Thursday, December 31, 2009

12/31/09 Midday Report: Let the New Year's party begin (Except for the 10% of you unemployed)

2009 finally ends tonight and what a year it has been.  The market sunk to a low of 666 before being exorcised by a low quality rally and a bottle of jesus juice, the US goverment bailed out the financial system and printed enough money to make Bill Gates seem like a pauper, unemployment spiked to multi-year highs bringing back Great Depression slogans such as "Brother can you spare a dime?" and "What can we get for $10?" (the answer of course being "everything you want."), and Hannah Hilton announced her retirement sending Money McBags into a deep and prolonged depression of his own.  It was a momentous year but that is in the past and as the year 2010 begins, we all need to refocus on the markets and follow the data closely because things aint so cheap out there anymore so mistakes can be made (though probably not as big as this mistake or this one).

In market news today, weekly unemployment claims came in lower than expected as companies build back inventory and try not to Scrooge people during the Christmas holiday.  The 432k initial jobless claims were the lowest in a year and a half so there is some optimism.  Of course, those filing for extended unemployment benefits rose by 200k to just under 5MM.  That's right, 5MM people have been out of the work force or longer than their 6 months of unemployment checks, but there is nothing to see here.  In actuality, we appear to be at an inflection point where the economy has bottomed and is stabilizing so there is hope for growth, of course, they said that in Japan in 1991 as well.

In stock news, not much is happening today.  Financials are up a bit (and as always, remember they are raking in the dough right now with free money from the FED and people and businesses who need that money willing to pay a lot more for it than free), RICK is rising again as the weak dollar makes those $20 lap dances oh so much cheaper for the international crowd, and NLS may be providing us with a good entry point should we believe the analysis of whengeniusprevailed random message board posters (as always, buyer beware).

So a Happy New Year to all of you from Money McBags who will leave you with this one thought for 2010.

Wednesday, December 30, 2009

12/30/09 Midday Report: The market mimics the Alabama school system as investors close their books until the New Year

With the year coming to a close, trading is thinner than a bulimic after a good gastric banding while market news is scarcer than Paris Hilton's panties or Bernie Madoff's investment returns.  The only real market news out today is that the Chicago ISM was released and measured a whopping 60, though it is unclear what 60 is out of and what 60 actually means, but it was higher than estimates so that must be good.  Apparently, readings over 50 signal expansion which means every time Bar Refaeli shows up on my screen, my pants would read about a 99 on the Chicago ISM scale.  Directionally, the results point to manufacturing in the midwest gaining strength and could signal positive changes for the job market as long as you are looking for a job as a competitve eater, snow shoveler, or corrupt politician (Chicago's 3 big industries).

The dollar is also on a bit of a rally as people forget how much money the US printed and borrowed, thus sending metals prices down.  Money McBags has talked about gold's Bubblicious rise in the past and we are now witnessing some sell off.  Long term, gold still remains a good hedge, though not as good as wearing two condoms when in Thailand.

Finally, GMAC may need more money from the government to the tune of $3B to $3.5B as not only did they finance shitty cars, but they financed them shittily.  As a result of this news, the financial services sector is down as the fear of more bad loans and bail outs is leaving a slight scent on the market (and that scent is a bit like a young skunk who has been urinated on and left to sleep with Amy Winehouse for a week).  That said, remember, these banks are getting free money and lending it out for a heck of a lot more than free so they should be raking in the dough so there are still some good buys out there.

In stock news, Money McBags favorite WILC hit its 52 week high as the shekel increases vs. the dollar and companies (unlike overweight strippers and kleenex) just can't stay ridiculously cheap forever.  Also there appears to be a sell off of momentum names in the weight loss space as NTRI and MED are dropping like Alan Greenspan's credibility.  NTRI announced a $5MM impairment charge yesterday, MED's CEO is regstered as having sold shares, and these names have been flying higher than a coked up Ruppell's griffon so a sell off is not unexpected.  Money McBags does recommend keeping an eye on NTRI as they have had solid returns, recently entered the diabetic market, and have new deals with WMT and Walgreens.  The company is a solid cash flow generator and this country has more fat people than Tiger Woods has STDs, so their business has plenty of room to grow.  It is worth following and waiting for the momentum buyers to finish selling.

Tuesday, December 29, 2009

12/29/09 Midday Report: Consumers more confused than Alan Greenspan in a housing bubble

Data came out today showing a rise in consumer confidence for the second consecutive month, despite consumers rating their current situation as the worst since February 1983 (and to give you an idea about how long ago February 1983 was, Tennessee Williams was alive for most of the month, Case had yet to mix his chocolate with Shiller's peanut butter,  Beat It was released as a single (and Michael Jackson was still black, and alive), and Hilary Scott was born and thus had yet to expertly fellate her first johnson).  That's right, in the same report today, the consumer's expectations of wages and jobs fell to 26 year lows while consumer confidence rose.  So it all makes perfect sense.  Consumer confidence is rising, while falling to new lows at the same fucking time.  Somewhere Kafka is happily sitting up in his grave and applauding while Zeno Cosini has his last cigarette.

Speaking of Case-Shiller, home prices in 20 cities rose for the 5th consecutive month, or they were flat, depending which news source you read of the exact same fucking data.  And seriously, for you reporters out here, you're not reporting on the existential feeling of Antoine de Saint Exupery or the exact location of a quantum particle (and for the record, under my balls would be an acceptable enough guess) so how hard is it get the one number fact correct?  Luckily, a third news source clears up any confusion by stating that home prices were up, but when adjusted for seasonality, they were flat.  Who knew that one needed to hire someone from NAFA (where I am told they party until their valuation allowances reverse) just to read a simple news story.

In stock news, a Money McBags favorite, RICK continues rise (and it is from more than the table dance) while a Money McBags watchlist company, CRTX, gets some momentum.  CRTX is a roll-up drug maker/supplier focused on the respiratory market who went public through a reverse merger last year.  Since that time they have acquired the rights to a number of drugs while revamping their sales force and selling controlling interest in themselves to Italian pharma company Chiesi (in return for the rights to market one of Chiesi's drugs in the US and a lifetime supply of parmesan cheese).  While trying to piece this company together, CRTX has seen their top selling drugs face increasing competition from generics (which they admit is happening and say is not unplanned, hence the acquisition of other drugs) and has disappointed the street (though only one analyst covers them and that analyst has been consistently too high, thus tripping quant funds' models when numbers come in low).  The point is, this company could easily do $115MM of revenue in 2010 (maybe $130MM at the top end) and has a current market cap of around $145MM.  Drug companies at a minimum should tade at 2x earnings, and more likely 3x to 4x.  So if this company can just execute and fend off lost drug sales through their new drugs (Curosurf and Factive) while purchasing another underutilized drug or two, the stock could easily double from here.  It definitely bears watching, as does the majestic Gracie Glam.

