Archive for December, 2009
2009 finally ends tonight and what a year it has been. The market sunk to a low of 666 before being exorcised by a low quality rally and a bottle of jesus juice, the US goverment bailed out the financial system and printed enough money to make Bill Gates seem like a pauper, unemployment spiked to multi-year highs bringing back Great Depression slogans such as “Brother can you spare a dime?” and “What can we get for $10?” (the answer of course being “everything you want.”), and Hannah Hilton announced her retirement sending Money McBags into a deep and prolonged depression of his own. It was a momentous year but that is in the past and as the year 2010 begins, we all need to refocus on the markets and follow the data closely because things aint so cheap out there anymore so mistakes can be made (though probably not as big as this mistake or this one).
In market news today, weekly unemployment claims came in lower than expected as companies build back inventory and try not to Scrooge people during the Christmas holiday. The 432k initial jobless claims were the lowest in a year and a half so there is some optimism. Of course, those filing for extended unemployment benefits rose by 200k to just under 5MM. That’s right, 5MM people have been out of the work force or longer than their 6 months of unemployment checks, but there is nothing to see here. In actuality, we appear to be at an inflection point where the economy has bottomed and is stabilizing so there is hope for growth, of course, they said that in Japan in 1991 as well.
In stock news, not much is happening today. Financials are up a bit (and as always, remember they are raking in the dough right now with free money from the FED and people and businesses who need that money willing to pay a lot more for it than free), RICK is rising again as the weak dollar makes those $20 lap dances oh so much cheaper for the international crowd, and NLS may be providing us with a good entry point should we believe the analysis of whengeniusprevailed random message board posters (as always, buyer beware).
So a Happy New Year to all of you from Money McBags who will leave you with this one thought for 2010.
12/30/09 Midday Report: The market mimics the Alabama school system as investors close their books until the New Year
With the year coming to a close, trading is thinner than a bulimic after a good gastric banding while market news is scarcer than Paris Hilton’s panties or Bernie Madoff’s investment returns. The only real market news out today is that the Chicago ISM was released and measured a whopping 60, though it is unclear what 60 is out of and what 60 actually means, but it was higher than estimates so that must be good. Apparently, readings over 50 signal expansion which means every time Bar Refaeli shows up on my screen, my pants would read about a 99 on the Chicago ISM scale. Directionally, the results point to manufacturing in the midwest gaining strength and could signal positive changes for the job market as long as you are looking for a job as a competitve eater, snow shoveler, or corrupt politician (Chicago’s 3 big industries).
The dollar is also on a bit of a rally as people forget how much money the US printed and borrowed, thus sending metals prices down. Money McBags has talked about gold’s Bubblicious rise in the past and we are now witnessing some sell off. Long term, gold still remains a good hedge, though not as good as wearing two condoms when in Thailand.
Finally, GMAC may need more money from the government to the tune of $3B to $3.5B as not only did they finance shitty cars, but they financed them shittily. As a result of this news, the financial services sector is down as the fear of more bad loans and bail outs is leaving a slight scent on the market (and that scent is a bit like a young skunk who has been urinated on and left to sleep with Amy Winehouse for a week). That said, remember, these banks are getting free money and lending it out for a heck of a lot more than free so they should be raking in the dough so there are still some good buys out there.
In stock news, Money McBags favorite WILC hit its 52 week high as the shekel increases vs. the dollar and companies (unlike overweight strippers and kleenex) just can’t stay ridiculously cheap forever. Also there appears to be a sell off of momentum names in the weight loss space as NTRI and MED are dropping like Alan Greenspan’s credibility. NTRI announced a $5MM impairment charge yesterday, MED’s CEO is regstered as having sold shares, and these names have been flying higher than a coked up Ruppell’s griffon so a sell off is not unexpected. Money McBags does recommend keeping an eye on NTRI as they have had solid returns, recently entered the diabetic market, and have new deals with WMT and Walgreens. The company is a solid cash flow generator and this country has more fat people than Tiger Woods has STDs, so their business has plenty of room to grow. It is worth following and waiting for the momentum buyers to finish selling.
