Posts tagged Jobs
While there may have been a tsunami in Japan (and Money McBags heard rumors that it was caused by everything from Godzilla and Mothra learning that they had invested their savings with Bernie Madoff to a rush to the Apple stores to buy the new Hello Kitty themed iPad2), there was a spoogenami in the market as investors once again proved to be symphorophiliacs and fondled their long assets over the economy and geo-political peace getting ready to explode like a bad case of beaver fever (and unfortunately not the fever Money McBags has for Kate Upton’s beaver). Middle East uprisings? Jizzzzz. Falling consumer sentiment? Double jizzzzzzzzzzzzz. Job openings drying up worse than Tony Danza’s marriage? Who’s the fucking boss jizzzzzzzzzzzzzzzzzzzz. The worse the news, the more investors buy the fucking dip because, well, because Uncle Bennie would want it that way so just remember that the next time NFLX drops below $200 or support levels get blown more than Enrico Ponzo’s cover.
As for macro news on Friday, the University of Michigan’s consumer sentiment index fell to a 5 month low as people realize they need money to actually buy shit (well, at least until the crash of the ponzeconomy™ and the return to the barter system). The preliminary March reading came in at 68.2, down from 77.5 in February, and well off the median forecast of 76.5 among economists who once again show there is not one data point to which they can’t find the fat tail. That said, Money McBags gives a shit about anything that comes out of the University of Michigan (except for maybe Selma Blair) because there is a reason it is a safety school.
In other macro news, job openings dropped 161k to 2.76MM which was a 5,.5% fall and means there are fewer openings than in an imperfortate anus. The data points to 5 people now vying for every position, though twice that if the position is the rusty bike pump. When the recession began in December 2007, there we 1.8 people going for every job so if the (No)Labor Department can just remember to carry the one and continue to cut the labor force participation rate in Money McBags’ “Fuck Off Strategy”, we should be back there in no time.
Elsewhere, business inventories rose 0.9% in January to their highest level in two years which might be meaningful news if this weren’t already March. Also, retail sales posted their largest gain in four months as consumers increased purchases of autos, apparel, tiger’s blood, and bras to hold their monkeys (and um, really? Shit Money McBags has heard of a titmouse, but a titmonkey? What the fuck is this world coming to (other than Brooklyn Decker)?). The rise in retail sales was the largest gain since October and the eighth consecutive monthly advance as rising oil prices did nothing to dissuade rich assholes from spending some of the paper profits they have made thanks to the Federal Reserve/White House/Wall Street money printing cartel where greenbacks flow like Clarence Thomas threesomes. But just imagine how much stronger retail spending would have been if Warren Buffett hadn’t only paid himself $100k (and note to assholes writing that story who make it seem like Mr. Boofay is some kind of fucking saint and man of the people for taking such a low salary. 1. The guy is worth $50B so um, real fucking magnanimous of him there, really, it’s like applauding Hugh Hefner for not sucking every tit. 2. The guy is living high off the hog thanks to the government bail outs so if he were really magnanimous, he would give that $100k to Hammerin’ Hank Paulson. 3. As Charles Barkely would say” “Shut the hell up.“).
Internationally, consumer prices rose in China by 4.9% thanks to food prices rising 11% in February which means more people will have to opt for the cheaper non-pee pee flavored Coke. Additionally, Chinese PPI was up 7.2% and the rise in prices across the board is more worrisome than being David Davis’ barber. With China fueling global growth, any attempt by the government to curb inflation may cause a slowdown in the world economy which would be as helpful to this recession as a right sleeve is to Aron Ralston so this bears watching (while this really bears watching, and this bear is watching).
In the market Ann Taylor jumped up 12% after a good Q (and Money McBags just spent 30 minutes trying to write an Ann Taylor joke and all he could come up with is that it is an anagram for “try on anal,” so do with that as you will). Steel manufacturers rose across the board after Steel Dynamics increased their dividend and gave good guidance thanks to strong demand in their rail business and they hope to continue to prove that whoever smelt it, dealt it. Finally AIG was up ~2% after offering to buy back $15.7B in MBS the government took from them during the financial crisis. When asked about the risk, AIG’s CEO reminded investors that if the MBS fail, the government will just re-take them from AIG so the company has less downside than a blumpkin from Maria Fowler because that is what happens once you slide down the slippery slope of moral hazard.
In small cap news, Money McBags favorite SAAS put up a “meh” Q as their growth was a bit shittier than Money McBags had guessed (this is Money McBags’ initial break down of their business, and this is Sarah Shahi), their marketing spend should continue to sink eps as they try to grow faster than Sex.com’s valuation, and their software growth guidance failed to reach prior growth levels (they said growth will get back to 25% to 30% by year end and it was at >40% for the three years prior to this one). Below are the quick positives from the call:
1. Booking revenue grew by 98% on the same number of deals closed, which means they are moving more upmarket than Bree Olson. On the call they said they recently closed two deals with Fortune 500 companies so this is fucking great news, though not as great as finding out that Jessica Biel is now single again. Not only that, but one of their larger deals came from their joint relationship with salesforce.com so if that partnership can continue to be fruitful, that will be jizztastic.
2. Their legacy telephony business is done eating dick. That business should level off or grow from here as >50% of telephony revenue is now coming from their software customers, so that is a marginal positive.
3. They continue growing in Europe and the Philippines and the Philippines has a fuck load of call centers so that is a market they need to penetrate.
4. They have 20 sales people but open recs for another 13-15 more and this is one reason why their marketing spend keeps increasing but Money McBags loves when growing companies expand their salesforces because you need to get the word out to bring in businsess (of course if the word they are getting out is “harder” and they are Jennifer Ellison, then even better).
So what do we do here? Keep holding the fuck on. Seriously, nothing about the story changed and as long as this company can keep growing the software business, there is ~$1 of earnings power here 3 to 4 years out and the company is trading at 3.5x that which is cheaper than sardines in Redondo Beach. The bad news is that in the short term costs are going to be above Money McBags’ expectations and revenues aren’t growing as fast as he would like, so he is taking down his 2011 eps guess from $.17 to $.03, but it sort of doesn’t matter and that is the point. They could easily spend less on marketing and be profitable, but they want to grow faster and bigger than a Victor Conte client so it is what it is. This is a name Money McBags just owns and doesn’t really give a fuck about the day to day or Q to Q because as long as they don’t fuck anything up, this will be more of a long-term winner than Diane Lane‘s husband.
11/9/10 Midevening Report: As QE2 Hangover Wears Off, Will Market Wake Up in A Pool of Its Own Volatility
It was another lackluster day in the market as investors are still trying to regain their bearings from last week’s quadruple news high of elections, QE2, the jobs report, and Kat Dennings nude photos being released. With all of the excitement of those events more than priced in to the market, investors have spent the last couple of days trying to figure out why printing a fuckload more money is good, how 17% (+/- “oh shit”) unemployment is healthy, and who the fuck cares that Conan O’Brien returned to TV (seriously, the last time Money McBags watched a late night TV talk show was before DVRs, the internet, and shaved bush was in style). With news at a plateau as earnings season winds down, the market should struggle to find direction more than one of Randy Quaid’s kids.
