The market was up again today as Europe remains solvent and investors ignore macro data and instead focus on how they can become race car drivers.  In economic news, production in the US slowed as automakers held back on churning out new cars due to a little something called a consumer fucking recession.  Not only did production slow, but last month’s number was revised down from 1% to .6% growth in the government’s consistent “hold the shock and hope for no awe strategy” which is surprisingly more effective than their “hey look, it’s Enrico Palazzo” strategy or simply telling the truth.

In addition to production across the US slowing, the Fed’s Empire State business survey unexpectedly dropped further than Abe Vigoda‘s ball sac after taking off his depends.  The survey showed general business conditions slipped to 4.14 (whatever the fuck that means) while analysts had guessed the number would come in at 8 but at least they were ordinally correct as 4 and 8 are both numbers (though the poor guy who guessed the survey would come in as “a” will certainly need to fix his regression model).

In other US macro news, the real estate market remains weaker than Gary Coleman’s kidneys and sell side research as new mortgage applications dropped to their lowest level in over a year as a result of frictional unemployment becoming more non-existent than acting in the best interest of clients at Goldman, the new home buyers government tax subsidy having ended months ago, and more mortgages being underwater than on the fictional island of Atlantis.  Even with rates at record lows, there are still fewer buyers than there are straight Wiggles or giffen goods which means prices are going to have to continue to tumble to somewhere between $0 and foreclosure before the housing market once again becomes liquid (and if it is going to become liquid again, Money McBags would suggest it become a nice Jack Daniels or perhaps a refreshing peppermint schnapps).  With home equity loans having been one of the engines that fueled economic growth in to the bubble and allowed people who couldn’t otherwise afford it to buy such necessities as 60 inch flat screen TVs, Hummers, and diamond encrusted gold teef (because really, your teef deserve it), the inability of home owners to tap in to these lines of credit with their upside down mortgages and lowered home values will continue to weigh on the recovery.  With shadow inventory of somewhere between 8MM and every fucking house in the country looming, home prices will continue to feel more pressure than Ricky Martin’s colon on a Saturday night so it’s no wonder that the market keeps rallying (and yes that was sarcasm).

Internationally, Japan tried to weaken the yen by slipping it some roofies and telling it it doesn’t love it anymore.  With the yen at a 15 year high against the dollar, Japan’s central bank is furiously buying US currency in order to help Japanese exports and to try finally get that 50th state quarter for which it has been looking.  In other international news, the European commission was out with rules aimed at stabilizing the markets (other than closing them down, barring HFTs, and telling Goldman Sachs to go fuck themselves).  The new rules include giving regulators the ability to ban naked short selling (which is fine as long as those doing the short selling don’t look like this) and to get better access to information on derivatives books in the market (and Money McBags’ favorite derivatives books are The Clearinghouse of the Seven Exchangeables and Black-Scholes Beauty).

In stock news, YHOO (remember them?) was up 4%+ after saying they won’t sell their stake in Chinese internet firm Alibaba.  YHOO’s stake in Alibaba is valued at ~$11B which is more than 50% of YHOO’s current market value as apparently being second (or third) fiddle to GOOG (the MySpace to GOOG’s Facebook or the Youporn to GOOG’s Spankwire, if you will) isn’t as lucrative as it used to be.  In other stocks, MA was up 5% after saying they expect 20%+ EPS growth through 2013 since fiat currency will likely die and lugging gold bars to pay for trivial necessities like dinner rolls, soup mix, and insect repellent, will be hella inconvenient.  Finally Travelers was up ~3% after saying they will be buying back $5B worth of stock, $1B more than previously announced, in the continued run of companies returning cash to shareholders as re-investing in the company for growth becomes another outdated management strategy for Peter Drucker and his ilk to drone on about along with “knowledge work productivity” and discounted lunches in the company cafeteria.

In small cap news, DGIT was up ~8% and Money McBags pointed this stock out again yesterday saying it is still a buy because the Ascent Media/Extreme Reach rumors are more overblown than Ron Jeremy (though to be honest, it is not clear one can ever really be over blown) and a company that is growing should not trade at <4x EV/EBITDA.  There is is still time to buy as it should be worth at a minimum in the low $20s with upside to $30ish.

Also, KIRK continues to tick back up after the company traded off way too much after their Q.  Money McBags wrote about them in the comments section last night but since the award winning When Genius Prevailed comments section is likely less trafficked than a bridge in Alaska or Gabrielle Sidibe‘s vagina, he will reprint it here (with some modest edits) since he believes KIRK is still a very good buy:

KIRK has found a nice bottom (though not as nice of a bottom as either of the Davalos twins) and Money McBags expects that over time they will bounce off that bottom because they are simply too cheap unless their business dies with the rest of the economy, so, um, maybe scratch that.

Money McBags analysis of KIRK has not changed and he recently read the Piper Jaffray note where the analyst shit all over KIRK as if she were filming an update to 2 Girls 1 Cup called 1 Analyst at Work by downgrading it to neutral and saying stagnating middle-income wage growth will hurt KIRK’s top line by causing them to discount more (because really, wouldn’t $9.99 make you buy the “Diva” word plaque instead of $14.99, and yes, Money McBags is recommending a company that sells something called a “Diva” word plaque and yes, he believes that sound was Emily Post rolling over in her exceptionally well cared for grave).

But here is what Money McBags loves most about the sell side and their lack of balls (though in this analyst‘s case, Money McBags is ok with a lack of balls), the analyst ripped the stock and downgraded it, and yet her price target is $19.  Sure it is down from her previous target of $28, but her $19 target is ~50% above KIRK’s current price and yet she only rates it a “neutral.”   That makes less sense than M-theory or lesbian transexuals.   Either Ms. Tamminga is covering the greatest stocks in the Universe and thus 50% upside is “neutral” for her, or the concept of logic has not infiltrated somewhere called Calvin College or the University of St. Louis MBA program from where she has her degrees.

Her fiscal year EPS estimate for next year is $1.60 (and Money McBags is not blessing this number, just stating her guess) and that includes her negative view of the company.  They have >$3.00 in cash on the balance sheet.   If you want to be a dick, throw a 10x on her negatively slanted number (and that number is ~10% growth, so a 10x multiple is probably too low, but whatever) and add the cash and you’re at ~$19, which is ~50% above where KIRK is today, so it clearly sounds like a neutral-rated company to Money McBags.   See, by having a neutral on the stock but a 50% upside price target, the analyst can claim she was right or wrong no matter what happens to the stock, and that my friends, is how the sell side operates.

So what have we learned:

1. KIRK is cheap

2. The sell side has no balls and instead of making cogent and logical arguments, would rather just produce volumes of nonsense to get the buy side to trade with them.

3. The Davalos twins are hot

Anyway, KIRK should be trading in the $18+ range, but it will take time now that they blew their quarter (and most importantly, they forgot to swallow), so you can build a position at your leisure.