Data came out today showing a rise in consumer confidence for the second consecutive month, despite consumers rating their current situation as the worst since February 1983 (and to give you an idea about how long ago February 1983 was, Tennessee Williams was alive for most of the month, Case had yet to mix his chocolate with Shiller’s peanut butter, Beat It was released as a single (and Michael Jackson was still black, and alive), and Hilary Scott was born and thus had yet to expertly fellate her first johnson). That’s right, in the same report today, the consumer’s expectations of wages and jobs fell to 26 year lows while consumer confidence rose. So it all makes perfect sense. Consumer confidence is rising, while falling to new lows at the same fucking time. Somewhere Kafka is happily sitting up in his grave and applauding while Zeno Cosini has his last cigarette.
Speaking of Case-Shiller, home prices in 20 cities rose for the 5th consecutive month, or they were flat, depending which news source you read of the exact same fucking data. And seriously, for you reporters out here, you’re not reporting on the existential feeling of Antoine de Saint Exupery or the exact location of a quantum particle (and for the record, under my balls would be an acceptable enough guess) so how hard is it get the one number fact correct? Luckily, a third news source clears up any confusion by stating that home prices were up, but when adjusted for seasonality, they were flat. Who knew that one needed to hire someone from NAFA (where I am told they party until their valuation allowances reverse) just to read a simple news story.
In stock news, a Money McBags favorite, RICK continues rise (and it is from more than the table dance) while a Money McBags watchlist company, CRTX, gets some momentum. CRTX is a roll-up drug maker/supplier focused on the respiratory market who went public through a reverse merger last year. Since that time they have acquired the rights to a number of drugs while revamping their sales force and selling controlling interest in themselves to Italian pharma company Chiesi (in return for the rights to market one of Chiesi’s drugs in the US and a lifetime supply of parmesan cheese). While trying to piece this company together, CRTX has seen their top selling drugs face increasing competition from generics (which they admit is happening and say is not unplanned, hence the acquisition of other drugs) and has disappointed the street (though only one analyst covers them and that analyst has been consistently too high, thus tripping quant funds’ models when numbers come in low). The point is, this company could easily do $115MM of revenue in 2010 (maybe $130MM at the top end) and has a current market cap of around $145MM. Drug companies at a minimum should tade at 2x earnings, and more likely 3x to 4x. So if this company can just execute and fend off lost drug sales through their new drugs (Curosurf and Factive) while purchasing another underutilized drug or two, the stock could easily double from here. It definitely bears watching, as does the majestic Gracie Glam.
The only real news today (other than that Nell Mcandrew is still hot) is that the extra day of shopping this year led to an increase in retail sales. Amazingly enough, analysts also found that an extra serving at dinner led to an increase in people gaining weight, an extra shot of Jager led to an increase in people throwing up, and an extra hour in a Bangkok brothel led to an increase in people getting AIDS (and Money McBags loves any city whose name is a verb followed by a noun). Retail sales were up 3.6% as retailers were better able to hold price and manage inventory, plus that whole extra day thing. Without the extra day, analysts estimate retail sales were up 1% to 4%, so throw your favorite dart at whatever number you prefer. Interestingly though and a positive sign, sales of electronics were up 6% as consumers still want their iPhones, netbooks, and Rabbit Habits.
In other market news, the street awaits Wednesday’s treasury auction which has caused yields to increase and thus tempered market gains today and Israel raised their interest rates by another 25bps to fight off inflation. Israel also announced that if inflation continues to rise, they will either send the Mossad after it or simply have it’s mother nag it to death. The rise in Israeli rates will increase the value of the shekel vs. the dollar which is good for Money McBags’ favorite WILC though bad news for Americans planning on going on a kibbutz this summer.
In stock news, a tiny Money McBags watchlist stock, MBND, continues to rise after raising revenue estimates last week. MBND installs Direct TV across the country with a specialty in multi-dwelling units and recently rolled up a number of players to become the largest Direct TV installer. They finally worked out operating kinks last Q and earned $3.3MM of EBITDA and just guided to $260MM-$270MM of annual revenue. So as long as they don’t fuck anything up (which they did in the 2Qs prior to this last one, so the leash is shorter than a midget’s nut hairs), they should earn at least $14MM of EBITDA and they have only a $20MM market cap and ~$55MM EV. So they are trading at ~4x EV/EBITDA and <.1x revenues and that is if they realize no operating efficiencies. This is either a $6+ stock or a roll-up cluster fuck, but worth keeping an eye on and doing some research as Direct TV continues to grow and MBND could ramp with it now that they have their operational issues “under control” (at least until the next fuck up).