Monday, December 28, 2009

12/28/09 Midday Report: Light volume as the market tries to shed holiday pounds

The only real news today (other than that Nell Mcandrew is still hot) is that the extra day of shopping this year led to an increase in retail sales.  Amazingly enough, analysts also found that an extra serving at dinner led to an increase in people gaining weight, an extra shot of Jager led to an increase in people throwing up, and an extra hour in a Bangkok brothel led to an increase in people getting AIDS (and Money McBags loves any city whose name is a verb followed by a noun).  Retail sales were up 3.6% as retailers were better able to hold price and manage inventory, plus that whole extra day thing.  Without the extra day, analysts estimate retail sales were up 1% to 4%, so throw your favorite dart at whatever number you prefer.  Interestingly though and a positive sign, sales of electronics were up 6% as consumers still want their iPhones, netbooks, and Rabbit Habits.

In other market news, the street awaits Wednesday's treasury auction which has caused yields to increase and thus tempered market gains today and Israel raised their interest rates by another 25bps to fight off inflation.  Israel also announced that if inflation continues to rise, they will either send the Mossad after it or simply have it's mother nag it to death.  The rise in Israeli rates will increase the value of the shekel vs. the dollar which is good for Money McBags' favorite WILC though bad news for Americans planning on going on a kibbutz this summer.

In stock news, a tiny Money McBags watchlist stock, MBND, continues to rise after raising revenue estimates last week.  MBND installs Direct TV across the country with a specialty in multi-dwelling units and recently rolled up a number of players to become the largest Direct TV installer.  They finally worked out operating kinks last Q and earned $3.3MM of EBITDA and just guided to $260MM-$270MM of annual revenue.  So as long as they don't fuck anything up (which they did in the 2Qs prior to this last one, so the leash is shorter than a midget's nut hairs), they should earn at least $14MM of EBITDA and they have only a $20MM market cap and ~$55MM EV.  So they are trading at ~4x EV/EBITDA and <.1x revenues and that is if they realize no operating efficiencies.  This is either a $6+ stock or a roll-up cluster fuck, but worth keeping an eye on and doing some research as Direct TV continues to grow and MBND could ramp with it now that they have their operational issues "under control" (at least until the next fuck up).

Thursday, December 24, 2009

12/24/09 Mid-Morning Report: It's Christmas Eve, can a jew get a table dance?

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).  

Wednesday, December 23, 2009

12/23/09 Midday Report: Consumer confidence rises enough to spur consumers to still not buy new houses

Another day and more mixed data so Bulls and Bears can both rejoice (Yay!!!  Things are getting better and Yay!! Things are staying crappy.  See we can all get along, you hear that Israel and Palestine and Tiger and Elin?).  US consumer confidence rose to 72.5 according to the Michigan Consumer Sentiment Index, though it was down from the preliminary reading of 73.4 just over a week ago.  It's good to see even Michigan is adopting the Commerce's departments' "downward revision" strategy which Money McBags outlined for you yesterday.  In addition to Consumer Sentiment rising to some undefined number, personal spending and incomes were up (though less than forecast) as the second derivative of unemployment has slowed and the economy has been stimulated from flaccid to almost semi-erect with all of the dollars the government has printed and strategically placed into their g-string.

But Bears don't worry because in contrast to the stronger consumer (though not as strong as estimates, Magnus ver Magnusson, or the odor from a Mickey Rourke corn shit), new home sales fell to a seven month low and dropped 11%.  I'm no Robert Shiller (for fucksake I'm not even Karl Case) but when home foreclosures are at a record, why the fuck would anyone buy/build a new home when they can get an existing one for 70% of the price (and backing this sentiment up was the news from yesterday that existing home sales were up)?  But fear not everyone, because Timothy Geithner says there will be no "second wave" financial crisis and we all know how good Treasury Secretaries have been with their predictions.

In stock news, newspapers are moving up (and that is not an error as bizarre as it seems, so there will be no retraction necessary) as a Wells Fargo analyst upgraded the sector from "underweight" to "equalweight" after sniffing four packages of glue, downing a fifth of Jack Daniels, and revving up the flux capacitor in his DeLorean and travelling back to the 1980s, thus forgetting about this little thing called the interfuckingnet.  Along with that report, the analyst also predicted that New Coke will soar, Ishtar will revolutinize the movie industry, Teddy Ruxpin will be the best selling toy in history, and AIDS will be but a fleeting virus and thus he also downgraded CHD.

Tommorrow is a half day on the markets so get your trades in while you can and then enjoy your day off.

Tuesday, December 22, 2009

12/22/09 Midday Report: GDP revised down, existing home sales up (await downward revision)

The market got mixed news today as sales of existing homes grew 7.4% to a two year high of a 6.5MM annual rate (and we thank our lucky pornstars for tax breaks, 4% lower median home prices, foreclosure sales of houses formerly owned by the unemployed, and Faye Reagan) while GDP was revised downward from 2.8% to 2.2% growth.  The commerce department loves downward revisions like WGO loves losing money ($.14 last q, don't let the tax break fool you) and America loves watching stuff that sucks

The downward revision strategy does seem to be a winner though as the market is up and the previous GDP announcement helped spur on this rally.  Money McBags now suggests all of you try this "downward revision" strategy on your first dates.  Just tell the lovely lady you are wining and dining that you are a multi-millionaire, have houses on both coasts (and are just renting a crappy apartment while they are being renovated), and are hung like a moose (and not any moose, but a Canadian moose, on steroids).  If she winds up liking you, just downwardly revise those estimates every week or so and you're golden.  If she doesn't like you, just up your upward estimates next time.  So kudos to Secretary Gary Locke and his Commerce Department for that strategy, we always wondered how he scored a fox like Mona Lee, but I guess now we know.

