Posts tagged banks
The big news of the day is that the Labor Department, led by Hilda Solis whose name is an anagram for the upcoming Snoop Dogg swine flu dis track titled “Hos said ill,” came out with their jobs report for December which showed a loss of 85k jobs. This was worse than expectations and held the unemployment rate at 10% while moving the underemployment rate up from 17.2% to 17.3% (you know, the rate that actually counts all of the people unemployed, like the ones who have given up on trying to find a job because they’re 50 years old and companies can just hire someone half their age, if they’re going to hire anyone, at half the price to sit at a desk all day and watch Youtube videos, look at the hot chicks they can date, and wonder why Leon gets to take a break at 2pm while they have to fake work until 3pm). So look at the person to your left and then look at the person to your right, and then look at the person one over from that person to your right and the person one over from the one to your left, and odds are one of you will be underemployed. Leading the way down were builders who cut 53k jobs last month as the construction industry halted to stare at the Burj Dubai Tower and all it’s infinite awesomeness which now claims the title of the world’s tallest building, though still measures a few centimeter less than Peter North’s most famous appendage.
Further causing concern is that unemployment in the euro zone rose to 10%, it’s highest rate since 1998. This was led by Latvia who now sports a 22% unemployment rate to go with it’s 22% literacy rate and Spain where 43.8% of the population under the age of 25 is now on siesta according to the NY Times, which we know is chock full of typos today. If true, that is a truly amazing statistic. You would think with all of that unemployed labor they could finally finish the Sagrada Familia, I mean it’s only been under construction for 128 years and to put that in context, 128 years ago there was no Panama Canal, TV hadn’t yet been invented, and Barbara Walters was still in High School.
In stock news today KO slid 2% as JP Morgan downgarded them to neutral based on KO’s 18% premium to the group. The analyst obviously is unaware of KO being a great dollar hedge due to their booming worldwide business spurred on by great brand equity and a fuck load of sugar. The financial sector is also giving back some gains today with the Citi analyst cutting estmates for investment banks and people getting temporary amnesia and forgetting the one fact Money McBags keeps harping on, banks are getting money for free and lending it for more than free and at a spread at historic highs. Sure risk mitigation is the most important metric, and banks have failed at that worse than Artie Lange failed at accuracy, but the next few Qs should show record profits.
Anyway, that’s all until monday, until then, enjoy the weekend.
Hide the women and children because the market is coming back with a vengeance, like Dirty Harry Callahan or Don Knotts on Three’s Company. The market appears to be determined to show all of the traders who manufactured complex derivitaves such MBS, ABS, and plain BS, that financial engineering can only keep it down for so long as eventually people have to consume. The big news is that manufacturing continues to improve as inventories which were cut to bare bones minimums (and at a minimum, I would bone a bare Eva Wyrwal with my inventory) are now starting to be replenished. China’s manufacuring grew the fastest it has grown in 5 years which is great news for the lead paint industry but bad news for infants. In the US, manufacturing grew faster than it has in 3 years according to the ISM. This increase was driven by the stimulus spend, inventory build back, and increased sales of electronics to replace those which were broken by being thrown against the wall in disgust as the market cratered. Along with China and the US, Europe also saw an increase in manufacturing to a 25 month high causing red light sales to cease across the red light district of Amsterdam.
While positive manufacturing data is certainly good for the global economy, there is still some negative news today putting the proverbial turd in the punch bowl or the circular reference in the excel model. The dollar is dropping again as commodities rally due to cold weather driving up oil prices (and shrinking up “geysers”) and China’s manufacturing prowess spurring inflation concerns. Additionally, US homebuilding fell to a 6 year low led by a 1.6% drop in private home building. Not included in the report though was that sales of cardboard boxes have spiked as foreclosees build new houses out of cheaper materials.
