2/1/11 Midnight Report: Egypt Shmegypt. You Can’t Stop the Rally, You Can’t Even Hope to Contain It
Fuck yeah was it on today as the cry of “1400 or Bust!” rang through the trading pits (and if it is Melissa Archer’s bust, well, then Money McBags may have to be rooting with his shorts) like other momentous rallying cries such as “The British are coming,” “Remember the Alamo,” and “Who Let the Dogs Out.” That’s right. despite 2MM people protesting in the streets of Egypt demanding that Mubarak let their people earn dough as Egyptians have grown sick and tired of being poor, sick and tired of seeing food prices rise, and sick and tired of having to root for the Pistons (whoops, that’s Detroit, but Egypt-Detroit, potato-potahto. Actually, it’s probably safer to walk the streets of Cairo than Detroit and with much less hobo smell), the market rallied as if it had downed a case of Four Loko spiked with ample amounts of Red Bull and Charlie Sheen’s urine.
With global unrest now a catalyst for the market to go up in the bizarro ponzeconomy™ in which we live where fundamentals have been trumped by regression analysis on historical time periods that look nothing like today’s period, regularly scheduled government bond purchases inflate paper portfolios more than Timothy Geithner’s ego or Lacy Banghard‘s bra, and crossing one’s fingers and hoping it doesn’t hurt is the leading investment strategy, Money McBags guesses all one can do is buy the dip, buy the rip, and buy everything with more beta than a blue chip. Just be ready to get the fuck out before the tattered curtain is peeled back exposing this run up for the Fed induced manipulation it has really been.
Anyway, other than a sovereign nation with touch points to the global energy supply imploding (though not nearly as important these touch points), macro news was rather quiet today. The ISM’s manufacturing report showed that factory activity in the US rose to 60.8 last month which was up from 58.5 in December and was higher than even the highest analyst guess of 59.5 as analysts thought they were playing by the rules of The Price is Right and thus going over would cause them to lose (though what they would lose other than their credibility Money McBags doesn’t know, and yes that is funny because they have no credibility). Money McBags just loves to point out when shit like this happens because in theory with 78 analysts guessing (which should be a large enough sample size), the actual number should be somewhere within the normal curve of guesses, but this result wasn’t even within a fat-tailed standard deviation of the mean which means (pun intended) that those models are either fucked (and if there will be any model fucking, Money McBags hopes that Marissa Miller will be involved) or the measurement is fucked, or more likely, both. The most interesting part of the data though was that the pricing index went from 72.5 to 81.5 and it’s a good thing that Bernanke said inflation is not a problem, because otherwise Money McBags would be more nervous than if he had gotten mouthy with Julie Schenecker (and yes that is sarcasm).
The only other macro news was that construction spending fell to its lowest level in a decade, and if that doesn’t scream recovery then Money McBags’ name isn’t Money McBags (hmmmm). Construction spend fell by 2.5% which was worse than analyst guesses of a .1% rise, once again outside of the entire range of guesses, and about as healthy for the economy as a cancer sandwich with an extra topping of AIDS and Mickey Rourke’s taint. While every sector was down, the biggest drop came in federal construction which fell 12% as the government moved its funds to more pertinent ventures like producing food stamps and new rims for Joe Biden’s Camaro.
In the market, earnings were mostly positive as UPS delivered a solid Q and beat estimates thanks to package volume rising 1.7% which was the result of business picking up and better use of the Maxtender. EPS was up 44% to $1.08, which beat analyst guesses of $1.05, and full year forecasts for eps were a range of $4.12 to $4.35 which would be ~20% growth, ahead of analyst guesses, and a result of strong orders for the Tila Tequila sex tape to be shipped overnight.
Elsewhere, Pfizer was up 5% after a good Q and an announcement that they will slash their R&D budget in 2012, buyback an additional $5B in shares, and try to produce drugs that treat only patients not using a medicaid discount. And finally, Baidu searched for and found a ginormous quarter as their their profit tripled and their market share in China rose to ~73% as inflation pushes up more than just currency.
In small cap news, everything was up including KITD which closed up ~6% a day after their strange set of acquisitions which Money McBags broke down in great detail yesterday. Speaking of Money McBags’ breakdowns (other than the mental one he is currently having over the death of the only positive thing he had in his life, NSFW muff guessing. He’d say more about this but right now the wound is too fresh and his pole is at half mast as a way to mourn), when he analyzed CRUS’ Q last week, he erroneously said they weren’t supplying chips to the iPad which was just flat out wrong. Shit, it was a fucking douchewad mistake, but Money McBags simply missed the iPad product breakdown a few months ago and he hadn’t gone back through the latest delightful presentation on the CRUS investor page (and note to readers, their presentation is actually a really good introduction to the company for new investors because the CEO has a voice over on all of the slides so you’re not just looking at out of context data, but you are hearing about it as well).
Anyway, if Money McBags read and listened correctly, CRUS currently has 5 custom ICs they sell to Apple so that does damper his bullishness a bit as he thought getting in to the iPad would be a step function up for them (which it likely was, but now we’re still on that step). The important question is whether Malene Espensen will ever return Money McBags’ overtures, but the relevant question is can CRUS get more than 5 ICs in to Apple products to get that next leg of audio growth (perhaps their third leg if you will, after the smartphone and the tablet). Regardless, Money McBasgs thinks CRUS is a company that is working right now because they sell a product to the company that is currently dominating the world (like selling gold chains to MR. T in 1984) so they should continue to have success but they are no longer stupid cheap and need find new areas of growth.
Finally, Money McBags was set to break down NEI’s Q today, but he got busy doing other shit and is now more tired than his dick jokes. He went through their Q, updated his model, and found just the right picture of Danica Thrall, but he simply doesn’t have the time right now to give it the write-up it deserves. He will shoot to have this tomorrow, but the basic story is he thinks there is ~10% downside now and 100% upside but it is 90% likely to just do nothing as it’s not what Money McBags would call a high quality company with any kind of disruptive technology, They are a little do shit services company that is winning bigger deals as they compete on price and they might be about to hit some strong growth which was foreshadowed by the expansion of their manufacturing in to Europe. So nothing about Money McBags’s thesis has changed, but he’ll hopefully get to the details tomorrow. Also, watch for SFLY earnings tomorrow. This company has been rocketing the fuck up and looks to be just cockposterously overvalued. Money McBags has never liked this name but he hasn’t paid much attention to them in a couple of years, so he really has no opinion going in to earnings. His gut tells him they are going to have a big Q (because everything else has) but with the way they are priced, a miss should cause a big sell off, like Pam Anderson‘s career once she turned 35. So the name should be volatile either way and Money McBags is curious to dig in because if they miss, it could be a good short candidate.
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