That said, macro news today was relatively light and irrelevant like CNBC or the SEC’s findings on the flash crash (or the mini flash crashes that keep happening and will continue to happen until someone finally shuts that bastion of evil and market manipulation down known as Waddell and Reed. Shit, Money McBags has no idea why the Pentagon is wasting so much energy trying to figure out who fired a missile off the coast of California when we all know it was just some douchewad trader at Waddell and Reed trying to beat Joshua in a game of Global Thermonuclear War during his lunch break).
Small business optimism rose from “we’re totally fucked” to “50% off sale.” The National Federation of Independent Business (and it would be too easy to point out the oxymoronic nature of a federation of things that are supposed to be independent) said its small business index for last month rose 2.7 points to 91.7 which was the third consecutive monthly rise as well as the 34th consecutive month below 93. Now Money McBags has no idea what the difference is between 91.7 and 93 (except for 1.3) but when he writes it that way, it makes things seem as ominous as an invitation to participate in a Goldman MBS offering, and almost makes Money McBags feel like the muckraker he has always wanted to be.
Elsewhere wholesale sales were up .4% which was smallest increase since June while wholesale inventories skyrocketed up 1.5%, doubling analyst guesses and signaling companies are ramping up on pre-marked down items. This jump in wholesale inventories will make Q3 GDP look better (though not this good), but realistically, rising wholesale inventories may signal the economy becoming more backed up than a constipated John Edwards (because that guy is completely full of shit) as retailers stocking up for the holiday season may wind up more disappointed than Lisa Marie Presley on her wedding night or any jackass who is selling all of his worldly possessions in anticipation of 12/21/12.
Finally, the (No) Labor Department released data showing that job openings decreased by 163k in September to 2.93MM which means ~6 people are vying for every opening (unless that opening belongs to Brooklyn Decker, and then there are at least 60MM people vying for it). That said, two month old data on job openings is about as useful as a regression model with correlated errors so unless Money McBags finally discovers a hot tub time machine to go back to two months ago when that data may have been 1% useful (and trust that Money McBags has tested many hot tubs to find such a feature), he is going to give this a big fucking yawn. That said, Money McBags hopes the (No) Labor Department can find something more constructive to do with their time like find people some fucking jobs or figure out how this guy got a mouse up his ass (And if Money McBags ever gets caught with anything up his ass other than Kate Bosworth‘s tongue, he will also say he doesn’t know how it got there).
Internationally, the yuan is at its highest level vs. the dollar since 1993 thanks to Benny B. getting his quantitative ease on and testing to see if he can make that which grows on trees worth more than money, thus putting an interesting twist on the old saying. Coming on the heels of this (like a determined podophiliac) is news that Chinese rating firm Dagong Global Credit Rating has downgraded their credit rating of the US debt from AA to A+ claiming the US economy is more virtual than Farmville’s. They also said, and to loosely translate because Money McBags’ Mandarin is still very bad, US GDP will continue to “eat a bag of dick for the foreseeable future.” But it’s not like the US relies on China to continue to sell debt to in order keep the economy going, so no big deal. Oh wait, shit.
In the market, Ambac finally filed for bankruptcy in the least surprising news since finding out that a priest may be in to porn as apparently insuring all of the shit that destroyed the largest global economy is a less profitable business than selling copies of Strunk and White at a Tea Party event (or to Money McBags).
As far as stocks go, Priceline was bid the fuck up after putting up its billionth consecutive huge quarter thanks to strength in international bookings, hotel bookings, and car rentals. Revenue was up 37% and EPS was up 57% to $5.33 which easily beat analyst guesses of $4.97 per share and was enough to win them a room at the Columbus, OH airport Hilton Suites. Also up was YHOO as the internet space rallies like it is 1998 when sites like hotornot.com were considered revolutionary and valued at the same levels as small Indonesian countries. YHOO was up on rumors that it is a take out target because apparently Pointcast and Geocities were asking too much.
Finally Dean Foods was down ~18% as a result of higher dairy costs thus figuratively squeezing the teet on which the company feeds and Sara Lee announced they are selling their North American bakery business to Grupo Bimbo from Mexico which in English roughly translates to “Group of Paris Hilton” (and yes that was a fucking horrible pun, but you get for what you pay, and Money McBags puts no value on your dignity).
In small cap news today, one of Money McBags’ favorite shorts, WGO, dropped ~7% today on no news other than perhaps common sense. Also, EBIX put up their Q today and once again had spanktacular growth with revenues up 43% and earnings up 77% or up only ~35% once you strip out their one time gain recognized in regards to the decrease in the fair value of a put option issued by the company. So they actually had negative operating leverage as costs were up ~300bps but Money McBags would have an easier time deciphering the Rosetta Stone or getting a blumpkin from Queen Elizabeth II than he would of understanding this company’s financials (same goes for their auditors which is perhaps why they keep hiring news ones).
Their income statement and balance sheet remain a riddle wrapped in an enigma and covered in shit which is why months ago Money McBags told you all to either stay the fuck away from them or put on some kind of options straddle (and Money McBags would take the option to straddled this) because EBIX is either worth 2x what it trades for or is a complete and total fraud and worth nothing. Money McBags honestly doesn’t know the answer to that but anytime he runs in to a business with that kind of growth with a business model that requires drawing a 3D matrix and praying to the God of What The Fuck is Going On just to understand what they are doing, all kinds of red flags go up.
Also, DFZ put up their Q today and Money McBags exhaustively broke down their last Q a few months ago in ways that would make the sell side blush. This Q was more of the same in that they continued to have decent growth and continued to execute. Revenue was up 23% y/y to ~$36MM and EPS was up 81% to $.37. That said, before we go out and buy the lobster tails and properly freshen up our junk to celebrate the jizztastic quarter, in the press release, management said sales were pulled forward by ~10% from next Q so if we knock 10% off of revenue and cost of revenue we get a ~11% topline increase and a ~16% bottom line increase. Still very good, and consistent with the message of this company, but nothing to get overly excited about, like the Amanda Seyfried lesbian scene in the movie Chloe (and yes that is the safe for work version).
They have ~$23MM of cash on the balance sheet, up from $18MM y/y but down a fuckload sequentially as this is the Q they have to ramp up on inventory. They also raised their dividend to $.07 quarterly from $.05 and fired a board member to cut costs (and Money McBags can’t figure out if it is good that they cut dead weight or bad that they had to cut a director who had been with the company for 60 years, no joke).
The stock was down ~5% on the day despite the decent Q and dropped precisely 15 minutes in to their call so they must have either said something about a pending acquisition (which they keep saying they are going to make) or given some sort of shitty guidance but Money McBags didn’t have a chance to listen to the call or read a transcript yet. Given that, Money McBags is keeping his valuation and thoughts inline with last Q (he guesses they should be worth ~$12-$14 absent a big acquisition) and hopefully tomorrow he will have time to be able to figure out what the fuck they said on the call to cause the stock to drop. He knows it is sloppy analyst work to go through the Q without listening to the call, but he wanted to get you some information rather than none, so it is what it is.