Meanwhile, the yield curve continues to widen like Ben Bernanke's forehead, Kevin Federline's waist, and a young wannabe actresses' sphincter in a Bang Bros. video.  The steepening of the yield curve should be a boon to banks who really need a break after almost destroying the economy by lending money to people who couldn't pay, then getting bailed out by the government, and then getting to borrow money for free and lend it for more than free (and that "more than free" is currently growing to "profit-licious").  Now, just when the banks raised more equity (further diluting already underwater shareholders) to pay back the TARP in order to give employees bonuses (and those bonuses are mostly well deserved, and by "mostly" I mean "not at all"), they get historically favorable spreads in which to make money.  Thank goodness, I was starting to get worried, but the banking system really does need this kind of break.  Now if we could just release OJ, redirect a few billion dollars of the funds going to repair the New Orleans levees to aid in building more golf courses, and elect the cast of the Jersey Shore to congress (with the lovely Jwoww promoted to be Secretary of My Interior), then everything would be alright with this country. 

So if you don't care about spiraling credit card risk and the potential commercial real estate bust, now would be a good time to invest in some banks (just not C, because they are to banking what John Meriwether is to hedge funds).

Monday, December 21, 2009

12/21/09 Midday Report: The recovery is on, I read it on the internets

The market is rising today as people are becoming convinced that the economic recovery is real and not just the beginning of a double-dip recession (which is actually worse than double-dipping your chip at a party and not nearly as exciting as a good ATM double dip).  Chicago Fed Chief Charles "Chuck E." Evans maintains that inflation will be tame (woohoo), unemployment will remain high (boohoo), and the Fed will keep rates low to help stimulate the economy (market voodoo).  Meanwhile, the market is betting on inflation as it can actually count the amount of dollars the US has printed/borrowed/pulled out of a hat during the recession.  The inflation debate now promises to be one of the three most hotly argued questions over the next several months along with the always fun post holiday "Does my ass look fat in these jeans?" and "Brittany Murphy:  Cocaine, anorexia, or who gives a shit?"

In market news, Intel (INTC) was upgraded by Barclays to "overweight" as the analyst claims the market has been too harsh in dinging INTC for potential peaking gross margins, an FTC investigation, and the senate's failure to ratify Moore's law.  Of course this has led investors to wonder, "Who the fuck is Barclays??"  Also moving the market today is french company Sanofi-Aventis who is buying toiletry and fragrance producer Chattem in their quest to end France's 2000 year old assault on proper hygiene.  The French buying a hygiene company is a bit like the State of Alabama buying Encyclopedia Britannica or Shawn Kemp investing in Church and Dwight, but one has to start somewhere.

The next few days should see relatively light trading with managers locking in their gains and taking off for the holidays so be careful about interpreting market moves, though be more careful about interpreting the results of your breathalyzer test.

Friday, December 18, 2009

12/18/09 Midday Report: Earnings surprises abound as RIMM jobs naysayers and naysayers begrudgingly admit they kind of liked it

The big news moving the market up today is that several tech companies beat earnings.  Leading the way was RIMM who destroyed analyst forecasts of $1.04 by dropping $1.23 to their damp bottom line and growing topline by 49%.  They also raised guidance, margin forecasts, and the ire of PALM who once again fell short of expectations like all of Jaimee Grubbs' parent's hopes and dreams.  Apparently people still like buying Blackberries even if they don't always work as the Curve is now the number one selling smart phone, so suck on that Apple and your beautiful, fully functional iPhone which is so awesometastic it will actually wipe and bidet you for no extra charge.

In other tech news, ORCL easily beat forecasts as more companies are buying the fuck out of whatever ORCL software does and that can only be positive, unless Oracle software is responsible for promoting Paris Hilton's album, the intelligent design theory, or trickle-down economics.

In macro news, German business confidence rose as the Business Climate Index predicted the climate is getting so much better that all rain showers will now be golden.  The index managed to rise to a whopping 94.7, beating out expectations of 94.5 and we all know how great a .2 beat is of a number with no context, right?  Actually, the number comes from a survey of 7,000 German firms across their biggest industries including manufacturing, construction, wholesaling, retailing, and scat film shooting.  The longterm average is 96 so I guess everything in Europe is almost back to normal, just don't tell the Greeks.

And finally Money McBags favorite RICK met expectations and didn't give guidance but said the current $.19 quarterly eps is a decent range though the first two quarters this year should be stronger than that with the NBA all-star game in Dallas and the Super Bowl and Pro Bowl in Miami (no seriously, they said that). Unfortunately, no one on the call asked how revenues during the Super Bowl will be effected by Chris Henry's absence and Pac Man Jones' unemployment.

If you read the transcript from their call, which I highly recommend even though it's no Tolstoy (but it is an asshair better than any of that Dan Brown crap), you can even learn of RICK's successful recent Toys for Tots event in their NYC club and no, Money McBags is not making that up but yes he is pissed his parents never got him those kind of toys when he was a tot.  The point is, this company is easily going to earn $.76 next year and is likely going to earn over $1.00 (where analyst estimates currently are).  They are trading at ~10x a worse case scenario and 6x-7x a more reasonable estimate.  The problem is that RICK's is always one hummer in the champagne room away from being screwed (pun intended) so Money McBags recommends you go long RICK and buy some long dated out of the money puts to cover your ass should that happen (though he also recommends that RICK employees do everything but cover their asses).

Enjoy the weekend.

Thursday, December 17, 2009

12/17/09 Midday Report: All the news sucks today, but will it swallow tomorrow?

A rash of negative news for the markets is out today.  The dollar is rising thanks to the Fed saying they believe the economy is strengthening (they conveniently left out the part about the quadrillion dollars they printed over the past year to strengthen said economy, but I understand that is a minor detail) and the Federal Reserve Bank of Philadelphia showing a positive increase in manufacturing in the Philly region (apparently guns, crack cocaine, and Allen Iverson jerseys are included in those manufacturing numbers).  This news is leading investors to bet on rates rising in the future and thus the trade out of equities and commodities is gaining a bit of momentum, like pants-less Tuesdays.

Other bad market news includes another downgrade of Greece, this time by S&P who is now giving the country a Triple-B rating (while Maria Menonous maintains her double D rating), citing the country's lingering inability to collect remunerations from the Grecco-Persian wars, the gag-inducing contributions to the entertainment world by Nia Vardalos's opus, and the fact that they have a fuckload of debt with 16% of their GDP tied to the tourism industry in a global economy where no one can fucking afford to travel except for Tiger Woods' wife.  If Greece doesn't either collapse or fix their debt structure soon, Money McBags may have to hang it up because his stable of Greek jokes is thinner than Socrates defense for "corrupting" the "minds" of young men.

