3/7/11 Midnight Report: Market Goes Down on Libya as Qaddafi Proves not to be a Cunning Linguist
The market sold off today as the Fed came out (not that there is anything wrong with that) and said that they are both for and against QE3 (which is as useful as a yersinia fecal transplant. And a quick side note on the whole fecal transplant as the new curative breakthrough but Money McBags finds it hard to believe that after tens of thousands of years of human invention, inserting shit into oneself would be some kind of panacea, after all, if that were true wouldn’t Snooki be near immortal?), an oxymoronic civil war in Libya (though not moronic, because Money McBags is against despots of all kinds such as Qaddafi, Ahmadinejad, and Mr. Furley) continued to send oil prices to 2.5 year highs (causing thousands to be thankful jheri curls are no longer in style), and the most obvious rapist search in history still befuddled police and frightened citizens.
The big news obviously continues to be Charlie Sheen’s sleeping arrangements, while the other big news is that Libya is mounting air strikes against its own people as Qaddafi’s power slips faster than MySpace’s valuation or a Ben Bernanke autographed Federal Reserve rookie card (Money McBags remembers when you could trade three Volcker’s and a Janet Yellen for one Bernanke, but now you can’t even get a tattered Artie Burns for it). With news from Libya coming faster and more furious than Peter North in the 1980s, as one minute Qaddafi is seeking asylum and the next the opposition is looking to put him in the asylum (and feel free to use that one Jay Leno, see, Money McBags can write shit that sucks too), oil prices continue to rise as Libya controls whatever is more than a fuck load of oil (perhaps a fucking fuck load). Given that, President Obama is considering tapping US oil reserves (while Money McBags is considering tapping this), in order to lower prices and have less reliance on the Middle East (and note to everyone, it’s called energy independence so lets call up Ed Begley Jr. and figure out what the fuck the electric car is).
The other uncertainty in the market was caused by the Fed who can’t make up their mind about QE3 and today they had more he said/she said than when RuPaul performs a monologue in her bathroom. Federal Reserve Governor and fantastically named Dick Fisher said he wants to end QE2, Dennis Lockhart said QE3 is not impossible, and Charles “Chuck Nice” Evans said to lose his fucking number. Money McBags has no idea what the answer is to the question of “will there be a QE3?”, but he is pretty sure it isn’t titmouse.
As noted, the Fed’s Dick Fisher (which is also what it says on Larry Craig’s last police report) may vote to end the asset buyback program early as he feels it has already caused enough harm to the ponzeconomy™. Speaking at the annual conference of the Institute of International Bankers in Washington (where the hubris blends in nicely with lack of real accomplishment in whatever the opposite of schadenfreude is, we’ll call it “lucky to be privileged”), Dick Fisher spewed about QE2: “I remain doubtful enough as to its efficacy that if at any time between now and June, it should prove demonstrably counterproductive, I will vote to curtail or perhaps discontinue it.” Dick is worried about the Fed blowing it and doesn’t want them to overshoot their goals. Fisher then finished with “What is needed now is for business to be incentivized to commit that liquidity to creating American jobs. This is the task of the fiscal authorities, not the Federal Reserve” before being summoned in to Bernanke’s office for a healthy dose of “shut the fuck up.”
In stark contrast to Dick Fisher is Pussy Farmer (and yes, that is the worst pun in the history of the award winning When Genius Prevailed, but Money McBags is a bit under the weather, and unfortunately, this is not the weather), but also in stark contrast was the Fed’s Dennis Lockhart who said more bond purchases may occur after June, but he would be “very cautious” because once the Fed has already inflated their way in to stagflation and a global commodity spike, then it is time for caution. Lockhart said “My first inclination is to be very cautious about extending asset purchases after June,….given the emergence of new risks, however, I prefer a posture of flexibility as regards policy options‘” He then added that he prefers the posture be even more flexible than an arc de triomph.
