Posts tagged gold
Once again investors came out in full force to buy the fucking dip on Friday after learning that Qaddafi’s men opened fire on protesters in Tripoli in Moammar’s shoot first, shoot later negotiations policy, GDP was revised down to “QE3 is coming,” gold rose to over $1,400 an ounce once again making Flavor Flav’s teeth the most expensive commodity in the world, and the US government threatens to shut down while individual states bust unions (and if it is this Union’s bust, then Money McBags approves) and teachers across the country get pinkslipped (while others slip pink). So once again cognitive dissonance reigns like Peter the Great in 18th century Russia or like Ms. San Antonio (only without eating so many tacos).
With Saudi Arabia promising to pump out enough oil to support both lost Libyan production and an even better Oil Rumble, and with consumer sentiment rising in everything but how the consumer sentiment number is calculated (Money McBags will guess lovingly and with a fuckload of goal seeking and hard coding), investors ignored every other bit of common sense, toggled away from Kate Upton’s twitter pics, and jumped back in to the market faster than Charlie Sheen jumps back in to a bottle of vodka (or Capri Anderson‘s rectum).
Anyway, Money McBags thought he would try a gimmick for Friday’s wrap-up because all writers need to find new tricks (especially ones like Money McBags as he writes as if he is trying to put his round peg through Karissa Shannon‘s spare hole). So in honor of Sunday’s Oscars, Money McBags thought he would equate each news item of the day to a best picture nominee simply because he needs a challenge.
Inception goes to consumer sentiment hitting its highest level in 3 years because clearly consumers must be dreaming of something other than the declining buying power of the dollar and the shitawful ponzeconomy™ if they really feel confident about anything other than their savings being fucked (and see, that’s funny because most of them have no savings). The Thomson Reuters/University of Michigan/Vivid Video survey on consumer sentiment came in at 77.5 which was up from 74.2 in January and the highest since January 2008 which was right when the last guy on the Street knew that bank balance sheets were more fictitious than a Dr. Boris Sachakov hemorrhoid removal, so um, look out below. The number was above the median forecast of 75.3, above the early February reading of 75.1, and above Money McBags’ sentiment of “you have to be kidding me” because the only times Money McBags has been less confident in the consumer was during the Beanie Baby phase and when Garth Brooks went platinum. Consumers reported “significant” labor market improvements, judged their personal finances more favorably than at any other time in the past three years, and insisted that redneck is a religion.
True Grit goes to GDP which keeps trying to tough it out despite being more fucked than David Wu’s political career. GDP for Q4 was revised down to 2.8% annual growth, below 3.2% guesses, and well below the 5% needed to lower the 9% unemployment rate without just clerically adjusting the labor force participation rate down again (Money McBags’ “Fuck Off” strategy), but hey, just buy the fucking dip. The slower growth was driven by deeper spending cuts by state and local governments who continue to suffer from lower tax revenues and reality.
Toy Story 3 goes to the Ben Bernanke who is treating M2 as if it is Monopoly money as the money supply not only grows faster than Cameron Diaz on the awesomeness scale but is more correlated to the rise in the S&P than tinnitus is correlated to attending a Black Eyed Peas concert. But hey, Money McBags guesses we will learn the hard way that Zimbabwe isn’t just for lovers (lovers of AIDS that is).
The Kids Are Alright goes to the state of Wisconsin whose teachers have missed work to protest cuts to their health care benefits and collective bargaining rights as a union which has caused senate Democrats to flee the state to avoid voting as it is always best to run from bullies. Teacher protests give kids more time to stay at home, fire up the playstation, and plan the next rainbow party, which is alright with Money McBags.
The King’s Speech goes to Libyan dictator Moammar Qaddafi who got up in the center of Tripoli on Friday and threatened to make his country a living hell and kill those who oppose him. When protesters heard this, they rejoiced, claiming a living hell would be three steps up from Libya’s current living situation which is so bad it has been compared to having to french kiss Kathy Griffin‘s sphincter.
Winter’s Bone goes to Winter Pierzina as who wouldn’t want to giver her a bone? And, yes, that has nothing to do with the economy or the market, but it is very important to confirm.
The Fighter goes to all of the protesters in the Middle East and Northern Africa who are tired of some asshole despotic ruler continually oppressing them and are now striving to become that asshole ruler to be able to oppress the factions they hate. How these Middle East protests have not spooked the market more is a question for which Money McBags is seeking an answer (though he is pretty sure the answer isn’t pussy furry).