The final blow to the market today was that weekly claims for unemployment went up for the second straight week while analysts were expecting them to drop.  While the four week trend is still down, two rising weeks in a row is not a good signal, unless you hate people working.  So the market is down because the economy is both strengthening (rates may rise) and getting worse (new jobless claims are up), heads you win, tails I fucking lose.  Why do I even play this game?

In stock news, RICK is running into earnings tonight as it is cheaper than a used broken condom.  If they can show positive profitability trends in their Vegas club, they could double by next year.  Money McBags' favorite short WGO also reported this morning and said they are seeing improvement with backlog up 350%.  What they tried not to mention too much is that they still lost $.14 in the Q (don't be fooled by that tax break), are still going to lose money next Q, burned $7MM in cash., saw market retail sales continue to plummet (down 31%), and still produce an overpriced product that no one can afford to fucking buy.  While new tax breaks helped them out, today's action is the usual short covering of fickle investors.  WGO has less chance of  being profitable this year than Paris Hilton does of giving the annual MENSA address in Latin, so Money McBags would be getting ready to re-short this in the next few days.  Oh yeah, as predicted, no one wants to buy C stock, something about not wanting to own a terribly run company with worse risk management capabilities than Chris Henry.

Wednesday, December 16, 2009

12/16/09 Midday Report: Inflation aint what it used to be

The market anxiously awaits Ben Bernanke's language on interest rates today after the FOMC meeting (and at the meeting, I am told they are serving GDP growth with a side of bank lending, while the kitchen has been told explicitly to hold the Rates, make sure there is absolutely no inflation, and to not put any smiley face cupcakes out).  Bernanke's language in the FOMC minutes will be analyzed in greater detail than the dead sea scrolls, Natalie Portman's nude scene in Hotel Chevalier, and Tiger Woods' appointment book.  Newsflash: He's going to hold rates steady for at least another fucking year, because, you know, banks hate lending when they have to pay more than 0% and the stimulus is wearing off like the scent of last night's hooker, I mean advice columnist.  And with the CPI out showing core inflation to be flatter than the demand for a perfectly elastic good (Giffen goods be damned), rates don't need to move anywhere yet.

And speaking of Bernanke, he apparently has been named Time's Person of the Year narrowly beating out President Obama, your own Money McBags, and Ernie Anastos, so keep fucking that chicken Benny boy.  Female PhD students of economics everywhere are said to be anxiously awaiting the centerfold pictures to go with the article to see just how expansionary Bernanke's "monetary policy" really is.  So Ben, just make sure you don't keep rates too low for too long and reinflate Greenspan's folly.

In stock news, Intel is being sued by the FTC for being a big bully and threatening to take the other chip companies' lunch money if they spoke out of turn, while Iconix Brand (ICON) turned out to be just a stock tease in their attempt to buy Playboy (PLA)(though just for the articles).  This never would have happened were Hugh Hefner still alive.

The market awaits Bernanke's meeting notes this afternoon, so hold on to your seats as what he says will mean absolutely nothing to you in one week.

Tuesday, December 15, 2009

12/15/09 Midday Report: Porter trims forces to 4 as commodities laugh at competitivie advantages

The big news today is that wholesale inflation is up 1.8% and manufacturing in the US is churning out more goods people can't afford to buy, especially if prices have to be raised now that input costs/commodities are moving up faster than expectations (weird that expectations were wrong, though much less weird than the new hair trend sweeping across the US).  With the continued increase in commodity prices, unemployed aging workers are rushing to their dentists to have their gold/silver/mercury fillings pulled to sell them on the black market.

In world markets,  Greece is the latest country now seemingly assfucked (which apparently the Greeks actually enjoy, so kudos to them on that) as their credit rating was downgraded last week by Fitch from "you need a little perfume" to "take a fucking shower."  The Greek prime minister George Papadapolis has said he will cut Greece's current 12.7% budget deficit to 3% over the next few years by exporting more baklava, feta cheese, and Greek Helmets.

And in stock news, WFC becomes the latest bank to raise money to pay back their TARP funds in order to be able to pay bonuses to all of the employees who didn't destroy value (surely someone gave a small business loan that worked out, I mean they are getting free fucking money.  Even Bernie Madoff could make money doing that.).  At this rate, the banks will have their balance sheets all squared up in no time so they can continue to not lend to consumers and businesses without having to worry about the pesky government.

Monday, December 14, 2009

12/14/09 Midday Report: Abu Dhabi on a Dubai-ing spree for Christmas (or whatever the fuck they celebrate)

Before we get to the midday report, we all need to pour out a little Courvoisier (or whatever your revealed preference for drinks may be) for noted Economist Paul Samuelson who passed away at age 94  Samuelson did his best to try to bring legitimacy to the completely made up and theoretical field of study called Economics, which as every good professor will tell you does not work in the real world, like "just being friends" and Eddy Curry.  Samuelson wrote the most famous textbooks on Economics and luckily he was reading one as he passed away so he died peacefully in his sleep.  A big Money McBags moment of silence for Professor Samuelson.

In market news, Abu Dhabi is bailing out $10B of Dubai's debt which would be great if Dubai didn't owe another $150Bish (but why let math get in the way of a market rally?).  If 14 other Dubai neighbors each pony up $10B, this should all blow over like Eliot Spitzer's dalliances.  I mean nothing ever came of those, right?

As for stocks, C somehow raised enough money to pay back their TARP funds just in time to get the government off their backs so they can pay out end of year bonuses (and really, if anyone deserves a bonus this year, it is the management team of C, who never saw value they couldn't destroy.  They are to banking talent what Sarah Palin is to syntax).  Also, Exxon is spending $31B to buy XTO Energy, a domestic producer of natural gas.  Hey Exxon, instead of dropping $30B on XTO, how about just giving me $10MM and I'll stop off at Taco Bell daily, order 5 bean burritos, and give you all the natural gas you need.  That's right Exxon, I got your natural gas right here.  OH!