8/6/10 Midafternoon Report: Jobs number disappoints again as people ask “Brother, can you spare a dime, and maybe a 401k?”
The market fell for most of the day before being bizarrely bailed out at the close for no reason other than to seemingly allow Money McBags to write that alliterative phrase. The big news was that the jobs report once again disappointed like the other side of a Goldman CDO deal or Tara Reid’s plastic surgeon. The July jobs report showed the economy lost 131k jobs driven by a 143k decline in temporary census workers, a 59k decline in other government workers, and a 99% decline in hope. The positive spin is that private employers added 71k jobs though that was below the 90k analysts guessed but up from the DOWNWARDLY REVISED June made up number of 31k (and that was DOWNWARDLY REVISED from the bogus 83k number which Money McBags eviscerated last month and means that at least 221k jobs were lost last month, not 125k, but what’s another 100k to the 16.4MM people unemployed?).
With all of the revisions, the headlines and the numbers are less believable than Lawrence Fishburne ever being up for Father of the Year or the Laffer curve. Rather than trusting the headline, Money McBags once again went to the BLS’ actual press release (and as always the “L” in BLS is silent) to look at the numbers since headline writers and financial analysts treat due diligence as if it were going to give them herpes of the brain (and not regular herpes, but porn star herpes).
The most interesting thing that Money McBags found is that the fictitious birth/death model, which may be the most famous black box Robert DeNiro has never entered, had little impact on the manipulated numbers. The birth/death model adjustment was only 6k so the 131k reported number was likely at worst 137k. That said, in breaking down the numbers we see that 59k non-census government jobs were lost, and those may or may not have been permanent and may or may not include Maxine Waters’ husbands’ bank auditors, but it is something that has been glossed over by the media. Sure seeing private sector job growth is important, but if it is at the same level as lost government jobs, we’re just robbing Peter to pay Paul or robbing Spitzer to pay Dupre (which actually, wouldn’t be so bad).
Money McBags did find one discrepancy as the BLS report says that:
“Employment in professional and business services was little changed (-13,000) in July. The number of jobs in temporary help services showed little movement (-6,000) over the month.”
And as you can see in the above chart, Money McBags did not factor in the 6k reduction of temporary jobs, assuming them to have been grouped in with the professional and businesses services (though they weren’t last month), so one might be able to further increase the jobs lost number by 6k, but people care less about 6k more job losses than Economists care about how their ideas work in practice (the answer is not good) or Britney Spears cares about underwear.
The unemployment rate remained at 9.5% thanks largely to another 350k people simply leaving the labor force (yes, the math is that convoluted) and thus causing that stagnant metric to be more misleading than the movie titled The Banger Sisters. But hey, as long as we keep losing jobs and the unemployment rate only gets better or stays the same, everything is fine. In fact, Money McBags suggests a radical, though more honest strategy, were everyone just leaves the fucking labor force by claiming they don’t want a job and thus the unemployment rate will artificially drop to zero and the government can pat themselves on their filibusters about what a great job they have done. Problem solved, election won.
Anyway, the real unemployment rate which includes those people who have become more discouraged about finding a job than Sisyphus was pushing that fucking boulder or Heidi Montag’s singing coach was trying to teach her to sing on key, remained unchanged at 16.5%. So the economy remains about as healthy as Dick Cheney’s fictitious heart.
Internationally, there wasn’t much news today other than that Russia continues to herd themselves some grains as the country faces it’s worst drought since Rasputin’s liver was fully functioning. The ban on exports of grain has caused a global spike in wheat prices and led to a rally among companies specialized in fertilizer (and Money McBags would love to fertilize her).
In stock news, KFT put up a nice quarter with profit up 13% thanks to their recently acquired Cadbury business which saw gum sales bubble up in Latin America, chocolate sales sweeten in Asia, and loads of soggy biscuit sales metabolize in Europe. Taking out the Cadbury acquisition, sales were up 2.2% but the company moved the low end of their organic growth guidance from 4% to 3% due to aggressive promotions in the US and the fact that people don’t have any money.
In other market news, AIG annonuced earnings and they either beat, missed, or came in-line with analyst guesses. The company’s financials remain more obfuscated than Caster Semenya’s gender and Money McBags would rather calculate pi to the 1MMth decimal using only a slide rule, a broken abacus, and Abe Vigoda’s nut hairs than analyze an AIG earnings release. The company claims their adjusted net income was $1.2MM on $2.2MM of operating earnings leaving adjusted eps of $1.99 but Money McBags trusts any of those adjustments about as much as he trusts Leprechauns.
In small cap news, TMRK traded off after a big jump yesterday on it’s quarterly earnings release. Money McBags wrote about TMRK yesterday and thinks it is an attractive long term hold (though not as attractive of a long term hold as Alice Eve), so he certainly likes today’s entry point better than yesterday’s which was likely inflated a bit by short covering. Like he said in his analysis, he is unconcerned by quarterly or even daily fluctuations as this is a core small cap position. QCOR also sold off today before recovering near the end of the day as the market is basically punishing any company that ran up on good earnings. Keep an eye on QCOR as you may get a very attractive entry point (though not as attractive of an entry point as Jenn Sterger‘s mouth).
In other small cap news, a tiny little company which Money McBags has written about before, FHCO (use the search box for his break out of their last Q and earlier company deep dive), announced their earnings today and the number was so bad that not even an FC2 could prevent it from giving someone AIDS. Revenue was down ~70% in the Q to $1.8MM and operating income was down 99% to $21k leaving the company with a whopping $0.00 eps. Wow. That sounds worse than the melodic stylings of Celine Dion and yet the company was only down ~5% because according to the company 2 big orders simply got pushed back. Whew.
The good news is that the the company said Q4 is proceeding as expected and that “the two pending orders represent significantly larger quantities than the customers’ most recent previous orders.” So in every thing but practice, the top line should be growing.
The bad news is that it’s not clear when the delayed orders will actually hit the bottom or top line as management also said “The Company cannot predict when the pending orders will be received or which quarters they will impact.” In addition to saying: “Delays such as these, which are usually due to bureaucratic issues, politics and/or changes in personnel, generally may last from 3-4 weeks to 6 or more months.” Money McBags likes that explanation a fuck load less than if they could have just said “we’ll send those orders out in Q4″ because it highlights that they have about zero control of their sales process as they are dealing with large public sector entities who either have or don’t have the funding. Since they have no idea when these orders will come in, they dropped their operating earnings growth from 30%-40% for 2010 to 10%-20%.