Black Swan goes to AIG who in a black swan event shit on the global economy a few short years ago as their derivatives book of credit default swaps (which had a one in bazillion chance of blowing up according to the douchenozzles who were writing that shit and whose bonuses relied on writing it, but nothing to see there) found itself in the Gaussian curve’s fat tail and blew the fuck up as insuring something without actually putting aside the money in case that thing you are insuring gets fucked is as dumb of a business as ZAGG or a Wilford Brimley tongue kissing booth. But it gets even better because in an even bigger black swan event, this fucking company is still in business somehow (because apparently criminal actions don’t get punished in the US if you have a good lawyer and are on the government’s payroll) and on Friday they put up a big Q but sold off as investors raised concerns over AIG’s huge property insurance business, its aircraft leasing unit, and how the fuck they can actually trust a company that came within a Verne Troyer nut hair of blowing up the world. Money McBags isn’t saying AIG is a shitty company, he’s saying they are a fucking shitty company.
127 Hours goes to every company that had earnings or analyst ratings changes on Friday because in 127 hours (or 3 to be more precise) no one will remember and the stocks will trade on new speculation (and by new speculation, Money McBags means the Fed’s continued capital injection). In earnings on Friday, Salesforce.com apparently sold the fuck out of some forces beating earnings guesses and raising full year guidance as cloud computing remains hotter than Tulip sales in the Netherlands in the 1600s or two lip sales in Eliot Spitzer’s hotel rooms in the 2000s. In other earnings news, ADSK saw profits rise 23% on a 16% increase in revenues and the company is now up 45% for the year as more people use their autocad software to design the cardboard boxes in to which they have moved.
In other company news, FSLR was down 6% despite higher profits as the solar panel maker burned investors by forecasting weaker sales this year and warned it would cut prices to compensate for the end of solar subsidies in Europe. That said, a flurry of analysts raised their price targets on the stock because lowered sales forecasts didn’t effect their hardcoded models. Finally WFC climbed after Goldman raised its rating on the stock to “buy” from “neutral” after the analyst was told he hadn’t published anything on WFC in a while and needed to drum up some trading flow.
The Social Network goes to NTRI, as the company tries to help people lose weight and become more social (and yes, it is a stretch giving them The Social Network but unfortunately Cash For Chunkers 2 somehow slipped through the Academy’s nominations), who put up an assrific quarter (and not a regular ass, but a swamp ass) and traded down 30%. Wow. They dropped further than Cloris Leachman’s boobs and it was a result of Weight Watchers absolutely killing them with the new “points plus” program (and remember, Money McBags will soon be instituting his own “points plus tits” program on the award winning When Genius Prevailed), awful pricing, and a complete swing and a miss with a new strategic plan. Money McBags has written about this company many times as they have a great business model and brand equity, but as for management’s execution, well Money McBags is all for it.
As for Q4, revenue was down ~16%, though gross margin was up ~250bps to 56.5% and they managed to cut marketing costs by ~$9MM so they still earned a sort of reasonable $.25 per share and had ~$17MM of EBIDTA. So that is marginally ok, but what fucking killed them is their guidance as they gave full year 2011 eps guidance of $.40 to $.50 after earning $1.22 per share in 2010 so fuck you very much. Basically, by losing out on new customers in Q4 and with January new customer starts down 30%, they lose the compounding effect of having those customers continue on and that pretty much sinks the year. They say they’ve recovered in February with new customers starts up 20% because they ditched their new and improved failed strategy (though the only thing it seemed to improve is short interest and cash burn) and cut prices (so bye bye margins), but when a company says: “it is clear that we need new product offerings and new sales channels to re-energize top-line growth going forward, and to that end we plan to invest in new product development efforts in 2011,” usually you want to pull out faster than if you were boning the Octomom without a condom.
So do we put our value hats on and buy here? Hmmm. First of all, you all know Money McBags likes value investing and catching falling knives as much as he likes Jane Austen novels or cuddling, but given this company’s business model which can quickly generate a ton of cash, it is tempting to bottom feed here (though Money McBags would rather feed on this bottom), especially with their ~5% dividend yield which they should be able to pay from cash generated this year (unless they continue to make worse business decisions than Stephen Baldwin). That said, this management team has been truly awful, no really, they have destroyed more value than HD porn (because honestly, one doesn’t need to see every single herpe). They fucked up their promotion with WMT a few quarters ago and now they spent who knows how much money on a quantitative study to better target customers, implemented that study, and saw new business decline at least 30%, so perhaps they shouldn’t have hired Madoff consulting to run that quant study.