Friday, December 11, 2009

12/11/09 Mid-Morning Report: In the year of the ox, China is showing it's hung like one too

There are three big pieces of news out this morning:  US retail sales beat expectations, China is producing the fuck out of some shit, and Nell McAndrew is hot (this may not be news to some, but Money McBags is just brushing up on his British history and he would have fought the fuck out of some Battle of Hatings for Ms. McAndrew).  As far as US retail sales go, they were up 1.3% and up for the second consecutive month.  Most interesting is that core retail sales (excluding gas, autos, building materials, and blumpkins) were up .6% with purchases of electronics and appliances up 2.8%.  Wow, color Money McBags impressed (as long as it is a nice soft blue color to match Money McBags' eyes).  Perhaps the consumer isn't as dead as feared and this is certainly a positive surprise.  People love them some electronics so as long as their credit cards haven't charged off, perhaps they can continue to support the economy.

New data is also out on China showing industrial output rose 19% and imports rose 26%.  Those numbers are so Bubblicous that Cadbury is thinking of suing for patent infringement.  Two important facts though before we get too excited like Rodman Renshaw pumping Chinese IPOs.  1.  China output still remains below where it was pre-crash.  2.  There was such a large stimulus by the Chinese government that Timothy Geithner is said to be quietly suffering from stimulus envy.  So let's temper our excitement just a bit and perhaps let the  Dom chill a bit more instead of cracking it open right now.

The market has had more of a tepid reaction to this news than Money McBags would have expected, but then again he also expected Wes Anderson to make a good movie after Rushmore and look how that worked out.  Perhaps the market is still in awe from opening night of Avatar which has critics in a tizzy and continues to pump up IMAX stock like a tulip in the Netherlands in 1636.  You would be getting in a little late in the game, but IMAX's JV strategy, new movement into Europe, and improved film distribution techniques thus allowing them to show a more diverse schedule and be more nimble, have been driving this stock up with Avatar's potential serving as the cherry on top of their ice cream sundae or the extra hands in their threesome, if you will.  The market seems to be selling the news a bit today, so keep your head up and be smart.

Thursday, December 10, 2009

12/10/09 Midday Report: Take our cheap shit, please

The market is off to the races again as a rise in US exports turned on the cold water and created some shrinkage to the US trade deficit.  The trade deficit dropped by 7% which was better than expectations of a rising deficit (and I know, it is hard to believe expectations were wrong much like it is hard to believe printing money will lead to inflation, but let's all just take deep breaths and try to move on from this).

So basically, with a weakened dollar, the US is becoming China without the lead paint and bad drivers (As an aside, the Chinese are forecast to buy more cars in 2010 than Americans, so now would be a good time to buy that auto body shop in Shanghai) as we can make much cheaper crap that other countries want to purchase.  This isn't a bad thing as any sales are better than no sales, and if it can create demand and jobs then we'll have some people no longer sucking on the teet of good ole Uncle Sam (and hopefully earning enough money to suck on the teet of good ole Aunt Sam).  So as long as people don't want to travel out of the country since the dollar can now only buy about fifteen minutes in an Amsterdam motel room and a half a croissant, this is decent news.

As far as jobs, the average number of Americans filing first-time jobless claims over the past four weeks fell to a one-year low and the number of newly laid-off workers seeking jobless benefits rose more than expected last week and were higher than expectations.  So it fell to a one-year low and it rose in the same week.  That's a neat fucking trick.  Next up, jobless claims will prove that 2+2 does not always equal 4 (in honor of the Underground Man), will walk and chew gum at the same time, and will create a building to scale based on MC Escher's blueprints.  The point is,  depending on which news source you read (one is using an average 4 week number, and I assume one just using last week's number), we're either still fucked or a bit less fucked, yet definitely totally confused.

In the market, C thinks they are going to raise $15B-$20B to pay back their TARP funds (and honestly, I would rather burn money and dip my balls in the searing hot ashes than buy any securities offering from C, so good luck with that) and RIMM is creating jobs by launching in China which has the stock moving up.

There's still a bunch of noise as the economy tries to figure out just how stimulated it is (it has had its GDP tickled and been shown pictures of some hot growing economies, but it may also need an insertion in it's back door lending policies), so be careful out there.

Wednesday, December 9, 2009

12/9/09 Midday Report: Nothing to see here

No really, there's not much to see today except for this and maybe this.  The dollar started to decline again thus boosting commodities and reversing some of the downturn the stock market has taken over the last week.  No new data, but traders have to make money somehow so banging the soft dollar is a reasonable enough way to play the market on a slow day (while banging Jessica Biel is a reasonable enough way to play any day).

In other news, Japan announced that their economy grew slower than first thought due to reduced capital spend.  As a result, they are thinking of letting Godzilla out of his cage in order to rampage Tokyo again and thus have to increase capital spend to fix the destruction.  It's not the greatest strategy, but then again neither was allowing banks to keep issuing debt while not forcing them to write-down and declare their bad debts and half-assing government intervention, so it's not like Japan has had a ton of great ideas (the Nintendo Wii and MarioKart excluded).

Also, British officials put down their bangers and mash, put out their fags, and put in their dentures just long enough to declare a one time 50% tax on all bank bonuses.  Take that you greedy bankers who made loans to gullible people who faked their employment records to buy things they couldn't afford and then sold them at higher prices to other people who couldn't afford them all to make a quick Euro.  But at least the government is going to use that money to cut their budget deficit and not to get drunk on a week long bender in Courchevel, France like other governments are prone to do.

Tuesday, December 8, 2009

12/08/09 Midday Report: Formidable headwinds, not as good as formidable head

The news driving the market down today comes from Ben Bernanke's speech yesterday (apparently the joke about the rabbi, the priest, and the horse did not go over well) where he warned that there are still "formidable headwinds" to an economic recovery.  And in an additional exercise of overstating the obvious, he also concluded that there are formidable headwinds to repairing Tiger Woods' image, to getting a money shot into lesbian porn, and to figuring out why his chinese restaurant keeps putting pee pee in his coke (even if it is only a joke).  Money Mcbags has been preaching it here all along, but he'll do it again:  The US economy is going to struggle for awhile (at best).  15MM+ million people are out of work and the government has printed so much money to stimulate the economy that we are actually in the midst of a tree shortage, which in turn is stimulating global warming, so we've got that going for us too.

In stock news, McDonalds (MCD) reported November same store sales marginally below the number that analysts bent over, reached up, and pulled out of their rectums.  MCD had .7% same store sales growth off of an up 7.7% growth last year, so still growth on a tough comparison.  They also continue to see benefits from FX, which is one big reason to consider this a core holding.  As the US moves from being a world leader to a citizen of the world, having currency diversification is an easy strategy to play (though not as easy as playing dodgeball against Terri Schiavo, and not because Terri Schiavo was in a coma, but because she is dead).