In stock news, Novartis has the vision to buy more ACL, financials are rallying (and as Money McBags has said many times over the past few weeks, they are getting free money right now so should have record profits), and Money McBags favorite TMRK is soaring. TMRK is in the colocation/hosting business along with RAX and EQIX. This sector should see strong growth in the future as more companies rely on virtualization and more and more data storage is outsourced. The larger global trend (other than reality TV, string theory proponents, and flash your co-workers Wednesdays) is cloud computing, where all of one’s programs, files, and downloaded spankwire videos will be hosted in a “cloud,” thus leaving the actual pc as just an interface. Just think about all of the data out there now and the exponential growth it will see as medical redords, MRIs, MP3s, videos, and other apps continue to multiply like rabbits after downing a week’s supply of viagra. TMRK is one of the companies building facilities to host all of this data. It is currently the smallest public player in this sector, though the sector is consolidating with EQIX buying SDXC for around 10x 2010 EV/EBITDA, and it has typically traded at a discount to peers due to the size, illiquidity, and $300MMish net debt (and no that is not a typo, they have a ton of debt as colocation facilities don’t grow on trees). Still their topline is growing 20% plus (though the growth rate has been declining as they build out new facilites, so there are some step function aspects to growth) and and they have 20% of their revenue coming from the government as they host various government websites. This government revenue gives them stability and they should be able to grow it as cyber security becomes more important and colocation actually decreases the security risks. The fact is, data storage and colocation demand is outpacing supply by at least a 2 to 1 ratio so while TMRK is not terribly cheap anymore, as it trades at 8.5x EV/EBITDA, the industry is growing and consolidating so this company should be a longterm winner, like Groucho Marx jokes and anything starring Olivia Munn.
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 $5MM impairment charge yesterday, MED’s CEO is regstered as having sold shares, and these names have been flying higher than a coked up Ruppell’s griffon so a sell off is not unexpected. Money McBags does recommend keeping an eye on NTRI as they have had solid returns, recently entered the diabetic market, and have new deals with WMT and Walgreens. The company is a solid cash flow generator and this country has more fat people than Tiger Woods has STDs, so their business has plenty of room to grow. It is worth following and waiting for the momentum buyers to finish selling.
The market got mixed news today as sales of existing homes grew 7.4% to a two year high of a 6.5MM annual rate (and we thank our lucky pornstars for tax breaks, 4% lower median home prices, foreclosure sales of houses formerly owned by the unemployed, and Faye Reagan) while GDP was revised downward from 2.8% to 2.2% growth. The commerce department loves downward revisions like WGO loves losing money ($.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 big news today is that wholesale inflation is up 1.8% and manufacturing in the US is churning out more goods people can’t afford to buy, especially if prices have to be raised now that input costs/commodities are moving up faster than expectations (weird that expectations were wrong, though much less weird than the new hair trend sweeping across the US). With the continued increase in commodity prices, unemployed aging workers are rushing to their dentists to have their gold/silver/mercury fillings pulled to sell them on the black market.
In world markets, Greece is the latest country now seemingly assfucked (which apparently the Greeks actually enjoy, so kudos to them on that) as their credit rating was downgraded last week by Fitch from “you need a little perfume” to “take a fucking shower.” The Greek prime minister George Papadapolis has said he will cut Greece’s current 12.7% budget deficit to 3% over the next few years by exporting more baklava, feta cheese, and Greek Helmets.
And in stock news, WFC becomes the latest bank to raise money to pay back their TARP funds in order to be able to pay bonuses to all of the employees who didn’t destroy value (surely someone gave a small business loan that worked out, I mean they are getting free fucking money. Even Bernie Madoff could make money doing that.). At this rate, the banks will have their balance sheets all squared up in no time so they can continue to not lend to consumers and businesses without having to worry about the pesky government.
12/14/09 Midday Report: Abu Dhabi on a Dubai-ing spree for Christmas (or whatever the fuck they celebrate)
Before we get to the midday report, we all need to pour out a little Courvoisier (or whatever your revealed preference for drinks may be) for noted Economist Paul Samuelson who passed away at age 94 Samuelson did his best to try to bring legitimacy to the completely made up and theoretical field of study called Economics, which as every good professor will tell you does not work in the real world, like “just being friends” and Eddy Curry. Samuelson wrote the most famous textbooks on Economics and luckily he was reading one as he passed away so he died peacefully in his sleep. A big Money McBags moment of silence for Professor Samuelson.