They are still trading at >30x the midpoint of their guidance, no longer have that great of a balance sheet with only ~$10MM net cash, and on an EBITDA basis, if you add back ~$11MM depreciation, ~$9MM of stock comp and other non-cash charges, and ~$6MM of taxes, you get a guess of~$50MM of EBIDTA for 2011 and the company is trading at ~7x that which is not really cheap considering REVENUE IS GOING TO DECLINE THIS YEAR FOR THE SECOND YEAR IN A ROW (guidance is for >$400MM, and they had $510MM of revenue in 2010 and $524MM in 2009). If anything, this is still a short because valuation is out of line, Weight Watchers is eating their lunch (and puking it back up later to stay fit), their product is too expensive and actually, pretty shitty, and their margins are going to get crunched as food prices rise and they discount more. So while there may be a brief dead cat bounce, Money McBags would short into that. That said, if an activist management team comes in to take over, Money McBags would be happy to buy in to this company because they have a ton of leverage if they can remember how to exploit their brand equity. Fat people aren’t going anywhere, and they are always going to be hungry, so this company has every advantage if they can just get back to their roots.
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.
The markets were on fucking fire today as investors shook off the historic drop last Thursday, apparently confident that the SEC looking in to the causes of the sell off will yield answers other than the current ones whch include: “Beats me,” “How the fuck should I know,” “and hey look, it’s Enrico Pallazzo!“ The head of the SEC, Mary Schapiro, who in her short time leading the never distinguished agency has already instituted sweeping reform including such things as following up on leads, proactively going after market manipulators, and clamping down on tranny porn at the office, has called last week’s market failure “profoundly disappointing and troubling.” She then added, “I haven’t been this disappointed with anything since Meaghan Chung worked at the SEC or since I bought a slap chop.” Luckily regulators are getting closer to finding out what was wrong with the market by ruling out several potential causes such as erroneous fat finger trades (known here on WGP as Portia De Rossis), unusual trading in P&G stock, hackers, terrorist activity, and Noriel Roubini shouting “Beetle Juice” three times quickly. The SEC has sent out subpoenas to further look into this matter, though they have not said to whom they have sent them, but Mary Schapiro was seen asking Goldman’s CEO if his first name is spelled with one “L” or two. While equities are bouncing back, it is still showering gold in the markets as gold has hit an all-time high which means Mt. T’s neck is now the richest person in America (and he pities the fool who told him all that jewelry was silly). The fact that investors are rushing in to gold is not a good sign for the markets as it signals little faith in currencies and a fear that escalating debt will continue to cause gevernments to run their printing presses more rapidly than drunk Hollywood wannabes run through Paris Hilton‘s panties. Money McBags remains very afraid.
Helping drive the markets up today is that Spain has announced an austerity plan that will involve cutting wages of government employees, reducing public investment spend, and increasing the use of home grown green technologies such as spanish fly. There is real fear that workers may strike throughout the countrty, but economists are fairly certain strikes won’t come to fruition because strikes would cut in to workers’ daily siestas. In addition to Spain making like they are serious about their budget, in much the same way that James McGreevey made like he was serious about Dina Matos, Portugal sold the fuck out of some bonds. Portugal raised 1B euro (though the euro isn’t worth what it used to be) which is a good sign for the markets, though the fact that they need to raise another ~20B by the end of the year is a sign worse than waking up pantsless in a West Hollywood alley with a sore rear end and rainbow colored socks. Joining in on all of the debt lip service in Europe (and Money McBags wishes Faye Reagan would give his growing debt some lip service), is Britain who is instituting budget cuts as unemploymnet spikes to its highest level in 16 years. The new fiscal policies could include a tax on banks, black jeans, and Lucy Pinder downloads. Also, data came out today showing GDP in Europe was up modestly in Q1, growing .2%, or as it’s better known as: a rounding error.
In the US, markets rocketed up thanks to positive forecasts from tech companies who said they expect it to be sunny with a chance of silicon. Tech giants IBM and INTC both gave positive outlooks today with IBM saying they expect to earn at least $20 per share by 2015 which is double their current business and INTC’s CEO saying he expects a double digit percent rise in revenues and earnings. Additionally, MSFT was up today after they said they will offer Microsoft Office free online so the whole world can spend their days dicking around with PowerPoint for no charge. Wow. Technology hasn’t received news this good since Number 5 was found to be alive. Also, the US trade deficit widened to a 15 month high as exports were up 3.2% and imports were up 3.1% For March, the rise in exports reflected increased sales of American farm products, a wide range of heavy machinery, and dollars. The rise in imports was driven by a 26% jump in crude oil shipments (though not nearly as crude as Dice Clay CD shipments).
