starts hit an 18 month low, falling 11.7% to a 519k annual pace which was much lower than analyst guesses of 600k and was driven by a decline in the construction of multi-unit homes which continue to drop like Brett Favre’s Q score (and his pants).  And it wasn’t just home building that signaled a weak housing market but mortgage applications also fell to their lowest levels in four months as rates ticked up slightly and sellers continue to refuse monopoly money as an acceptable form of payment.  Finally, Philadelphia was downgraded by Moody’s from a “shitty city” to a “really shitty city,” so look out Detroit because Moody’s is only about 20 years behind the curve.

Internationally, Irish bonds rallied as the UK said they will come to Ireland’s aid if needed (and you would to if your banks were holding a fuckload of Irish bonds) while the EU and IMF continue to negotiate with Ireland about terms of a bail out (with the key terms used being “douchenozzle” and “wanker”).  Representatives from both the IMF and EU are traveling to Ireland to go over Ireland’s books tomorrow and Money McBags only hopes the Irish books they go over don’t include Dubliners because that will cause representatives to sleep through the entire proceedings.  While it’s not clear to Money McBags how giving Ireland ~$100B makes the global economy any better (unless the global economy gets Roz Lipsett from Ireland in the deal), since if that were the case, the IMF should just give everyone $100B and call it a fiesta, the market seems to be reacting relatively positively to the news as there is nothing more reassuring than pushing problems off until later.

In the market, Financials continue to slump as not only are their balance sheets more full of shit than Christine O’Donnell’s resume but they continue to deal with the uncertain implications of Foreclosure Gate (though Money McBags is certain they were all complicit).  The Fed also came out with new dividend guidelines for the banks telling them they can’t raise their payouts until they apologize to everyone for being such asshats and ruining the economy, well that or just paying Uncle Sam back first.

Target was up ~3% after a strong Q as they continue to sell cheap shit and the middle class continues to trade down for cheap shit.  The company is benefiting from their credit card program where they have started offering customers 5% off of all purchases and TGT easily makes that back by charging those customers a 20%+ APR in an arbitrage opportunity that would make even Charles Ponzi’s dick hard.

Elsewhere Chico’s was the man as they beat analyst guesses with profit rising 27%, while BJ’s got ahead of analyst guesses and spit out a solid Q with earnings up 32%. The company raised guidance and rumors persist that they have retained Morgan Stanley to look in to strategic alternatives for the company with Morgan Stanley in turn retaining the services of the legendary Bishop Don Magic Juan to understand the best way to sell BJs.  Finally solar stocks melted down after Credit Suisse downgraded the sector to “market weight” saying there is more supply than demand for solar power and backed that up by simply pointing upwards to the sun.

In small cap news IMAX shot up 7% likely on early returns for the latest Harry Potter movie which Money McBags thinks is titled Harry Potter: Just Fucking Die Already.  Also, yesterday Money McBags brought up INTX and he had a chance to go through their 10Q today and still thinks the company’s long-term business faces more challenges than the Octomom in a hottest MILF competition.  The company basically has one business which is selling identity theft protection despite several attempts to diversify in to Bail Bond Management and something called Online Brand Protection or as it’s better known as: “irrelevant.”  They also recently sold their Background Screening segment after failing to do their own background screening and realizing that it was a shitty business.  This company has done everything it can to diversify over the past few years but that has merely led to bad acquistions and worse execution (further witnessed by their Goodwill write-offs).

The company earned $.24 per share from continuing operations in the Q and seeing as how their core business continues to gradually slip, like Katherine Heigl’s diet, that is at best a $.96 run rate.  They company has gone from 5.5MM customers a couple of years ago down to 4.1 customers in the last Q with net customer acquisitions of zero as for every new sucker they find, one cancels their subscription.  A concerning issue is that more of their marketing plan now relies on direct marketing as they have lost larger indirect partners (and those deals with indirect partners are all short term in nature so can be canceled or renegotiated whenever those partners feel an itch in their balls).  So while earnings this Q were solid thanks to a ~$4MM drop in marketing costs resulting from a decrease in marketing expenses for their direct subscription business with existing clients, their ability to attract new customers is questionable.

So the company is basically in run off mode (or treading water at best) and their cash management strategy is giving off signals that they have kind of given up right now.  They sold off a business unit, raised their dividend to $.15 a Q, and weirdly talk about raising more debt to potentially support the dividend.  That said, their cash flows have been solid enough to support the current ~$2.7MM quarterly dividend payout but the fact that they are no longer talking about reinvesting in the business but are instead focusing on returning cash to investors screams “we don’t know how to grow this fucking company.”

Valuation wise, they are trading at ~10x run rate earnings (though with their inability to grow that base, Money McBags expects those run rate earnings to be overstated) but at only ~4x EV/EBITDA which is actually pretty stupid cheap, but again, this business is stuck in neutral at best.  At the end of the day, there is basically no volume on this stock and no one gives a fuck about it so getting in and out may be difficult (and nowhere near as fun as getting in and out of this) but Money McBags sees no reason for this stock to appreciate and the fact that they need to pay a way above market dividend is a sign of both desperation and management wanting to take money out of the business.  So if you can stomach shorting a 6% yield company, and can even get float on something this thinly traded, Money McBags thinks you will have nice long-term gains as their ability to market their extremely discretionary product has proven to be about as successful as an M Night Shyamalan movie.  On top of everything, their chart looks like it is ready to crater, but again, this is such a small do shit company that its unclear why Money McBags just wasted all of your time with it when he could have been wasting your time making sure you loved some NSFW strangers.

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