Posts tagged Estonia
The market limped in to the close today as the dip buyers were somehow distracted by the jump in new claims for unemployment which were so far from analyst guesses that they were perhaps a Nassim Taleb-ian black swan (as opposed to a Natalie Portman-to-lesbian Black Swan), the continued rise of commodity prices (as companies get ready to exclaim “we don’t need no stinking margins”), and the news of Mt. Etna blowing again (which makes it the biggest thing to blow since Veronica Bottoms).
With macro news continuing to show little to no improvement (unless you count a lower labor force participation rate, falling inventories, and an increase in meth users as improvement), Money McBags remains very cautious about buying any dips as cognitive dissonance is not his preferred investing strategy (you all know Money McBags is more of a bottoms up investor than he is a top down investor anyway). The point is, Money McBags gets that the market offers some inflation protection especially since bonds are deader than the Lebanese government or Alan Greenspan’s reputation as the “Bernanke Put” floods the market with dollars and keeps interest rates lower than Uma Thurman’s boobs, but at some point people need to get the fuck back to work because even the tiniest prick can pop a stimulus inflated bubble economy.
As for actual data today, as mentioned above, first time claims for unemployment were announced and they rose to 445k while analysts guessed they would fall by 5k to 405k (or by 4k if one wants to use the non-upwardly revised number in the B(L)S’ weekly game of “psych“) and it was the biggest rise in 6 months. The good news though is that it gives people more free time to buy the dips. That said, the most disturbing part of the number was that non-seasonally adjusted claims (and if it were Money McBags, the season he would use to adjust claims would be saffron) was 770k, which was the highest it has been in a year and as good a sign for a real recovery as a “bridge out ahead” sign was for Mary Jo Kopechne in 1969.
In other macro news, U.S. producer prices climbed 1.1% in December after a 0.8% rise in November, but luckily core inflation was up only .2% so the Fed can sleep easy tonight (as long as they don’t have to buy any necessities like food, gas, or shovels to clear the snow in the morning). Honestly, judging inflation by using core inflation (and thus taking food and energy out of the equation) is like is like judging Andrew Johnson’s presidency by taking all of his policies out of the equation (you know the ones where he basically negated any gains from the Civil fucking War, so well done you fucking asshat) or judging a Jay Leno monologue by taking all of the jokes out of the equation (and see, that’s funny because as far as Money McBags can tell, there are no jokes in a Jay Leno monologue).
And the macro news kept coming as the trade deficit narrowed to a 10 month low thanks to exports rising as a result of a weaker dollar and pre-orders for Faye Reagan‘s new release Bottomfeeders. Finally, home foreclosures topped 1MM for 2010 with the lucky 1MMth foreclosed on homeowner winning an all-inclusive night’s stay at their local YMCA where they are free to contract all of the scabies and old man smell they want (unfortunately, trips to the bacteriologist are not included). But none of that mattered to Benny B who got his Fed on again today at a Small Business Forum in Washington DC co-sponsored by the FDIC, CNBC, and the ATC. Benny B stepped away from his cauldron long enough to say that 3% to 4% growth is likely this year (and he can have the B(L)S goalseek to prove it) but that won’t reduce unemployment “at the pace we’d like it to” before mumbling “or at all.”
Internationally, Spain sold some fucking bonds (well $3.9B of five-year bonds to be exact) at a yield of 4.54% which was 97bps more than the previous auction in November, but 33bps below expectations and 400bps below a healthy fucking market. That said, it gives Spain at least one more month as a contributing member of the global ponzeconomy to enjoy some tapas and milkshakes with Helen Lindes.
Also in Europe, the ECB kept rates on hold as inflation concerns were overshadowed by renewed debt tensions and something called selective memory. Of note though was that this was the first time the ECB governing council included a representative from new euro member Estonia, and for those of you unfamiliar with Estonia, it is just north of Latvia, its capital city is called Tallinn, it likes long walks on its oil shale deposits, and if you get it drunk enough, it will whip out pictures of its large Peipus (or Peipussee in German).