Yes Money McBags lights the menorah and it looks like the market wants him to get those table dances tonight as it is up again on positively mixed news. Durable goods orders rose, though missed expectations with weakness in autos and airplanes which is not suurprising since “Cash for Clunkers” went away like Tom DeLay’s dignity. Taking out transportation, durable goods demand demolished estimates like Kirstie Alley demolishes her Christmas ham (and it is reasons like this that NTRI has been absolutely killing it lately). Orders were up 2% ex-transportation, led by demand for machinery, metals, computers, and stripper poles. The question remains whether this is real demand or just inventory build back, so we’re trying to temper our excitement and make it last longer by just thinking about baseball.
In other positive market news today, initial jobless claims fell to their lowest level since September 2008 as eventually you run out of people to fire. So if you made it through and stayed employed this long, you might be ok, but if you’re looking for a job, you may be fucked worse than the lovely Houston at her 620 man gangbang.
In stock news, Money McBags’ long time favorite QCOR is up 20% on news that the FDA will give a ruling on Achtar for IS by June (and hopefully the ruling is more than just finding it delicious). Seeing as how it took QCOR about 3 years and several “do-overs” to get this filing accepted (and you’d think they were trying to prove P=NP with how long it took them to simply get a filing complete), this is positive news, but the FDA still has to approve this drug which is used by the majority of doctors anyway (so one would think it would be approved, but then again, one also thought Lindsay Lohan would have had a long and profitable career and Evolution would not have been contested in the 21st Century). Money McBags wouldn’t be buying into this rally though. It seems more like short covering than anything because the company is still going through growing pains and there is some uncertainty to their medicare reimbursement as they currently have to pay more than they get from medicare and didn’t reserve enough for late/non-payments last Q. The company is probably at a ~$.08-$.10 quarterly run rate right now, but they have cash and give back to shareholders through buybacks. They could have real upside if they continue to penetrate the MS market and can get on-label IS approval while overcoming the sticker shock from doctors/patients/insurance companies on the price of a vial of Achtar which currently runs at $23k a pop (and that is enough to cure spasms from MS/IS but create spasms from having to pay that price).
12/23/09 Midday Report: Consumer confidence rises enough to spur consumers to still not buy new houses
Another day and more mixed data so Bulls and Bears can both rejoice (Yay!!! Things are getting better and Yay!! Things are staying crappy. See we can all get along, you hear that Israel and Palestine and Tiger and Elin?). US consumer confidence rose to 72.5 according to the Michigan Consumer Sentiment Index, though it was down from the preliminary reading of 73.4 just over a week ago. It’s good to see even Michigan is adopting the Commerce’s departments’ “downward revision” strategy which Money McBags outlined for you yesterday. In addition to Consumer Sentiment rising to some undefined number, personal spending and incomes were up (though less than forecast) as the second derivative of unemployment has slowed and the economy has been stimulated from flaccid to almost semi-erect with all of the dollars the government has printed and strategically placed into their g-string.
But Bears don’t worry because in contrast to the stronger consumer (though not as strong as estimates, Magnus ver Magnusson, or the odor from a Mickey Rourke corn shit), new home sales fell to a seven month low and dropped 11%. I’m no Robert Shiller (for fucksake I’m not even Karl Case) but when home foreclosures are at a record, why the fuck would anyone buy/build a new home when they can get an existing one for 70% of the price (and backing this sentiment up was the news from yesterday that existing home sales were up)? But fear not everyone, because Timothy Geithner says there will be no “second wave” financial crisis and we all know how good Treasury Secretaries have been with their predictions.
In stock news, newspapers are moving up (and that is not an error as bizarre as it seems, so there will be no retraction necessary) as a Wells Fargo analyst upgraded the sector from “underweight” to “equalweight” after sniffing four packages of glue, downing a fifth of Jack Daniels, and revving up the flux capacitor in his DeLorean and travelling back to the 1980s, thus forgetting about this little thing called the interfuckingnet. Along with that report, the analyst also predicted that New Coke will soar, Ishtar will revolutinize the movie industry, Teddy Ruxpin will be the best selling toy in history, and AIDS will be but a fleeting virus and thus he also downgraded CHD.
Tommorrow is a half day on the markets so get your trades in while you can and then enjoy your day off.