Again, Money McBags finds this to be an interesting, yet highly bizarre little company that actually has a decent business model and should start seeing some earnings momentum with the switch to the lower cost product. Their gross margins went up from 48% last year to 54% in this Q, though they were down from 58% last Q which Money McBags will assume is the result of underutilized factories due to having orders pushed back, but one should keep an eye on that (one should also keep an eye on Sofia Vergara).
Anyway, lets assume the company is telling the truth and the delayed orders are some bureaucratic snag because dealing with governments and public sector funding is more of a pain in the ass than a thrombosed hemorrhoid. The company was earning ~$7MM per Q in revenue but on the call they said an order of 12MM units had doubled to 24MM units so there is some growth to the top line. Therefore, let’s say they hit no more delays and can earn ~7.5MM in revenue per Q at a 54% margin with operating costs of ~$2MM (slightly higher than where they have been) and the company still doesn’t paying taxes. With those numbers, the company should earn ~$.28 next fiscal year (excluding any increase from these delayed orders being shipped in 2011) and it’s now trading at ~17x that but they pay a $.05 quarterly dividend (~4% yield) and have a decent enough balance sheet with $3.9MM in cash and no debt (though if orders keep getting pushed out, it will become harder to pay that quarterly dividend).
Last quarter when the stock was trading >30% above where it is today, Money McBags said “this stock is a bit ahead of itself unless they can continue to grow earnings at 20%+” so he certainly is a lot more interested in the company now than he was then, but the delayed orders do make him nervous enough to not yet take a position in the name (unless that position is reverse cowboy and the name is Sara Jean Underwood), so he’s going to hold off again on this low liquidity stock while the economy gets worse. In theory, they should actually do well in a bad economy because their funding is set, but Money McBags would rather buy it when their delays are fixed and he’s not left wondering if they will have the capacity to make up for the delayed orders while filling their new increased orders. If it gets to <$4, Money McBags will likely take a closer look at buying a position.
Anyway, have a good weekend and remember to tell a friend or 10k about Money McBags and the award winning When Genius Prevailed.
Money McBags was initially in a good mood this morning as when he was scouring the internet for news/data/information, he learned that Wonder Woman was turning a delicious 69 (and it is news like that for which Money McBags lives), but then the jobs number came out and didn’t just put a turd in his punchbowl, but took the punchbowl, spilled out all of the punch, and then proceeded to fill it with a cacophony of fetid bile made up of what had to be 10 year old kimchi, expired mayonnaise, and Lindsay Lohan‘s saliva. The headline was that 83k private sector jobs were created despite 125k overall job losses due to the firing of 225k temporary census workers. And while that is mostly true, it obfuscates exactly how bad the numbers were like Goldman has obfuscated their real derivatives dealings with AIG. Money McBags doesn’t usually drop tables here (instead he drops all kinds of rules of decorum, manners, and grammar) but he has to do it today to explain exactly how bad the jobs number was and why it is a terrible sign for the economy going forward. So Money McBags went to the BLS’ actual press release (and readers should know the “L” in “BLS” is silent) and broke out the numbers since financial reporters hate doing work like Kafka hates writing endings to novels. That said, below is his table showing the actual jobs report numbers:
There are several things of note:
1. The BLS said the Government lost 225k temporary census jobs but had total loss of only 208k jobs, so one can backsolve in to a 17k government job creation number ex. census workers, which is kind of like a pyrrhic victory only without the fucking victory. Anyway, there is no way to know if those 17k job adds are temporary or permanent workers, but whatever, 208k net losses still sucks worse than a hooker with a bad case of xerostomia.
2. Of the 84k private sector jobs that the headline touts as somehow being positive, 21k of them were temporary, and the last time Money McBags checked his dictionary for “temporary” it hadn’t changed to being a synonym for “permanent.” The point is, only 63k real “thank the great Nipsey Russell in the sky I don’t have to look for another job in a month or so” jobs were created, not 84k.
3. The birth/death model plug which as noted before is the biggest black box Money McBags has seen since Vanessa Del Rio’s in the 1980s, added 147k jobs to the total and it would be easier to verify that the meaning of life is in fact “42″ than anything from the birth/death goalseek. Again, you can read all about the model here but it is basically the BLS’ way to rig the numbers, I mean estimate the number of jobs created/destroyed by new or dead businesses not in their survey. Now look, Money McBags is no Dale T. Mortensen and wouldn’t be able to debate the merits of the Beveridge curve or a backward bending labor supply curve (though he would like to give some beverages to Olivia Munn to see if she would bend backwards over his supplied curve), but how the fuck are more businesses being added now than are closing, when economy is going south faster than Mel Gibson’s chances of winning an NAACP image award? Yeah, Money McBags gets it, big businesses are no longer hiring so people are trying to start their own things, sure that could be one solution. But what about all of the small businesses that are dying because people don’t have fucking income? Are we really supposed to believe that 144k more people started businesses or joined start-up businesses than were laid off because their companies died? Sorry, but that doesn’t pass Money McBags’ sniff test and he’s got a hella good olfactory system. So taking out the fictitious birth/death model, 271k jobs were lost and 63k private sector jobs (temporary and/or permanent) were destroyed. Feel free to believe the birth/death model is remotely accurate, but Money McBags has more faith in Alan Greenspan winning this year’s Playgirl Man of the Year than he does that phony model.
4. As always, and not sure why Money McBags even keeps pointing this out, but analysts missed the number by a margin wider than a Larry Craig stance. Analysts guessed that 110k private sector jobs would be added and as you can see from above (and excluding the birth/death plug) only 84k or 63k were added, depending on if you give a shit about temporary workers. So Wall Street, WHY ARE YOU PAYING THESE GUYS? Money McBags is giving you better insight for free (well the cost of your dignity), so for the price you pay those highly distinguished economists, hire 20 people who are unemployed and Money McBags bets at least half of them come up with a better guess than the supposed experts.
So now that we know the jobs number was worse than reported, do we even bother debunking the drop in unemployment rate from 9.7% to 9.5%? Yeah, it fell, but that’s because the labor force participation number dropped by 652k as more people just gave the fuck up. The drop in unemployment rate is more full of shit than the birth/death model, Eliot Spitzer, or a constipated elephant with an overactive liver. Using what type of math can job losses increase, but the unemployment rate go down? No really? Is it some arcane rule of boolean algebra or perhaps Pythagoras’ lost theorem that says A^2 + B^2 = Whatever the fuck you want? The point is, the economy is not recovering (the real unemployment rate including discouraged workers was 16.5%) and with the stimulus running out, republicans denying extended unemployment benefits (so up to 4MM-5MM people potentially losing their safety nets), and retirement funds dropping daily as the market tries to find a new bottom (and as always, Money McBags only hopes it is Brooklyn Decker’s bottom), we are now at the tipping point where either Uncle Obama steps in again or we double dip our way back to 666 or below.
In other US news, factory orders declined by 1.4% which was triple what analysts had guessed, though that shouldn’t surprise anyone since we have already proved that the economy is getting worse and analysts suck at their jobs.