As for the market, MRK was down ~6% after they dropped their trials of blood clot drug Vorapaxar which in turn clogged up their hopes for revenue growth. Vorapaxar was thought to be a multi-billion dollar drug and was a big reason for MRK’s $41B acquisition of Schering-Plough in 2009, so um, oops. The problem is that the drug was found not to be safe for stroke patients, which in turn gave investors a stroke, thus lowering the drugs potential market opportunity even more.
Elsewhere in the market, SAP SAPeed on guesses as the stock surged ~6% after the firm reported a 27% increase in software revenue driven by business demand, Infosys infosucked after the Indian firm’s profit grew 14% but was below guesses due to the strength of the Indian rupee, and Marathon Oil ran all day after it announced it would move its refinery and pipeline operations into a separate company which continued the trend of large break ups including Motorola, ITT, and the zodiac.
In small cap news, COOL continued to rise after Tuesday’s announcement that they shipped more than 500k units of something called Zumba Fitness for the Nintendo Wii where players burn calories through dances such as the meringue, salsa, and daggering, Money McBags wrote about COOL quite a bit at the beginning of 2010 and was right that it is a terribly run company but now that they have a supposed hit, there might be some value here (though the company has mastered the concept of unprofitable growth). Unfortunately, Money McBags does not know the economics of what selling 500k units does for the bottom line in terms of margins etc., so he has no idea how to translate this news and whether COOL may actually be a buy, but he hopes to get some clarity in their call (and this is why professional investors can kick the shit out of regular guys like Money McBags because they can just pick up the phone and talk to COOL’s CFO to figure that shit out).
Also, on Monday a Money McBags favorite, QCOR, pre-announced that Acthar prescriptions for MS grew only 9% sequentially and 66% y/y while also warning that profits will be down due to investing in doubling their sales force (something Money McBags already pointed out, and he already pointed this out too). Anyway, Money McBags was expecting closer to 20% sequential growth and has ~$1.5MM of extra costs baked in to his Q4 numbers so if he lowers the growth rate to 9%, he gets to ~$.18 eps. For 2011 his guess is ~$.90 eps and that is the important number because no one really gives a shit about this Q4 given that the company has said they are in sales force growth mode. So QCOR is trading at ~17x Money McBags 2011 guess (and that guess may be low if their NS segment gets any kind of traction, of course it may be too high if MS only grows 9%, but whatever) which is no longer that cheap so if you’ve been in since Money McBags first started writing about this company when it was half the price it is today, you should definitely take some off the table. Q4 is going to suck so take your profits and buy back if you want when the stock sells off since it has had a monster run and is due for a bit of disappointment.
And yeah, Money McBags is aware that he used a very similar headline in August, but there is something about the classics.
It’s quadruple witching Friday today in the market which is unfortunately just the day where stock index futures, stock index options, stock options, and single stock futures all expire and not the day where the market finally gets a 5-some with Elizabeth Montgomery, Barbara Eden, Melissa Joan Hart, and Omarrosa. While this is usually a volatile day, the market has been quieter than the Clinton’s bedroom as there has been little macro or company news released today. That said, owners of gold are being showered with rewards as gold has reached a record high today thanks to investors betting against the current fiat system remaining viable. While it’s likely we’ll hit a deflationary period before inflation takes off like Shawn Kemp from a delivery room, holding gold as part of your portfolio right now as a hedge against volatility and the potential crash of the Euro makes more sense than pairing Suaterenes with a nice foie gras. In other US news, Tim Geithner is apparently getting new and more power which he has easily earned given how he has revived this economy from dead to about to die again and helped to bail out the firms who caused this mess. Geithner is set to lead a new council run by the Treasury Department to identify companies that might be shut down because they pose a risk to the financial system. So does that mean the government is going to shut down the SEC, FCIC, FINRA, FDIC, and NAMBLA? Don’t they all do the same fucking thing? Hey, I know how to solve a problem, let’s just create other fucking groups to do the same thing that current groups do but hope they do it better. Unbelievable. Money McBags just wants to know when more bureaucracy has ever fixed anything other than creating meaningless jobs. Somewhere Josef K. is scratching his head.