RICK also reported a nice growth in sales (and this joke is too easy, so write your own) this month as the famous old adage rings true, "Tits sell."  Same club sales were up 9.5% as RICK continues to shake off the recession fears while slipping $20s into its balance sheet.  Rick is inching up to $85MM in sales and $1.00 in earnings while trading at only about 1/3 the price of a lap dance ($7).  The stock is cheap, the girls aren't, but as always, they're only one hummer in the champagne room away from giving investors blue balls.

Monday, December 7, 2009

Short Idea: Winnebago (Ticker: WGO), That's not a Winnebago in my pants, but I am happy to see you

What they do:  They sell really expensive unneeded RVs.  Apparently people use them to go camping and drive cross country and shit.  Money McBags is not sure why people do either of those things since we have hotels and planes and thus camping and driving are so 1920s, but Money McBags also does not understand  this Lady Gaga thing so whatever.  The point is, RVs are expensive and we are in a little bit of an economic downturn (which you may have known had you been able to afford a computer to read this.).

Why Money McBags Thnks They Suck:

1. Their margins are truly gross:  Due to the fact that their production pretty much all takes place in their plant in Forest City, Iowa (where the men are men and the sheep are scared), they have huge fixed costs.  The fixed costs are so large that their gross margins are currently negative.  That's right, negative gross margins.  So it costs them more to make a Winnebago than it does to sell one.  It's like using an AIDS clinic as your dating pool.  Even when you score, you lose.  For the last year, their cost of production (and remember, this is before SG&A) was 114% of their selling price.  Now the market has bottomed for them and this should start getting better as dealer inventory picks up a bit, but even in their most recent Q it still cost them 3% more to make an RV than to sell one.  You don't need to be a maffematician to see the problem with this.

2.  Vertical integration ain't what it used to be:  As noted above, WGO's fixed costs are so ginormous, they are sunk before they even make a delivery, but the worst part is they can't do anything to fix it.  Since they have one plant that produces pretty much everything, they can't outsource parts of the process to cheaper plants in Mexico or Compton or wherever cheap labor is.  They are stuck with what they have and in order to be profitable with their given logistics, they would need to deliver about 1,800 RVs a quarter.  1,800 RVs, that sounds fairly easy, right?  I mean that's only about 35 RVs per state per quarter.  But guess what, in this last Q they only delivered 600 RVs total and they have only delivered 2,000ish on the entire year.  So they need to triple fucking deliveries just to break even.  To put that in more perspective, in 2008 Apple iPhone sales only grew 245% and the iPhones are fucking cool while expensive RVs are pointless and expensive.  Random shit that sucks just doesn't triple sales, no matter how much inventory has been cut.

They basically can't cut costs anymore and their other revenue (accessories, parts, etc.) went from $50MM to $30MM pushing up their prior 1,400 per Q break even number to the current 1,800.  Analysts are guessing that by 2011 sales will triple to make WGO profitable, but there is more chance that sales of Wilfred Brimley: A nude retrospective triple before WGO does.

3.  This two word phrase means you're fucked.  What is "secular decline?" (We also would have accepted "broken condom"):  Starting in 2004, annual growth in the RV industry was 4%, 1.5%, and then -9.5% in 2007.  So before the crash, RV sales were starting to fall and then in 2008 they were down 32% when all of the jobs and money dried up like Betty White's nether regions.  The point is, even before the glut of ABS. MBS, and just BS killed the global economy, RV sales were starting to decline.

4.  It's the economy, stupid:  First of all, these RVs are expensive.  On average they cost between $80k and $160k depending on how many toilets you want and how many shelves you need on which to place your NASCAR collectibles and boxes of Slim Jims.  Secondly, no one has any money.  Consumers are squeezed tighter than Joan Rivers' face.  With all of the mortgages in default, who exactly is going to have the money to buy an expansive completely discretionary item?  Which brings us to the final point which is that industry growth in the 2004-2007 time frame was driven by lenders giving money to anyone who was breathing and could fake an employment agreement.  You could put 10%, 5%, heck even 0% down.  Well that shit aint happening any more.  Only GE is still kind of lending in the RV space and those consumers who were over-leveraged are now under-duress.  It is easier for a straight man to get a hummer at an Indigo Girl's concert than it is to get an RV loan right now.

5.  Take my Winnebago, please:  Given the economic crisis, the used RV market has become more bloated than Kirsite Alley's small intenstine.  People are dumping their RVs below book values and well below current retail prices because they need money to pay their mortgage, loans, doctors' bills, and bangbrothers subscriptions.  Why would I buy a new Winnebago when I can buy one a year old one with no miles for less than half price?

6.  Stupid is as stupid does:  While WGO picked up some marketshare as competitors went into bankruptcy, Fleetwood and Monaco are apparently coming out of bankruptcy and those two will have more nimble production facilities.  Thor has remained profitable throughout as they have a better ability to control costs and this should allow them to outcompete WGO, especially on price.

7.  Valuation is out of whack:  WGO is not going to earn any money in 2010, they're just not.  Sales are not tripling, sorry guys, but there is zero chance of that happening if I round to the closest non-negative number.  Estimates for 2011 are somewhere around $.40-$.50 and falling by the hour.  Let's say they can earn $.50 in 2011 which is more of a guess by analysts than the box office draw was by the producers of Will Ferrell's Land of the Lost.  But ok, in 2 years WGO sales will more than triple and they will earn $.50.  Well they're trading at 22x that number.  The company has lost money for five consecutive quarters and sells a product that is too expensive for their target market, how does this deserve a premium multiple?  Oh yeah, it's going to grow 200%+.  Rigggggghhhhhhhhht.  If you believe that, I have a bridge and some Kevin Federline autographed AIDS tests to sell you.  Maybe they break even in 2011, maybe, and that is if you believe inventories at dealerships have fallen to almost zero right now so just getting back up to a former normal stocking level will drive revenue.  Anyway, let's say they actually have some positive earnings in 2011.  What multiple should a company in secular decline trade for when they have major operating cost issues?  8x earnings?  10x earnings?  If you believe that then they would need to earn $1.10 to $1.35 in 2011 and that's not going to happen.  In terms of EV/EBITDA, they had negative EBITDA (that is what negative gross margins do to you) and have an enterprise value of  about $290MM.  So if this kind of company should trade at 6ish times, then they will need to have about $50MM of EBITDA.  Well their EBITDA before the crash was $70MM, so do they get back to 80% of pre-crash EBITDA in 2011?  Doubtful.

