Wednesday, March 24, 2010

3/24/10 Midday Report: Port-Ugh-al

The market is down a bit today on news that some country in Europe named Portugal has had their debt rating lowered by a whole minus sign (yikes, imagine if it had been a minus sign and a frowny face) and slightly negative US macro news.  New home sales came out today and boy were existing home sales surprised by that, though it does explain why their come-ons were never returned and why new homes have so many closets.  Sales in february fell to a record low partially due to blizzards and partially due to people not having any fucking jobs.  Puchases were down 2.2% and were projected to moderately increase, so once again, nice job economists, don't let the assumed door hit you on the way out.  In other macro news, US durable good orders rose by .5%, but less than expected by economists.  However, exlcuding aircraft, military orders, and wrecking balls to demolish foreclosed upon houses, durable goods were down .6%.  Once again the economy is putting out marginally good data followed by marginally bad data and thus remaining at more of a stand still than a value destruction debate between John Meriwether and Bernie Madoff.  It's good that we appear to be at a new equilibrium, though it's bad that that equilibrium appears to be stagnant growth and no dessert after dinner.

In international news, Japan passed a $1T budget to stimulate growth while hoping to avoid fiscal hari kari as their debt is twice the size of their economy.  As part of the legislation, the government is trying to create more jobs by building more pachinko centers (they are now required to have three on every block instead of just two), hiring Mr. Miyagi to help train youngsters on how to paint fences, and by requiring 10 "shooters" in all future bukakke films as opposed to the usual 5.  In Europe, Portugal was downgraded by Fitch ratings from a country to I guess a principality.  Their debt moved from AA to AA- and we all know how drastic that - is from Fitch ratings, in fact Money McBags has nightmares about getting a - from Fitch like he has nightmares about losing his Michelin Star or about waking up next to Lady Gaga with the Ellen Degeneres show blasting on his TV.  So now we're going from Greece to Portugal, with their tasty sweet bread, their delicious salt cod, and their lovely export Vanessa Marcil.  Look, what Money McBags knows about Portugal can fit into an empty bottle of Taylor Fladgate or a small Portuguese hot plate, in fact, though he is a world traveler, Money McBags has never actually been to Portugal or it's capital Lisbon (though he hopes to find it's mythical sister city of Lesbian one day), but he does know that Fitch ratings are about as relevant as the Know-Nothing party, the steady state theory of the universe, or Robert Guillaume, so who cares.

Starbucks announced a $.10 cent dividend which will allow shareholders to finally have something to drop in to the tip jars when ordering their grande mocachino lattofcrape.  Dick Bove is out today saying bank stocks may quadruple by 2012 due to reduced loan losses and new math (where quadruple means something at least four times less than it does now).  Of course this is the same Dick who raised Lehman Brothers to a buy 3 weeks before their bankruptcy so either that was a glaring typo or nobody should give a fuck what Mr. Bove guesses.  Also, MF Global is rallying on news that John Corzine, the former head of Goldman Sachs and New Jersey governor will be taking over as CEO.  MF board members are hoping Corzine can bring the kind of profitability to MF Global that he brought to Trenton, Newark, and every other near bankrupt place in New Jersey.  More importantly, his Goldman background will now assure MF of a government bail out should they ever experience another rogue trader.

In small cap news RICK continues to get hammered after hitting Money McBags' $16 sell point several weeks ago.   Unfortunately Money McBags did not not sell and for the first time in his life he is regretting a decision involving Rick's Cabaret that didn't center around leaving or not getting another dance.  There was a lot of momentum in the stock and their quarter was pretty awful on top of a questionable acquisition, so the sell off is not unwarranted.  Money McBags will likely lock in his gains and buy back later when the stock settles back down.  Also, long time value trap IBKR was downgraded to underperform by Zack's, though luckily for IBKR Slater and Screech still have them at Market Perform (while Money McBags has Kelly Kapowski at a Strong Buy).  Their downgrade was based on lower options trading volumes in the next few quarters and the recent piss poor performance.  IBKR's CEO still maintains that the company has $2 of annual earnings power if you smooth out their performance over the long run (though that long run is looking like Eons as opposed to years) and the company is trading at 8x that.  They get hit when volatility works against them as their hedges become more expensive when implied volatility is much different from actual volatility.  Money McBags mentioned this name the other week and it is worth keeping an eye on, though it is worth keeping two eyes on Olivia Munn, so not sure where you'll get the extra eye to follow IBKR.

And readers, if there are small names you would like Money McBags to look in to, let him know.  He's here for you, well for you and Riley Steele.

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