Internationally, the Eurozone added Estonia as the lastest member in their global ponzi scheme. Estonia now has to pay $1B to Greece, and then Greece will pay 80% of that up to Spain, who will then pay 80% of that up to Germany. Funding problems solved. While it is certainly odd timing for a country to be joining the eurozone, Estonia said they had no choice after the University of Texas decided to stay in the Big 12 and and Utah beat them out for the last spot in the Pac 10. “It’s a great day for Estonia,” remarked Estonian prime minister Andrus Ansip, who was perhaps (an)sipping on a little too much Saku Originaal as getting in to the Eurozone right now is about as desirable as joining a tv show co-starring Ted McGinley or being drafted by the Washington Generals. Anyway, for those of you unfamiliar with Estonia, here are some quick facts: They were 4th out of 173 countries in the Worldwide Press Freedom Index narrowly being edged out by Canada and their NSFW Naked News, they’ve previously been occupied by more countries than Zsa Zsa Gabor’s vagina, and the person they most admire is Yosemite Sam. They’ve been independent since 1991 and are finally looking to settle down after 20 years of hard drinking and nordic flirtations in order to raise their favorite offspring Tiiu Kuik in a stronger family environment. So welcome to the Euro Estonia, just don’t burn all those Kroons quite yet. In other international news, the IMF backed Spain’s austerity measures after downing one sangria too many and learning about imaginary numbers.
In stock news, C is planning on raising $3B because they haven’t lost enough investor capital already. Just remember, this bank is so poorly run and has such bad judgment that they fired someone for being too hot, and she’s not even really that hot, I mean we’re not talking about Sara Carbonero for fucksake. And the best part about this is that they are raising money for their private equity and hedge fund groups right before Paul Volcker slaps his rule on the table and bans banks from owning those type of funds. Wow. Good for the funds but that makes about as much sense for C as it did for Saddam Hussein to build a new palace in Baghdad in March of 2003 or Simona Halep to go bra shopping right before the summer of 2009. Money McBags is sure C’s CEO Vikram Pandit will retain some type of personal interest in these funds when the Volcker Rule takes effect so I guess it makes sense for him but for C shareholders it seems like a whole lot of wasted time and energy (though if you’re a C shareholder, you have bigger problems to worry about than the company raising money for funds they are going to have to give up soon). In other news, CVS and WAG decided to end their snit over prescription drug benefit reimbursement and just go back to screwing Medicare and the American health care system together. Finally Moody’s lowered their ratings of BP by 3 notches from the unintelligible Aa2 to the just as unintelligible A2 (or maybe it was the other way around, who the fuck knows). It’s nice to see that weeks in to one of the biggest environmental disasters in history, Moody’s is still on the ball. Good job guys, Money McBags eagerly awaits your downgrade of daguerreotype companies within the next 6 months. Though to be honest, any investor who needs Moody’s to tell them BP is more fucked than a cupcake in Kirstie Alley’s house probably shouldn’t be investing.
In small cap news CRUS continues to rocket up. Money McBags believes $24 (20x his $1.20 estimates) is a plenty fair price but at $20 he’d start to think about trimming to take some of the hella sweet profits you’ve made off the table (and rememeber Money McBags first brought CRUS to your attention when they were trading under $8 and he told you he bought them shortly thereafter. The fact that he dumped them after the “Flash crash” for liquidity reasons doesn’t change his valuation, it only makes him angrier that he believes the market structure is so broken that fundamentals may not matter). And if any of you are interested in a high flying small volatile momentum name, check out SPRT. Money McBags will try to break them down next week but they are basically outsourced and remote computer repair. It’s like Geek Squad only you don’t have to have a fat smelly skeevy fuck show up at your house and stink the place up while he wipes all of the porn off your computer to clean up whatever virus you downloaded while searching for that Miley Cyrus upskirt pic (and Money McBags will not be linking to the pic since he believes in the legal system). It’s certainly an interesting and potential low cost business model and the company is currently scaling up their technicians faster than a young hollywood starlet scales up her ambitions. It is doubtful that in this market Money McBags would ever own this stock because a lot has to go right for it to be valued even near what it is trading today, but it has a nice story has some real opportunity, and more than anything it has strong momentum and a rapidly accelerating business. If you have money you don’t care about, send it to Money McBags for a night out at Rick’s, otherwise, do some research here as this might be a good trade.