Things to worry about:

1.  WGO is likely going to survive:  They do have brand equity and decent market share and management seems like they are making the best of a bad situation, so some long-term holders just may not be inclined to sell.  This company may make money eventually (though it could be 5 years out), so long time holders may be asking why bother selling now?

2.  They have $40MM net cash:   But this is mainly because inventories dropped by $60MM in 2009.  They have said that can't happen again (obviously, because inventories are down to $40MM so if they dropped by $60MM they would have negative inventory, but then again they have negative gross margins so nothing this company does really surprises me) and that inventories are starting to go up.  So is that $40MM cash cushion enough to keep them afloat as they still lose money and build back inventories?

3.  The consumer and job market comes back stronger than expectations:  It's possible.  But it's also possible that Faye Reagan is giving me a blumpkin as I write this (and trust me, if that were happening, I would not be writing this but I would be preparing to dial 911 as my heart would likely be about to explode at any minute in a surge of euphoric glee).

4.  It's cheap based on historical EV/EBITDA multiples:   Well so are my nuts and people aren't lining up to buy those (just kidding, my nuts remain premium priced with an adequate waiting line to purchase).  Before the crash, WGO had a peak EBITDA of $120MM which had fallen to $70MM by 2007.  So if you take that 2007 EBITDA and assume that by 2011 inventories will have risen, negative gross margins will have flipped, and leprechauns will roam the Earth giving away free pots of gold, thus getting WGO back to that level, then they are trading at around 4x that number.  Of course their net cash may start to decline as they are unlikely to burn through inventories and thus their EV is a bit depressed right now if demand does not pick up and fix their margins (though it's not as depressed as the guy who had Tiger Woods in the "least likely to get herpes" pool).


WGO is a company slated to lose money for at least one more year (and Money Mcbags thinks it will be longer), is producing RVs at negative gross margins, is a big ticket item in a 100% consumer discretionary spend space in the worst economy in 70 years, is in a market where much cheaper similar alternatives exist and with competition coming back in the market, and most importantly is fucking expensive.  Even if they were to earn $.50 in 2011 (which they won't), they should at most trade for 15x that and thus be valued at $7.50 (which is still too high).

If you can get borrow on this pig and agree with Money McBags' analysis, then go for it.

***Disclaimer:  Money Mcbags has no position in WGO, short or long.  He also has no position in the movie "White Men Can't Hump."

12/07/09 Midday Report:: Follow the yellow brick road, until it leads into a deflationary spiral and you wind up homeless

The big news in the market today is that gold is starting to fall as investors anticipate an increase in rates due to a faster than expected economic recovery (All 15MM+ unemployed people just groaned a sigh of relief, because sighing is still free, I think).  So the dollar is up on this new sentiment while Money McBags' "dollar" is up on this new sentiment.  The point is, nothing is certain and the market could still swing either way so any new data point will continue to cause overreaction in both directions, like the parents of a 16 year old boy who just found out their son had a threesome with two chicks.

In other news, the credit card sector got a tepid upgrade because now that people aren't paying their mortgages, they have a greater ability to pay down their monthly debts (wink, wink).  Also, a Money McBags favorite, ROY, is being purchased by a competitor for a 50% premium as the market understands that ROY is getting into the precious metals royalty business and thus their multiple of NAV was way too low, like Jessica Simpson's IQ or Abe Vigoda's balls.

Bernanke is set to speak at 12:45 to the Economic Club of Washington, and with any luck he'll tell that great joke of his about the rabbi, the priest, and the horse who walk in to a bar (I don't want to ruin the punchline, but let's just say the horse wasn't circumcised).  Anyway, the market awaits Bernanke's words of wisdom like giddy gentile kids on Christmas morning or like Roman Polanski on conjugal visit day.  So be ready for this afternoon when the day traders guess wrong before guessing right.

Friday, December 4, 2009

12/04/09 Midday Report: Brother can I get a job? Well actually, maybe.

The market is soaring today as the payroll report was better than expected, unemployment actually dropped from 10.2% to 10% (depending on which numerator and denominator you choose to use, but those are just details), and the government significantly revised previous job loss declines.  In other news, the government also significantly revised the ending to Chasing Amy, the outcome of the Vietnam war (hey we won this time!  WooofuckingHoooo!), and the "no alcohol in fullly nude Las Vegas strip clubs" rule.  Of course there are still over 15MM people unemployed which is just slightly fewer than the entire population of Chile (and it's delicious capital city of Con Carne) and slightly more than the entire population of Cambodia.  So we're not quite out of the woods yet (and Elin Nordegren isn't out of the "woods" yet either, that is until they agree on a price).

Yesterday data was released showing more jobs being lost in the service industry while today the entire labor force seems to be getting less bad.  While we are happy the second derivative is moving in our favor (the rate of job loss is slowing), Money McBags has said it here before but the data is still very mixed and even though some of it shows improvement, it is all still very bad (though it's probably gone from Lindsay Lohan's hygiene bad, to just Lindsay Lohan's singing bad).

With a positive employment report out, traders have also begun to bet on interest rates going back up and not being kept down in perpetuity ala Alan Greenspan who never saw a bubble he couldn't inflate (actually, that is kind of literally true, since he never did see the bubble, and hence he inflated the fuck out of real estate values).  Bernanke seems to be a generally smart dude (Money McBags is reasonably happy with Bernanke's performance so far, but then again Money McBags was reasonably happy with MBND's last quarter and look how that worked out) and hopefully will bring rates back up at the appropriate time, but given the current lack of bank liquidity and lending in an environment where funds for them are cheaper than condoms at a retirement home, now is probably too early to bet on a move up in rates sooner than the end of 2010.

But the data this morning has further fueled this market rally and it remains a bit early to tell if this is real or if we are just feeling the effects of the inventory slashing and the stimulus.

Thursday, December 3, 2009

12/03/09 Midday Report: BAC does not need your stinking funds (well at least not until next time)

The market is abuzz today with BAC's repayment of $45B to Uncle Sam who apparently got drunk and touched BAC in their loan loss reserves just one too many times.  So to break the cycle, BAC is going to pay back their bail out funds through the profits they made by being able to borrow from said Uncle Sam at 0% and lend for more than 0% and then have Uncle Sam bail them out should those more than 0% loans go bad.  Honestly, that is the best business model ever created, even better than the Brooklyn Decker kissing and rim job booth.