Internationally, Europe’s unemployment rate held at 10% (which Money McBags believes converts to 12.2% in American) but it’s still the highest rate in 12 years since the great black jeans shortage of 1998. Austria came in with the lowest unemployment rate of 4% which would be great if anyone actually lived there and Latvia came in with the highest rate at 20% which is great that no one lives there.
As for both large and small cap stock news, who really gives a crap today. It’s all going down right now so even though this is a party weekend, keep your shorts on as long as you can. And remember, follow WGP on facebook and Twitter and enjoy the fireworks on this 4th of July weekend.
6/4/10 Midafternoon Report: Jobs report challenges Marmaduke movie for biggest bomb released on Friday
The (No) Labor Department’s jobs report came out today and was well below analyst guesses which sent the market tumbling like Tony Hayward’s Q score at a Greenpeace convention. The US added 431k jobs in May which was the biggest increase in a single month in over a decade since the internet was founded and needed people to set up all of the tubes. While on the surface that number seems spanktastic (though not nearly as spanktastic as Rosie Huntington-Whiteley who Money McBags would let hunt his whitey anytime), the market was surprisingly not fooled by it. First of all, analysts had guessed 500k jobs would be created so the actual number came up shorter than a Kristen Bell skirt or Bernie Madoff’s alibi. But what makes matter worse is if one digs in to the numbers it is doubtful any real jobs were created despite the government claiming that a whopping 41k private sector jobs were created, and honestly, bragging about 41k private sector jobs being created is like bragging that you won the spelling bee on the short bus. But let’s look at the numbers more closely.
Of the 431k jobs created, 411k were temporary census workers and 31k were temporary service workers. So already were at a net -11k permanent job creation number unless the government decides to turn the US into Oceania and thus take a new census every month thereby making those temporary jobs permanent. Now the Labor Department said the government cut 20k permanent jobs so the 411k census jobs added led to a net 391k new government jobs. So since the top line number was 431K, they solve for x in 431k – x = 391k and get “you’re fucked,” I mean ~40k for private sector job growth. But here’s the thing, as we said above, 31k of those ~40k were temporary fucking jobs so even using the government’s hunky dory jobs created numbers, there were only ~10k PERMANENT private jobs added to the economy or 10k total permanent jobs lost including the government figures. That number is more piss awful than having to listen to Lynyrd Skynyrd put to music any of George Will’s essays about baseball. But wait, it gets even fucking worse, like being married for 21 years, or being for 21 years and then finding out your spouse was gay the whole time, and yes I mean you Fran Drescher (though to be fair, having to hear Fran Drescher every morning might turn Money McBags gay as well). You see the BLS uses something they call a birth death-model to estimate the lag between the creation of new businesses and the close of businesses that their survey misses in the short term. They don’t release the methodology so it is the biggest black box Money McBags has seen since Vanessa Del Rio graced the screen in the 1980s. For May, the BLS’ birth death model showed an increase of 215k jobs, which again is an estimate likely based on population levels, claims for unemployment, and shoving one’s thumb far up one’s own ass. So based on our previous numbers where we showed 10k permanent private sector jobs were created and 10k overall permanent jobs were lost, we can now deduct a number somewhere between 0 and 215k from that (and Money McBags believes the number is closer to 215k since the birth-death model is likely more fictitious than strippers who dance just to put themselves through college) to get the real job DESTRUCTION number which was likely more negative than a disgruntled anion. So we’ve got that going for us.
Other tidbits from the jobs report show that 6.8MM people have been out of work for more than 6 months, the average length of unemployment is now 34 weeks which is the longest period since the government started keeping track in 1948, and Chewbacca was a wookie. Some may spin the drop in the unemployment rate from 9.9% to 9.7% as positive but that was more likely caused by people leaving the workforce as the Labor Force Participation Rate, which oddly enough measures the labor force participation of working age adults, decreased to 65.0% from 65.2%. So no matter how the government spins the jobs number, it sucked harder than a young lady trying to fellate Whitezilla all by herself.
In international news, everything was down as the Euro broke through the critical $1.20 mark on its way to extinction. Traders now see $1.18 as the next short term technical downside target for the Euro until it falls below that. The latest fears coming out of Europe revolve around Hungary which is apparently starving for funding. The newly elected vice president of Hungary, Lajos Kosa, channeled his inner Joe Biden late yesterday by saying that Hungary is in a Greece-like sovereign credit crisis. In response Prime Minister Viktor Orban didn’t deny the issues but did call Kosa a dicknut for speaking out of turn and promised to punish him by uninviting him to the new administration’s meet and greet with Zita Gorog. The new government is now in the process of determining the real state of the budget, and will report this weekend on whether they are fucked or just lovingly violated. The fear of Hungary defaulting is causing a spike in european CDS and has caused the price of European default insurance to rise to it’s highest price since Jean-Paul Marat forgot to lock his bathroom door.
In stock news, everything is down as the government can’t even properly manipulate the economy anymore. MCD is showing weakness because they annonced they will have to recall 12MM Shrek drinking glasses that contain the toxic metal cadmium. The irony in this is that the cadmium glasses are still less toxic and better for you than the nine piece Chicken McNuggets. And WMT had their annual shareholders meeting today where they announced a five year plan to add 500k jobs, insitute a $15B stock buyback plan, and continue to make the world a worse place.
In small cap news, WGO took it in the winnebago again today since the stock remains more overvalued than multi-family dwellings in Detroit before the subprime crash. Money McBags has been through this before but the company is not going to make money this year and is trading at a valuation that makes less sense than the rules of cricket. This is a best a $7.50 stock and on high volatility days it will get pitched around like the SS Minnow because valuation is based solely on hope and hope doesn’t put food on the table (though Hope Dworaczyk could put her melons on Money McBags’ table any day). The fact is, every small cap closed down except for somehow CTGX, JOEZ, TZA, and TWM (and that last two are funny because they are leveraged small cap short ETFs) because no one wants to hold illiquid little shit when the economy is still struggling, Europe is going to 0, and we now have to give a fuck about some do-shit country called Hungary who dropped a steaming pile of ghoulash on the markets today.
Oh well, at least try to have a good weekend.
It’s the jobs, stupid. Good Friday was great Friday for the economy as investors got the day off to spend their hard earned dollars on cheap imported crap from China while the Labor Department released monthly data showing 162k jobs had been created. Labor Department Secretary (though Money McBags prefers the more politically correct term Labor Department Administrative Assistant) Hilda Solis, was heard exclaiming “it’s on bitches” after the report was released and was seen vociferously taunting “I got your fucking jobs right here.” Sure the economy has lost 8MM jobs during the recession, but at this rate we will have gained them all back in four short years, just in time for the next bubble to be burst (China anyone?). Before we get more excited by the jobs report than we were to find out that the lovely Anna Paquin is bisexual, the numbers need to be looked at objectively. While 162 jobs were created, 40k were temp jobs (likely people being hired to clean out the offices of those recently laid off), 48k were temporary census workers hired to make sure people correctly fill in the boxes (perhaps they should have just hired Peter North to make a box-filling instructional video), and the number of jobs created lagged the guesses of economists. Still, jobs are fucking jobs so even if they are mostly temporary, the more people who are employed, the fewer people the government has to support (like the 16.8% of Americans who are underemployed), and the more money people will not be saving in order to buy iPads they can’t afford. So hooooooooooofuckingray. In other US macro news, pending sales of US homes rose 8.2% which is the second biggest gain on record, nudging out the “buy one get one free” promotion installed by Alan Greenspan in late 2001. Finally, the ISM services index jumped to 55.4 from 53 and above economist guesses of 54. Money McBags has no idea what this means but anything above expectations is good, unless expecations were for the number of new AIDS patients, the number of Kathy Bates nude scenes in existence, or the number of gangbangs in which your current girlfriend has taken part.