In market news, Abu Dhabi is bailing out $10B of Dubai’s debt which would be great if Dubai didn’t owe another $150Bish (but why let math get in the way of a market rally?). If 14 other Dubai neighbors each pony up $10B, this should all blow over like Eliot Spitzer’s dalliances. I mean nothing ever came of those, right?
As for stocks, C somehow raised enough money to pay back their TARP funds just in time to get the government off their backs so they can pay out end of year bonuses (and really, if anyone deserves a bonus this year, it is the management team of C, who never saw value they couldn’t destroy. They are to banking talent what Sarah Palin is to syntax). Also, Exxon is spending $31B to buy XTO Energy, a domestic producer of natural gas. Hey Exxon, instead of dropping $30B on XTO, how about just giving me $10MM and I’ll stop off at Taco Bell daily, order 5 bean burritos, and give you all the natural gas you need. That’s right Exxon, I got your natural gas right here. OH!
The market is abuzz today with BAC’s repayment of $45B to Uncle Sam who apparently got drunk and touched BAC in their loan loss reserves just one too many times. So to break the cycle, BAC is going to pay back their bail out funds through the profits they made by being able to borrow from said Uncle Sam at 0% and lend for more than 0% and then have Uncle Sam bail them out should those more than 0% loans go bad. Honestly, that is the best business model ever created, even better than the Brooklyn Decker kissing and rim job booth.
But it gets better. BAC is going to repay some of their bailout funds by issuing $18B of securities which should be great for the current shareholders since issuing securities isn’t dilutive or anything, right? Why else would BAC have opened up 6%? Oh wait, issuing equity will lead to substantial dilution on the order of 10% to 15% (according to street analysts who may be right or wrong depends on the coin flip). So this all makes perfect sense. All companies need to do in this market is fuck up really badly, get coddled by good old Unky Sam, and then fuck their shareholders over and over again until their balance sheet is completely flaccid. After this, their stock should shoot up at least 6%. Makes perfect sense, just like intelligent design (spindle cells be damned) or Tori Spelling’s face.
In other market news, Comcast is buying NBC so now not only will NBC have shitty programming, but their customer service will suck too. But hey, this deal is synergy-istic and synergies are what the business world is all about. Just ask Time Warner and AOL or this guy.
As for our daily job report data, the service industry saw jobs contracting but initial jobless claims fell unexpectedly. So our economy is getting worse and it is getting better at the same time, it’s like Schrodinger’s cat. Is the cat alive, is it dead, or does anyone fucking care (and who put the cat in the fucking box anyway? Do I need to sick PETA on this Schrodinger fellow?) So depending on what data you view as most representative, we are either fucked or slightly fucked, take your pick.
11/24/09 Midday Report: Stocks are down as people hate spending, unless they are spending on cheap shoes
The big news of the day is that the government revised GDP data downward and consumer spending took the brunt of it (which is how it works when consumer spending is 70% of GDP, dipshits). The new estimates are that there was a 2.8% rise in GDP from this past Q vs. the previously announced 3.5% growth. While it was inline with the expectations of economists (and we all know what great guessers economists are, which reminds me of the old joke: Why did the economist cross the road? Who the fuck cares, now pass the salt.), it showed that the economic resiliency may not be as robust as bulls hoped. But hey, the economy still grew so round of hummers and lobster tales for Bernanke, right?
Also in the news today, banks stocks took it in the yingus as the government wants their stimulus funds paid back and people continue to realize the banking system is as healthy as Paris Hitlon’s vagina (which of course isn’t good since she has herpes). Additionally, the US fund for bank deposit insurance fell into the red, but don’t worry because we can always print more money.
In stock news, DSW shot up on a good earnings report because poor people (US citizens) love them some cheap ass shoes. Better yet, RVI which owns a disproportionate amount of DSW maintained their huge spread to DSW (a spread larger than the Octomom’s punany after dropping out little child protective service kids). RVI owns around 63% of DSW and yet trades at around 33% of DSW’s market cap. RVI sold it’s holdings in Filene’s Basement and Value City so all they have now is DSW. This valuation makes less sense than Ron Artest’s singing career or the Lifetime channel (who puts the less in mindless).
The economy can still go either way so as always, be careful out there.