But it gets better.  BAC is going to repay some of their bailout funds by issuing $18B of securities which should be great for the current shareholders since issuing securities isn't dilutive or anything, right?  Why else would BAC have opened up 6%?  Oh wait, issuing equity will lead to substantial dilution on the order of 10% to 15% (according to street analysts who may be right or wrong depends on the coin flip).   So this all makes perfect sense.  All companies need to do in this market is fuck up really badly, get coddled by good old Unky Sam, and then fuck their shareholders over and over again until their balance sheet is completely flaccid.  After this, their stock should shoot up at least 6%.  Makes perfect sense, just like intelligent design (spindle cells be damned) or Tori Spelling's face.

In other market news, Comcast is buying NBC so now not only will NBC have shitty programming, but their customer service will suck too.  But hey, this deal is synergy-istic and synergies are what the business world is all about.  Just ask Time Warner and AOL or this guy.  

As for our daily job report data, the service industry saw jobs contracting but initial jobless claims fell unexpectedly.  So our economy is getting worse and it is getting better at the same time, it's like Schrodinger's cat.  Is the cat alive, is it dead, or does anyone fucking care (and who put the cat in the fucking box anyway? Do I need to sick PETA on this Schrodinger fellow?)  So depending on what data you view as most representative, we are either fucked or slightly fucked, take your pick.

Wednesday, December 2, 2009

12/2/09 Midday Report: What goes up, Must go up

The market keeps rallying as it seeks to prove the little known old adage that what goes up, must go up (if it is inflated with sealed in non-decaying helium).  Spurring the rally is the dollar's continued demise.  It has now not just fallen lower than Eliot Spitzer's dignity, but is rapidly approaching Tiger Woods' (and seriously, with all of the money Tiger makes, this is what he is spending it on???  Really?  If that doesn't prove the dollar's decline in purchasing power, then I don't know what does.  Quick Tiger Woods joke:  What is the difference between a cowboy and Tiger Woods (and this is for you English majors and logophiles so follow closely)?  One drives "steers" on a range, and the other fucks dirty whores.).

Emerging markets also continue to rally as Dubai's debt problems are being swept under the proverbial rug (and at least his time it is a nice persian rug as opposed to the usual crap you would buy at Bombay Company.  What?  Bombay Company is out of business?  Fuck.).

In other market news, GM asked it's CEO to resign after his 100 day plan apparently sucked balls (which would be good had GM been competing with RICK, but unfortunately they are still in the car making business.  And Money McBags does love him some RICK which is trading at less than 7x next year's potential earnings and has yet to have any problems with the authorities for "whoring.").  Anyway, the point is, if turning around GM were easy, it would have already been done.  The fact is people don't have jobs, thus don't have money and banks aren't lending so even if people wanted to buy a crappy car, they couldn't.  So Money McBags' advice to GM is to liquidate their assets and retrofit their factories to produce shit PEOPLE ACTUALLY WANT (caps intended).  Did any GM CEO ever think of that?  They never thought people may not want their shitty product?  Guess what?  My "shit in a bag" business never took off because not enough people wanted the product (plus all of the restrictions on selling feces through interstate mail and the fact that I had no production competitive advantage no matter how many hard-boiled eggs I ate.).  So you know what I did?  I shut it down.  You can't run a business selling a product people don't want to buy, it is common fucking sense.

Finally, a jobs estimate came out today which said US businesses shed another 169k jobs last month which was worse than the 150k expected.  Of course expectations are irrelevant and what matters most is people are still losing jobs.  No one is going to buy a crappy GM car until they are employed, so maybe the new CEO of GM should just hire the fuck out of people with his gov't funds and then require each employee to buy 2 GM cars.  Two problems solved, the economy picks up, and GM continues to produce shit people don't want, but now they can actually sell it.  Done and done.  Why the fuck am I not running this economy?

Anyway, the trends continue as the dollar is dropping, gold is becoming bubblerific, and emerging markets are not just emerging but they now need to be put on a logarithmic chart.  Nothing to see here.

Tuesday, December 1, 2009

12/1/09 Midday Report: Dubai? Do fucking buy.

Oh no, the ground is rising (or whatever the fuck the opposite of the sky is falling is). To no one's surprise, Dubai's finance arm related to real estate is going to renegotiate their debt and according to Dubai's ruler, Sheik Mohammed bin Rashid al-Maktoum, there is nothing to fucking see here (except for a ton of overbuilt land done so by securitizing debt which may never be paid back, but those are just minor details, I mean the Sheik said "“We are strong and persistent” so everyone just back the fuck up and leave Dubai alone and go pick on Jordan or Yemen for fuck sake.).  So the minor scare, which Money McBags told you was a minor scare last week, is no longer (until Dubai can't pay back it's debt, but come on, when has a country, or whatever the fuck Dubai is, ever defaulted on debt?  Wait, Argentina is a country?  When the fuck did that happen?).

As an aside, Money McBags needs some clarity here.  I thought Muslims were not allowed to charge interest due to having to conform with Islamic law.  Seriously, this is a real question.  If lending is against the Muslim religion, how does Dubai have so much debt?  I know wikipedia has some entry about this but if I trusted everything I read on wikipedia, then I'd have misdiagnosed myself with syphillis at least seven times.

In other news, manufacturing remains strong in China and the US as companies still need to rebuild a modicum of inventory (as opposed to a full cum shot of inventory) after going Crazy Eddie on all of us in the past year.  Stimulus + lean inventory = some rebound, but do we bounce or create a new equilibrium?

Most interesting today was the news out of Australia that they are raising their interest rates again because the Chinese love Australia's natural resources like Money McBags loves Bar Rafeali's natural resources.  It's nice to know that all you need is some shit in the ground to prosper in this global recession.  Perhaps that is a strategy Geithner and Bernanke can use instead of more stimulus.  Let's just get a fuckload of nickel, iron, and gold, dig a deep hole (deeper than Paris Hilton's), and bury the fuck out of that stuff.  Then all we need to do is hire non-unionized Americans to dig it the fuck back up and sell it to the Chinese.  Problem solved.  Heck we can even paint the alloys in pastel stripes and make it like a new fangled Easter Egg hunt.

It's amazing how Money McBags can solve our financial crisis in a few short paragraphs.  Health care, can you hear me?