In stock news, the iPad is out which means any day now cancer will be cured, there will be peace in the middle east, and we will finally get money shots in to lesbian porn because the iPad is that fucking good. Sales of the iPad on opening weekend were stronger than Magnus Ver Magnusson after a week long double steroid cycle and analysts have upped their price targets on AAPL to what ever is a bit higher than infinity. According to reports, 300k iPads were sold over the weekend with expectations now for ~5MM sales for the year which is more than the population of Ireland, Singapore, or Paris Hilton’s pants.
In small cap news, the Apple momentum continues to push CRUS higher (Money McBags broke CRUS down again for all of you last week) while FHCO perhaps forgot to protect itself this morning and is down 4% on no news other than it has run about $1 too much. Money McBags is more short of time this week than Dennis Hopper is so he likely won’t be able to provide dick jokes or market analysis until Thursday. He may pop up on twitter now and again or be able to pop out some quick analysis Tuesday night, but for the next few days you’re all more on your own than a deep thinker at a Tea Party. Stocks for all of you to keep an eye on include TMRK and KITD so do your work and remember to have your pets spayed and neutered.
The market is up again as the service industry grew more than forecast last month thanks to more people stopping off at McDonalds on their way to the unemployment office and then washing their sorrows away by watching touching interpretative dances at their local Rick’s Cabaret in order to warm the cockles of their jobless hearts. The ISM’s index of non-manufacturing businesses was up to 53 from 50.5 and in theory measures 90% of the legal economy (it doesn’t take the lovely Ashlee Dupre to let us know there are many illegal services performed in this country). That was higher than the 51 estimate and we are all acutely aware that a number above 50 signals growth (while a number above 36DD usually signals growth for Money McBags). Also ADP was out with a report estimating companies cut 20k jobs in February which would be the smallest drop in 2 years were that number not likely to be revised next month. Economic data gets revised more often than a politician’s stance on issues (cough Harold Ford cough Mitt Romney cough), modern history, or the background of an old rich guy’s wife (she was a student, she worked with kids, they were my kids and she was in high school, but….). The good news is that there is the whiff of real recovery in some of these numbers, though that could also just be the smell of Ben Bernanke’s taint after an all-nighter spent trying to right this economy.
In international news, Greece has approved an economic plan which will save $5.5B through a 30% cut in holiday bonuses, a 2% increase in value added sales tax, and a promise to cut down their spending on noise pollution by simply having Nia Vardalos shut the fuck up. Money McBags is anxiously looking forward to the day Greece’s fiscal problems are solved and not because it will help shore up the market but because he has fewer Greek jokes left in his arsenal than a eunuch has balls. Seriously, if Money McBags knew he was going to have to write so many one-liners about hellenic culture he would have majored in Greek history, Epic poetry, or Maria Menounos while in college. For fucksake Money McBags may have to stress his long syllable and start writing this blog in dactylic hexameter if the Greeks don’t get their shit together (and if he is going to stress his long syllable, he can assure you that Alice Eve will be very involved). Of course the Greeks were less than thrilled with the cuts, including taxi drivers who apparently stayed home for a second day because according to the NY Times (so it could be totally fictional), they were “protesting tax reforms which would oblige them to issue receipts, keep account books and pay tax according to their income.” While that would make Charles Rangel proud since he loves finding ways around the means of paying taxes, protesting the loss of the ability to cook one’s books is as preposterous as Heidi Montag‘s singing career or anyone finding Jay Leno funny.
In stock news today Ethan Allen is running (though this time not from the British) as they said their orders for the first two months of 2010 were up 25% as apparently it was time to buy new furniture for Fort Ticonderoga. Dine Equity announced their quarterly results and decimated estimates thanks to increased traffic at Applebees and only a moderate downtick in IHOP business. Adjusted earnings came in at $.76 cents easily beating analyst estimates of $.15 as the company was able to create significant operating leverage, pay down debt, and somehow disguise the taste of their food to make people actually want to eat it. Money McBags is not saying that Applebees is bad, but not even chronic ageusia sufferers will go there. So it is understandable that analysts would have underestimated earnings, that said, being off by a factor of 5 is as bad as trying to forecast the length of Lindsey Vonn‘s celebrity and using any metric loner than days. Finally, BJ’s Wholesale club reported earnings up 4.6% but guidance was below estimates sending BJs down on the day. Money McBags is a bit confused as he doesn’t find anything disappointing with BJs, but should they continue to gag or see a lenghty decrease, they may be forced to change their name to Blumpkin’s Wholesale Club.