The market got mixed news today as sales of existing homes grew 7.4% to a two year high of a 6.5MM annual rate (and we thank our lucky pornstars for tax breaks, 4% lower median home prices, foreclosure sales of houses formerly owned by the unemployed, and Faye Reagan) while GDP was revised downward from 2.8% to 2.2% growth. The commerce department loves downward revisions like WGO loves losing money ($.14 last q, don’t let the tax break fool you) and America loves watching stuff that sucks.
The downward revision strategy does seem to be a winner though as the market is up and the previous GDP announcement helped spur on this rally. Money McBags now suggests all of you try this “downward revision” strategy on your first dates. Just tell the lovely lady you are wining and dining that you are a multi-millionaire, have houses on both coasts (and are just renting a crappy apartment while they are being renovated), and are hung like a moose (and not any moose, but a Canadian moose, on steroids). If she winds up liking you, just downwardly revise those estimates every week or so and you’re golden. If she doesn’t like you, just up your upward estimates next time. So kudos to Secretary Gary Locke and his Commerce Department for that strategy, we always wondered how he scored a fox like Mona Lee, but I guess now we know.
Meanwhile, the yield curve continues to widen like Ben Bernanke’s forehead, Kevin Federline’s waist, and a young wannabe actresses’ sphincter in a Bang Bros. video. The steepening of the yield curve should be a boon to banks who really need a break after almost destroying the economy by lending money to people who couldn’t pay, then getting bailed out by the government, and then getting to borrow money for free and lend it for more than free (and that “more than free” is currently growing to “profit-licious”). Now, just when the banks raised more equity (further diluting already underwater shareholders) to pay back the TARP in order to give employees bonuses (and those bonuses are mostly well deserved, and by “mostly” I mean “not at all”), they get historically favorable spreads in which to make money. Thank goodness, I was starting to get worried, but the banking system really does need this kind of break. Now if we could just release OJ, redirect a few billion dollars of the funds going to repair the New Orleans levees to aid in building more golf courses, and elect the cast of the Jersey Shore to congress (with the lovely Jwoww promoted to be Secretary of My Interior), then everything would be alright with this country.
So if you don’t care about spiraling credit card risk and the potential commercial real estate bust, now would be a good time to invest in some banks (just not C, because they are to banking what John Meriwether is to hedge funds).
The market is rising today as people are becoming convinced that the economic recovery is real and not just the beginning of a double-dip recession (which is actually worse than double-dipping your chip at a party and not nearly as exciting as a good ATM double dip). Chicago Fed Chief Charles “Chuck E.” Evans maintains that inflation will be tame (woohoo), unemployment will remain high (boohoo), and the Fed will keep rates low to help stimulate the economy (market voodoo). Meanwhile, the market is betting on inflation as it can actually count the amount of dollars the US has printed/borrowed/pulled out of a hat during the recession. The inflation debate now promises to be one of the three most hotly argued questions over the next several months along with the always fun post holiday “Does my ass look fat in these jeans?” and “Brittany Murphy: Cocaine, anorexia, or who gives a shit?”
In market news, Intel (INTC) was upgraded by Barclays to “overweight” as the analyst claims the market has been too harsh in dinging INTC for potential peaking gross margins, an FTC investigation, and the senate’s failure to ratify Moore’s law. Of course this has led investors to wonder, “Who the fuck is Barclays??” Also moving the market today is french company Sanofi-Aventis who is buying toiletry and fragrance producer Chattem in their quest to end France’s 2000 year old assault on proper hygiene. The French buying a hygiene company is a bit like the State of Alabama buying Encyclopedia Britannica or Shawn Kemp investing in Church and Dwight, but one has to start somewhere.
The next few days should see relatively light trading with managers locking in their gains and taking off for the holidays so be careful about interpreting market moves, though be more careful about interpreting the results of your breathalyzer test.
12/18/09 Midday Report: Earnings surprises abound as RIMM jobs naysayers and naysayers begrudgingly admit they kind of liked it
The big news moving the market up today is that several tech companies beat earnings. Leading the way was RIMM who destroyed analyst forecasts of $1.04 by dropping $1.23 to their damp bottom line and growing topline by 49%. They also raised guidance, margin forecasts, and the ire of PALM who once again fell short of expectations like all of Jaimee Grubbs’ parent’s hopes and dreams. Apparently people still like buying Blackberries even if they don’t always work as the Curve is now the number one selling smart phone, so suck on that Apple and your beautiful, fully functional iPhone which is so awesometastic it will actually wipe and bidet you for no extra charge.