In small cap stocks, everything rode up like a hand on Alexis Texas‘ ample thighs. CRUS, TMRK, and KITD continue to rally even though Money McBags ditched them for liquidity reasons last week. Money McBags did buy back some KITD today in the $12.90s in anticipation of a good earnings call on Monday. If the market structure is healthy, KITD remains a high upside company. Also, QCOR is holding a conference call this afternoon to discuss the FDA panel’s ruling on Acthar last week where the drug was found to be both less filling and taste great by a panel of experts. The FDA panel voted 22-1 in favor of Acthar’s efficacy in treating IS but there was some concern over how manageable and reversible the complications were. Money McBags is sure QCOR will delve into all of this this afternoon, but on the surface it seems like very positive news since it points to the FDA putting IS on label for Acthar and thus allowing QCOR to market to IS doctors, something they have been unable to do despite being the favored IS treatment. Money McBags promised some analysis today and he has FHCO’s Q on his to do list (though it is much behind Alice Eve and Ashley on his to do list), but time ran short today so tomorrow he will try to hit you up with some micro to go with the macro.
The news out today is that the service sector grew, but less than expectations, so now we know how Vern Troyer’s parents felt. The ISM index of non-manufacturing jobs rose from 48.7 to 50.1 and anything over 50 signals expansion according to the arbitrary metrics measured by the index and the directionally correct economists who are paid to interpret them. This is the third time in four months the index has been over that oh so helpful 50 number (even if at 50.1 it was only over by a rounding error or a He Ping Ping nut hair, and yes that has been two “little person” jokes in the first paragraph so I am sure “Bridget the Midget” is anxiously waiting by her tiny phone). This is a marginally good sign for the economy, but not significant enough for anyone to break out the Dom Perignon or slush fund to pay for that special Hannah Hilton visit.
Also today, ADP released their forecast of job losses for the month of December which came in at 84k, worse than the expectations of 75k according to Bloomberg, but better than expectations of 90k losses according to CNBC. So for the tie breaker, we go to the always reliable New York Times who reports estimates were for 73k job losses. So there we have it, 2 out 3 news sources reporting the same data have a different spin on it. What say you Wall Street Journal? Oh, you have estimates of 90k, so job losses were better than expecations. So we’re back to a tie and everyone knows, the tie goes to the runner. Anway, the point is no matter how you spin this number (though hopefully not on one of those old school sit’n spins, because Money McBags is out of barf bags after watching 10 seconds of Kathy Griffin on CNN New Year’s Eve, and please CNN, make the bad lady go away. Wow, that was quick, but as long as you’re granting wishes, can you have Franco-Nevada up their proposed buyout offer to ROY and give my phone number to Hayley Atwell?), it is directionally positive yet inconclusive as to where the economy is going. The number did reflect the fewest job losses according to ADP since March of 2008 (and if you can remember back that far, it was when Brett Favre first announced his retirement. I wonder what ever happened to that guy?), so yeah for us.
In stock news, gold and commodities continue to run as the Fed remains adamant that they will keep rates near zero until the next bubble, while news from Hershey’s board is squirting out that they may decide to make a bid for Cadbury. And in the small cap universe, EBIX finally split yesterday and has continued to run after a sell off. Now EBIX’s actual business is more confusing than giffen goods, a Higg’s boson, or Dane Cook’s popularity but they essentially try to build/buy networks to be part of every insurance transaction globally. The CEO’s ego is bigger than Alexis Texas‘s voluptuous backside (and that is if she had elephantitus of the anus) and there is always something Enron/Satyam-ish to be concerned about when investing in a complex/hard to define business that shuns the street, relies on acquisitions, and has a cult following centered around their egotistical CEO, but the company has been growing rapidly, is developing networks which are extremely profitable to first movers, has had phenomenal returns, and is almost completely underfollowed by the street. Estimates are for them to earn at least $1.20 next year (though estimates are few and far between) and they are currenty trading at less 20x that (or is it fewer than 20x that? Can someone exhume William Safire and let me know?) since the street does not yet value them as a growing technology company, which they really are. Given that there is upside to that EPS number and their new goal is $200MM in reveune and 42% operating margins by Q4 2011 (which is admittedly a long way out and will require a number of acquisition for which they will probably have to raise more cash), the stock has room to move back up after an unwarranted sell off. Money McBags is an owner of EBIX, but do your own research because why would you trust a random guy on the internet, even if he is the preeminent dick joke teller and money maker in the world (though if you can clearly state what EBIX does in fewer than 5k words, please share with those in the group).