In small stock news, LOV received a take out offer for $3.10 per share and “other possible business combination transactions” from big shareholder Great Hill Partners. The stock has shot up to $3.30 so those “other possible business combination transactions” either mean “another $.20″ or merger-arb traders are betting the company put themselves on buyashittycompany.com and are expecting a counter offer. Money McBags broke LOV down last week and came up with a $2 valuation so either Great Hill Partners has more of a Jewish fetish than anyone who has dated Barbara Streisand (because why else would anyone want to date that?) and thus needs to own JDate or “Great Hills” is yiddish for “Sucker.” Yesterday Money McBags briefly mentioned QCOR but he finally had time to go over their Q last night and he loves what he sees. Money McBags has followed this stock for almost a year and a half and has watched the issues they have had with their FDA filing for IS marketing approval, their asstastic sales into the IS market last Q, their sales force ramp up in MS, and their out of nowhere medicade reimbursement and reserving issues from last quarter. Honestly, their last Q finally got Money McBags out of the stock as it wasn’t clear what was going on with their sales as a potential competitor had emerged and the reserving issue they reported was more confusing than a post-op lesbian tranny (I mean if you like chicks, why cut the thing off?). Money McBags still liked the company though as their management team had generally done a good job on strategy (with their execution being a bit concerning because how many times does it really take to file a fucking sNDA? One? Maybe two? But having to refile more than twice creates more red flags than a Beijing pennant maker.). That said, this quarter easily beat Money McBags’ top line estimates and their phone call was chock full of goodness. Money McBags had an estimate of $23MM in net sales for QCOR based on IS sales remaining flat (it was down big last Q in what looks like an anomaly) and 15% Q/Q growth in MS sales. Well IS sales rebounded to the mean of their historical range and MS sales grew 50% Q/Q. While the reimbursement rate was about 1.5% higher than Money McBags estimated, their net sales still came in about $2.5MM above his estimates. Sales were strong enough to give shareholders spasmodic seizures (which of course should be good for QCOR since that what their drug aims to stop). Anyway, there were many other positives such as the potential emergence of a market for Achtar (the drug QCOR sells) into the nephrotic market. QCOR sold 14 vials to this market and estimates that there are 50k people their drug could treat and those people on average would use 2x the doses of an IS patient and 4x to 5x the doses of a MS patient. The company estimates this as a potential $1B market for them and will start allocating a bit of their sales force’s time to contacting nephrologists. Now look, it is way too early to get too excited about this as the data is very sparse but it does mimic the MS market for them just two years ago so there is some real potential here. Additionally QCOR has straightened out their Tricare reimbursement issue which may now contribute to 10% growth and said the FDA will get back to them on their ability to market to IS doctors by June 11, 2010. Oh yeah, the CEO addressed the potential competitive drug Sibril and said in the six months it has been on the market, they have not seen it make a dent in their sales. The only way this quarter could have been bette for QCOR was if they found out Achtar also acts as a pheremone for Brooklyn Decker‘s mouth. In terms of forecasting a baseline, just assume they get nothing from the nephrotic market, IS remains at its historical mean (so flat from here), and MS grows 20% per Q (which is aggressive, but whatever). Additionally assume a modest uptick in operating costs, no more reimbursement issues (they claim they are fully reserved for past medicare claims), and a 500k per q share buyback (they bought back 2MM shares last Q and have 5MM left on their buyback so it could be more), and you get to around $.76 eps for 2010. So on those baseline earnings, the company is still trading at less than 10x earnings even after being up almost 30% in two days. Plus they are only trading at 2.5x or so EV/sales and companies like this trade at 3x to 4x. Of course that $.76 eps number could be too low if the nephrotic market can get traction, the FDA approves them to market IS to doctors, and MS continues to run. The concerns still remain that the drug is hella expensive and the quarters can be lumpier than Alexis Texas’ backside, especially as they have little control on IS sales, so there is a reason for it to trade at a bit of a discount. Also, QCOR’s hiring of a Chief Medical Officer to investigate buying other assets with all of their cash is a bit worrisome because a company with their supposed growth opportunities in MS and NS shouldn’t need to be wasting time on non-core products. That said, there could still be a ton of value here. Plus with borrowing rates only to go up, M&A is getting hotter than Olivia Munn on the planet Mercury, so this could be a nice little take out candidate. Money McBags will likely buy on a pull back and is kicking himself for not having owned this, but their last Q was so bad it made it Lady Gaga look fuckable.
Oh yeah, Money McBags picked up some KITD yesterday at around $10.
Tim-motherfucking-ber. The market is nosediving today like a Biggest Loser contestant going after the last gravy covered deep fried twinkie at an all you can eat “stuff that’s bad” for you bar (and no offense to you weight-challenged people out there, but did you really need to go on a TV show to figure out you need to eat a fucking salad every once in a while? I mean for fucksake, it’s not like you need to decipher M-Theory or particle physics, you just need to stop eating crap and walk a little. Jeesh.) Driving the market down is what we here at When Genius Prevailed call serial unemployment (as opposed to Quisp’s cereal unemployment, which we hear has caused Quisp to resort to tickling Franken’s berries to pay the rent). New claims for unemployment came out and they were higher than last week and above analyst estimates. Claims rose 8k to 480k while expectations were for a drop to 460k. 10MM people continue to receive unemployment benefits or extended benefits and to give you an idea of how large of a group that is, it is is roughly equivalent to the population of Portugal, Belgium, or people who will show someone their tits on Bourbon Street should the Saints win the Super Bowl (and Money McBags fully supports Saints fans). So the economy may be getting a bit better but as long as there are so many displaced workers, full recovery will be difficult (to put it mildly) which is why the S&P is probably a wee bit overvalued, like long walks on the beach, Alan Greenspan, or Michael Chabon novels. Alternatively, labor productivity increased in January above analyst estimates as those with jobs have to work a fuckload harder to keep them (so instead of slacking off and looking at Miranda Kerr pictures for 6 hours a day like workers in a healthy economy like Australia, US worker now only slack off for 4 hours a day and are forced to look at internet pictures of Shirley Hemphill). Also positive news is out today on factory orders which gained again in December as businesses build back and try to maintain inventory.
In international economic news, investors are getting more skittish on Europe as they deal with the Greek budget crisis which will likely cause the EU to revive their hit doin da butt in making Greece their submissive (though luckily, and not to overgeneralize, but the Greeks seem to enjoy that). Fears are now spreading to Portugal, Spain, and any other country where two hour midday siesta’s are followed by 3 hour midafternoon siestas. Also, China is gettng a bit frisky with the US, objecting to claims that they are keeping down their currency in order to help exports. The Chinese Foreign Ministry spokesman said they will stop artificially deflating their currency when the US stops artificially inflating the value of free speech.
In stock news Cisco put up a nice quarter (and for the record Money McBags has been long CSCO, though the stock has moved strongly sideways on him) as revenue was up 8% and their adjusted earnings of $.40 beat analyst estimates of $.35. While many companies have beat earnings forecasts, CSCO was one of the few who also beat on the top line and not only that, they said the global technology environment is getting better and they will be hiring 3,000 people. So take that rise in jobless claims to 480k, Cisco will be hiring 3k of the 15MM-20MM unemployed so the recovery is on like Donkey Kong. CEO John Chambers did say that “we are already in the second phase of a capital spending increase” which is great news, though Money McBags was unaware that phase one had actually ended.
In small cap news, TSYS reports tonight and Money McBags eagerly awaits their earnings release which he discussed two days ago while JOEZ put up a nice quarter. Now Money McBags understands the appeal of Joes jeans about as much as he understands the appeal of Desperate Houswives or unshaved lady parts (and that is not at all). They are expensive jeans which people really have no reason to buy given the recession and cheaper alternatives. That said, Joe’s grew net sales by 42% as apparently people not only like the jeans but things called “woven shirts” and “denim leggings” (we’ll assume “pants ponies” are not one of Joe’s SKUs). The company earned about $.05 per share (excluding their big one-time tax benefit due to chugging a jar of metamucil and thus releasing their valuation allowance) thanks to the increase in sales and a higher gross margin. For the year, they earned somewhere between $.09 and $.13 depending on how you want to deal with their taxes and had around $3MM of EBITDA in the latest Q. On the call they talk about aggressively growing stores and categories so they will continue to expand which means a bigger marketing spend and a more complicated business to manage. On the positive side, they have $13MM cash, no debt, and products that snugly fit the lovely Anna Lynne McCord. It’s possible that they can continue to grow and keep gross margins the same with some better channel distribution, so maybe they earn $.15 per share next year, though that is a total stab in the dark guess based on growth off of last year and something analysts refer to as “putting a finger in the air.” The company is trading at around $1.85 today, is rapidly growing, and is relatively cheap (1.5x current revenue and if they can best their current earnings number, under 20x eps). If you want retail risk in this shaky economy, this is one way to get that with some pretty nice upside. Money McBags will not be purchasing JOEZ, despite the potentially good returns, because he just doesn’t get overpriced jeans and never trusts the easily changing fashion tastes of US consumers (the ones who brought you the rat tail and Hammer pants). That said, people are making money here and it does not appear to be ridiculously overpriced for a growth company.