In other tech news, ORCL easily beat forecasts as more companies are buying the fuck out of whatever ORCL software does and that can only be positive, unless Oracle software is responsible for promoting Paris Hilton’s album, the intelligent design theory, or trickle-down economics.
In macro news, German business confidence rose as the Business Climate Index predicted the climate is getting so much better that all rain showers will now be golden. The index managed to rise to a whopping 94.7, beating out expectations of 94.5 and we all know how great a .2 beat is of a number with no context, right? Actually, the number comes from a survey of 7,000 German firms across their biggest industries including manufacturing, construction, wholesaling, retailing, and scat film shooting. The longterm average is 96 so I guess everything in Europe is almost back to normal, just don’t tell the Greeks.
And finally Money McBags favorite RICK met expectations and didn’t give guidance but said the current $.19 quarterly eps is a decent range though the first two quarters this year should be stronger than that with the NBA all-star game in Dallas and the Super Bowl and Pro Bowl in Miami (no seriously, they said that). Unfortunately, no one on the call asked how revenues during the Super Bowl will be effected by Chris Henry’s absence and Pac Man Jones’ unemployment.
If you read the transcript from their call, which I highly recommend even though it’s no Tolstoy (but it is an asshair better than any of that Dan Brown crap), you can even learn of RICK’s successful recent Toys for Tots event in their NYC club and no, Money McBags is not making that up but yes he is pissed his parents never got him those kind of toys when he was a tot. The point is, this company is easily going to earn $.76 next year and is likely going to earn over $1.00 (where analyst estimates currently are). They are trading at ~10x a worse case scenario and 6x-7x a more reasonable estimate. The problem is that RICK’s is always one hummer in the champagne room away from being screwed (pun intended) so Money McBags recommends you go long RICK and buy some long dated out of the money puts to cover your ass should that happen (though he also recommends that RICK employees do everything but cover their asses).
Enjoy the weekend.
A rash of negative news for the markets is out today. The dollar is rising thanks to the Fed saying they believe the economy is strengthening (they conveniently left out the part about the quadrillion dollars they printed over the past year to strengthen said economy, but I understand that is a minor detail) and the Federal Reserve Bank of Philadelphia showing a positive increase in manufacturing in the Philly region (apparently guns, crack cocaine, and Allen Iverson jerseys are included in those manufacturing numbers). This news is leading investors to bet on rates rising in the future and thus the trade out of equities and commodities is gaining a bit of momentum, like pants-less Tuesdays.
Other bad market news includes another downgrade of Greece, this time by S&P who is now giving the country a Triple-B rating (while Maria Menonous maintains her double D rating), citing the country’s lingering inability to collect remunerations from the Grecco-Persian wars, the gag-inducing contributions to the entertainment world by Nia Vardalos’s opus, and the fact that they have a fuckload of debt with 16% of their GDP tied to the tourism industry in a global economy where no one can fucking afford to travel except for Tiger Woods’ wife. If Greece doesn’t either collapse or fix their debt structure soon, Money McBags may have to hang it up because his stable of Greek jokes is thinner than Socrates defense for “corrupting” the “minds” of young men.
The final blow to the market today was that weekly claims for unemployment went up for the second straight week while analysts were expecting them to drop. While the four week trend is still down, two rising weeks in a row is not a good signal, unless you hate people working. So the market is down because the economy is both strengthening (rates may rise) and getting worse (new jobless claims are up), heads you win, tails I fucking lose. Why do I even play this game?
In stock news, RICK is running into earnings tonight as it is cheaper than a used broken condom. If they can show positive profitability trends in their Vegas club, they could double by next year. Money McBags’ favorite short WGO also reported this morning and said they are seeing improvement with backlog up 350%. What they tried not to mention too much is that they still lost $.14 in the Q (don’t be fooled by that tax break), are still going to lose money next Q, burned $7MM in cash., saw market retail sales continue to plummet (down 31%), and still produce an overpriced product that no one can afford to fucking buy. While new tax breaks helped them out, today’s action is the usual short covering of fickle investors. WGO has less chance of being profitable this year than Paris Hilton does of giving the annual MENSA address in Latin, so Money McBags would be getting ready to re-short this in the next few days. Oh yeah, as predicted, no one wants to buy C stock, something about not wanting to own a terribly run company with worse risk management capabilities than Chris Henry.