Finally, Fed Governor Charles Evans put his WTF hat on and said the Fed isn’t to blame for rising food and commodity prices because apparently the money supply is not the way to measure inflation. Evans opined: “It has been interesting during this time period that people who I socialize with in a variety of formats who haven’t ever paid attention to the state of monetary policy say, ‘Hey Charlie, what’s up with this QE 2 program and will I ever get anything for my passbook savings?’” Um, not to be a dick Charlie, but why do you find it odd that people who have never given a shit about monetary policy now all of a sudden do? It’s like finding it odd that passengers on the Titanic after it hit the iceberg all of a sudden gave a shit about learning to swim or that Andy Roddick all of a sudden gives a shit about being home for dinner. See Chuckles, when shit is fucked up and out of the ordinary, that is when people take notice.
Anyway, to lose all credibility (and see that is funny because he never had any), Evans finished by claiming. “Inflation is not always well-understood. We focus on the prices going up, the things that catch our attention. Car prices have been lower, rent has not been increasing very much, recreation has been negative....what we tend to forget is that technology is improving and those prices are going down.” Awesome logic Chuckster, the next time Money McBags wants to eat some technology to survive, he’ll thank you for spurring on technological innovation, but good job pointing out that shit Money McBags can’t afford, like a car or recreation, hasn’t gone up because once can afford the shit he needs, like food, gas, and a blumpkin from Larissa Riquelme, he’ll get right on that other stuff.
As for the market, technology took a hit as stories came out that lawyers are being replaced by software, which means everyone must now hate software. Bringing technology down was a ratings downgrade of chipmakers from a WFC analyst who cut the group to “market weight” from “overweight” as “an indication of a more moderate though still optimistic view of the sector rather than any active concern about the chip stocks as a group” which in analyst speak means WFC needed more trading volume so had to say something to try to drum up some business.
Also in the market, the world’s No. 2 hard drive maker Western Digital (and they make drives even harder than if Jessica Talarovich were your passenger) is buying Hitachi for $4.3B in stock and cash while LVMH is taking over Bulgari in a 3.7B euro deal. Finally SBUX rose after Morgan Stanley upgraded them to “overweight” citing SBUX’s growth in domestic and international units, plans to enter the single-serve coffee market and bring its packaged coffee business in-house, and world domination.
As for small cap stocks, well Money McBags took it in the yingus today as his shit tends to be higher beta and has had good runs (perhaps it ate whatever Money McBags ate last week) so when it comes to selling the dip, these dips get sold first. That said, it should be a busy week with more earnings (and Money McBags is interested in SAAS, COOL, and KIRK among others) and tweets from Bree Olson. Money McBags did run some screens today and came across a tiny do shit company that may be interesting but has less liquidity than Hilary Clinton’s vagina. That company is PMD and they do some sort of substance testing using hair samples and Money McBags is pretty sure crabs isn’t the substance for which they are testing.
Anyway, Money McBags has done almost no research on this company (which qualifies him to launch coverage on it at any of the major investment banks, though, it makes him too qualified to launch coverage on it at places like Craig Hallum and whatever ThinkEquity is calling themselves these days) but they have ~$6MM cash, no debt, just grew revenue 20% for the year and the Q, and had EPS up 70% for the year (though down for the Q as it looks like operating costs jumped). The company is trading at ~18x trailing twelve month eps but they have a 5.5% yield and three years ago earned ~$.85 per share on $24MM of revenue (and they just did $20MM this year), so the earnings power is there as they are trading ~10x that $.85 eps. They’ve been profitable since 1993 and the CEO said “While some of our growth in 2010 can be attributed to the economic recovery, the primary increase has come from new customers and introducing new programs to existing customers.” So again, kind of interesting.
That said, it’s a $46MM market cap company that trades ~10k shares a day so, um, what’s the fucking point? Money McBags guesses revenues could grow if employers start hiring and thus running more background checks but other than PMD’s CEO Raymond C. Kubacki’s last name being a spoonerism for “bukkake,” it’s not clear there is enough here to tickle Money McBags’ fancy (unless it is Elle Liberachi doing the tickling because that would be hella fancy). Shit, throw it on a watch list and if you get a spare minute do some work, though if you get two spare minutes, do some work and some Kate Upton googling.
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