9/14/10 Midevening Report: Bigger retail sales fail to stimulate market as market prefers motion of the ocean
The market closed down after being up most of the day as US retail sales were a bit better than guessed at by analysts thanks to bigger back to school discounts, some states offering tax-free holidays (or as they are more commonly known as: paycations), and consumers having more money after skimping on their water bills. Retail sales were up .3% from July and core retail sales which exclude autos, building materials, and hope were up .6%, doubling the .3% guessed at by analysts who once again prove to be as accurate as the contestants in the Alabama State Spelling Bee (where both buying a vowel and using the right letter in the wrong place are legal). Categories that showed the biggest increases included grocery stores (likely a result of extended unemployment benefits, higher food costs, and the fact that people need to fucking eat), gas stations (likely a result of higher oil prices), and the Ines Sainz fan club (likely the result of pure awesomeness). So if one were to believe the numbers, the economy is not quite dead and should continue to peter along indefinitely if the government can keep borrowing from China or making up the data (and Money McBags votes for making up data because he’d rather be lied to than fucked).
In the only other US economic news today, wholesale inventories rose at their fastest pace in two years thanks to retailers stocking up on items for the back to school shopping season and Vivid Video stocking up on the highly anticipated Karissa Shannon sex tape for the skipping school shopping season. Wholesale inventories rising should be good news for GDP in the short run, though if the consumer remains on life support and only breathing through the government supplied money tube, inventories may be building up too early.
Internationally, expectations for Germany’s economy dropped dramatically as the ZEW economic-research institute reported that their economic expectations index for the country fell to -4.3 in September from 14 in August which is the lowest in over a year since the great maultaschen shortage of 2009. Economists’ tarot cards predicted that the index would come in at 9, thereby proving that fortune tellers/economists suck at their jobs regardless of the language. Elsewhere Eurozone production was flat for the month (even with a rise in dutch ovens) while housing prices in Britain dropped more than some guy named Wayne Rooney’s Q score after a saturday night on the town. Finally, Turkey’s economy grew by 10% after pairing up with a nice gravy and side of cranberry sauce (and don’t forget to tip your writer)
In the market, BBY jumped ~6% today after profits were up 61% as a result of better gross margins driven by mobile phone sales as customers rush to get the newest smart phones to be able to watch porn in any location. Analysts guesses were that earnings would be $.44 per share and BBY demolished those guesses by earning $.60 per share, despite flat same store sales growth, and they raised their full year guidance by $.10 to $3.55 to $3.70 per share. Like most other companies who beat, the outperformance was caused by margin expansion and not sales and that can only happen for so long. Other companies moving up included CSCO who announced a 2% dividend (as apparently investing for growth is becoming more passé than MySpace and full bush), KR who posted higher earnings and maintained profit guidance as they crank out more sales of Ramen Noodles, and JCP after their CEO said the company exceeded their back to school sales projections (and Money McBags has no joke for this as he is more puzzled by all of the retail strength than he is by Michael Chabon’s popularity or midget porn).
In small cap news, DGIT was up 4% today and Money McBags still thinks this is a buy. Remember the other week they gave guidance below the street which caused investors to get their panties all in a bunch as they worry that the potential work around solutions to DGIT’s ad serving box (or whatever you want to call it) by Ascent Media and Extreme Reach will start to hurt DGIT’s business. That said, it’s not an extreme reach (or any kind of reach to be honest) to say DGIT will hit their guidance of ~$100MM EBITDA and thus they are trading at ~3.5x because their core business is not just fine for the time being, but still growing (so more than fine, perhaps fine+ or titriffic) as the HD market remains stronger than Portia di Rossi‘s breath on a Sunday morning. Yeah, the street hates DGIT’s management team and sure, the former head of Fastchannel which merged with DGIT loves talking about how his Extreme Reach is going take business from DGIT, but guess what? That isn’t happening anytime soon and the Street can go fuck themselves. Honestly, the shorts are having a misinformation-fest with this name right now and the only thing that is going to quiet them down is the next couple of quarters from DGIT. Look, the Extreme Reach/Ascent media story has been out there for years now and DGIT’s management has been a bunch of asshats from day one, so what has fucking changed to bring this stock from ~$44 to ~$16? Nothing other than shorts getting louder than a pair of JAMS and DGIT actually giving guidance which was a bit below some douchelicking analyst’s overinflated targets but still ridonkulously good. The business is still GROWING, HD is still gaining share, and they still have the primo real estate to serve ads to TV stations so if you can deal with a bit of volatility, this company should at least bounce back to $20+ in the next few quarters.
Kind readers, Money McBags has an admission to make. You see, as the writer, editor, and lead muff guesser of the award winning When Genius Prevailed, Money McBags has to wear many hats when running this site and sometimes it is difficult to reconcile all of them. Given that, editor Money McBags is tasked with the very difficult role of trying to reign in writer Money McBags from potentially crossing the line between really bad taste and really really bad taste and yesterday was one of the few times that editor Money McBags won. That said, the writer runs this place and he refuses to let his work be corrupted by the political correctness of his editor.
Long story short, yesterday’s headline read: “9/13/10 Midevening Report: You can’t spell “unstable” without BASEL” when in fact the original, and likely funnier version, read: “9/13/10 Midevening Report: You can’t spell “unstable” (or “anal beads”) without BASEL.”
You can see the difficult editorial decisions Money McBags must make on a daily (or hourly to be more exact) basis. To be fair, editor Money McBags did think the anal beads reference was funny, but deemed it unnecessary, too far out of left field, and something that might not appeal to mainstream readers. He of course forgot that everything about WGP is far out of left field and unappealing to mainstream readers so censoring Money McBags’ writing will only lead to watered down analysis and a gentle stroking of the sellside instead of the complete ass fucking which Money McBags lays on them daily. So forgive that transgression and know that in his heart, editor Money McBags really wanted you to enjoy the anal beads and he will never keep any anal beads from you again.
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