2/3/10 Midafternoon Report: Market seeking direction like troubled teen in ABC afterschool special, though with less crying and less Meredith Baxter Birney
The market is mostly lower today despite some moderately postive macro reports (moderately positive in the way that learning you have syphilis is moderately more positive than learning you have nut cancer). The ISM said the service industry expanded in January for the first time in three months, which may be one reason RICK is bouncing back today since they provide the type of service into which all industries should be expanding. While the ISM’s index for the service industry rose to a whopping 50.5 (and again, for those of you playing at home, anything above 50 signals growth, so 50.5 signals about as much growth as Ben Bernanke’s cranium follicles), it was slightly below analyst estimates. Also, ADP came out with their job data for January showing only 22k jobs had been cut which was inline with forecasts and the smallest drop in two years which is good news for everyone but those 22k people who lost their jobs or the 15MM or 20MM (what’s 5MM among friends) people who remain unemployed.
In world news, the EU is getting all up in Greece’s souvlaki telling Greece that they are ok with the deficit reduction plan but will be watching them closer than a 25 year old virgin watches the lovely Amanda Seyfried at a movie premier (and as an aside, Money McBags had never heard of the delightful Ms. Seyfried until yesterday but he will now be investigating her full body of work which we can all assume is spanktacular. Unexpectedly finding this charming young lass is like finding that that undervalued small cap stock with no analyst coverage, growing at 40%, and trading at less than 4x cash flow). The EU commissioner for economic and monetary affairs called the Greek government’s objectives and targets “ambitious” but”“achievable.” He added, “every time we observe slippages we will ask the Greek authorities to adopt additional measures such as putting less tzatzki sauce on their gyros, conserving water by showering only twice a month instead of their usual three times, and allowing Maria Menounos to man the Athens welcome center kissing booth.”
In stock news, investors are getting less confident in the market with the expectations that the market will fall 10% or more at its highest level since 1984 according to a survey of investment writers. Of course those investment writers also thought 2008 would be a banner year for the S&P, Dewey would defeat Truman, and Fermat’s last thereom would go unsolved (hey guys, all you had to do was carry the 1). Money McBags was happily not one of the writers polled because he refuses to be associated with other financial writers and their groupthink (plus there was that incident last year at the Financial Writers of America Conference involving a punch bowl and a Money McBags’ turd, so it’s not clear he is welcome anyway). Also, Time Warner and AOL both put up good quarters, just not together, as they proved that two heads are often better than one (unless the head in question is Bar Refaeli‘s, and then one is perfectly acceptable). Time Warner not only beat estimates, but they raised their dividend thanks to strength in their film and cable business which was able to provide a boost for continuing publishing declines (why buy an investment magazine when you can read Money McBags for free?). AOL’s earnings were $.01 per share, though their revenue shrunk by 17% because people don’t use fucking dial-up internet service anymore. Jeesh. To diversify out of the dial-up business, AOL is said to be working on an updated abacus (featuring different colored beads), tins for dageurreotypes, and a re-invention of the wheel (they are apparently making it square).
In small cap news, HDIX (aptly named H sucks a DIX by Money McBags who owned them for a while last year) is up 89% on a buyout proposal from a Japanese company named Nipro (or as it’s pronounced in the US, Nipple). HDIX makes cheap over the counter diabetes blood test readers that sell for less than half the price of competitor’s products and work just as well. It was that thesis that led Money McBags to buy the stock last year as the recession should have caused people to trade down, of course it was HDIX’s shitty performance that caused Money McBags to sell well before today’s payoff. In other news, CKSW is down after their inline Q though guidance was for slighly above street revenue estimates for 2010. Money McBags has yet to fully go through their quarter but the sell-off is likely because license revenue did not grow. That said, their book to bill was greater than 1 (and book to bill is a strong leading indicator of future performance, like packs of unopened condoms at the beginning of a gang bang), they are forecasting near 20% growth, and are trading at 16x or so 2010 earnings or 3x revenues. The company isn’t terribly cheap, but they are growing, their fleet optimization software is supposed to be the best in the business, and they have a burgeoning partnership with SAP to deliver this software. Money McBags will look in to their Q a bit more tonight, but this is another watch list stock for all of you out there because they have a market leading technology in a growing market and a huge partner (SAP). This smells more of an acquisition candidate than Paris Hilton smells of AIDS.
Yes Money McBags lights the menorah and it looks like the market wants him to get those table dances tonight as it is up again on positively mixed news. Durable goods orders rose, though missed expectations with weakness in autos and airplanes which is not suurprising since “Cash for Clunkers” went away like Tom DeLay’s dignity. Taking out transportation, durable goods demand demolished estimates like Kirstie Alley demolishes her Christmas ham (and it is reasons like this that NTRI has been absolutely killing it lately). Orders were up 2% ex-transportation, led by demand for machinery, metals, computers, and stripper poles. The question remains whether this is real demand or just inventory build back, so we’re trying to temper our excitement and make it last longer by just thinking about baseball.
In other positive market news today, initial jobless claims fell to their lowest level since September 2008 as eventually you run out of people to fire. So if you made it through and stayed employed this long, you might be ok, but if you’re looking for a job, you may be fucked worse than the lovely Houston at her 620 man gangbang.
In stock news, Money McBags’ long time favorite QCOR is up 20% on news that the FDA will give a ruling on Achtar for IS by June (and hopefully the ruling is more than just finding it delicious). Seeing as how it took QCOR about 3 years and several “do-overs” to get this filing accepted (and you’d think they were trying to prove P=NP with how long it took them to simply get a filing complete), this is positive news, but the FDA still has to approve this drug which is used by the majority of doctors anyway (so one would think it would be approved, but then again, one also thought Lindsay Lohan would have had a long and profitable career and Evolution would not have been contested in the 21st Century). Money McBags wouldn’t be buying into this rally though. It seems more like short covering than anything because the company is still going through growing pains and there is some uncertainty to their medicare reimbursement as they currently have to pay more than they get from medicare and didn’t reserve enough for late/non-payments last Q. The company is probably at a ~$.08-$.10 quarterly run rate right now, but they have cash and give back to shareholders through buybacks. They could have real upside if they continue to penetrate the MS market and can get on-label IS approval while overcoming the sticker shock from doctors/patients/insurance companies on the price of a vial of Achtar which currently runs at $23k a pop (and that is enough to cure spasms from MS/IS but create spasms from having to pay that price).