Wednesday, April 14, 2010

4/14/10 Midafternoon Report: Market movin' on up, only a matter of time before it buys a dee-luxe apartment in the sky

Oh shit, it is on today like fucking Donkey Kong only this time Mario is not only going to save the Princess but he's going to get rich while doing so.  The market is rallying like it's 1999 with positive earnings, positive macro data, and not a fucking peep out of those Greek assholes who keep trying to fuck things up by going bankrupt (You hear that Greece?  Stay the fuck away from the market, put your hands on the car, and assume the position).  On the day before tax day, the market is making investors forget about the dough they are handing over to Uncle Sam and instead focusing them on the dough they will have to hand over to Uncle Sam next year with all of their oh so sweet gains.  Ahh, to be young and invested.  The rally today was sparked by earnings from JPM and INTC who treated earnings like it was a cup and they were the two girls (and if you don't get that reference and have a very strong stomach and lenient internet rules, Money McBags begrudgingly recommends you google "two girls one cup," but don't say he didn't warn you).  Along with positive earnings, macro data was so good Ben Bernanke was seen taking it out to lunch, playing a little footsie with it under the table, and then inviting it back to his hotel for a little regression analysis to make sure it was heteroskedastic.

US retail sales were up 1.6% in March over the previous month and up 7.4% from March of 2009 which beat economists' guesses.  The beat was driven by car sales which were up 6.8% thanks to incentives such as tax breaks, low financing, and taint massages by Kelly Brook.  Even with unemployment stuck at 9.7% like Keely Shaye Smith in a mudslide, consumers are spending because that is what they do.  When the AIDS scare hit the porn scene in the 1980s, did that stop great films from being made?  Maybe for a bit but now 20+ years later we're back to bareback ATM films with no worries by the performers about diseases.  This is just like consumers coming back after the recession and levering up again because daddy needs his 60 inch tv.  People have short memories (and Money McBags' short memories are mostly of He Ping Ping) and are generally optimistic so good news spurs them to repeat behaviors that may not be optimal for them in the long run.  In other macro news, the CPI was up only.1% and was flat excluding food and energy (or you know, the things you actually need).  The lack of an increase in CPI bodes well for the Federal Reserves' plan to keep interest rates low for an "extended period" as inflation looks like it will be pushed out for another few quarters until investors can actually finish counting all of the cash the US government printed (you all remember Money McBags' "Too big to count" hypothesis).  The one small turd in the punchbowl today was that mortgage applications fell for the second straight week as people seem content to live in their current abodes and the game of flipping houses has finally passed like a painful kidney stone, Mickey Roarke's comeback, or one piece bathing suits.

On top of the good macro news, Bernanke was getting his Fed on today in front of Congress by saying that he doesn't plan to change any policy decisions but the recovery may be moderate due to high and prolonged unemployment, low construction demand, the poor fiscal condition of state and local governments, and Rasheed Wallace.  Bernanke was quoted as saying about borrowing that "The decline in large part reflects sluggish loan demand and the fact that many potential borrowers no longer qualify for credit, both results of a weak economy."  Luckily, banks have shorter memories than investors and it is only a matter of months before FICO 560 people are once again getting $500k loans to buy houses in states they don't work at variable interest rates.  But hey, until then, rally on!!!!!!!

In stock news, JP Morgan beat estimates, grew income by 55%, and raised their outlook for the year.  So fuck you right in the ear recession, you hear that (though maybe you won't hear it with a dick in your ear)?  JPM earned $.74 per share which was $.10 above analyst guesses and revenue was $28.2B, ~$2B above guesses of $26.5B.  While JPM's retail bank and customer card businesses are still struggling a bit, the investment bank blew it out thanks to strong fixed income trading.  And if a weak retail business and strong fixed income trading don't bode well for the economy, then Money McBags didn't learn anything over these past few years.  Oh wait, trading profits and a fuckshit consumer are exactly what got us in to this situation, ugh.  But I guess there is something to say about the classics.  CEO Jamie Dimon did say that “We continued to see delinquencies stabilize, and in some cases improve, in our credit portfolios,”  which is a good sign, but then he added "and if they don't stabilize, we'll just create some complex products to trade with other banks and further boost our illusory profits."  While Chase card may have struggled, at least the bad loans have been siphoned off into a holding company to separate the risk and to hopefully make investors forget about what happened and just concentrate on Chase's growth portfolio which won't need to be put in to it's own holding tank, until it does.  In other stock news INTC crushed their quarter with eps coming in at $.43 which was well above last year's $.11 eps and revenue was up $3B to $10B.  They also announced strong revenue guidance, an improving gross margin, and they will be hiring 1k to 2k people which will be their first new hires in 5 years, so take that unemployment rate.  INTC's Q was so good that Money McBags may have to take it in to the bathroom and have a little time for himself with it while thinking about INTC's motherboards which are so sexy they can be considered MBILFs.  Finally Apple announced that they are going to delay the iPad launch outside of the US because demand in the US has been stronger than the demand for accutane in Jessica Simpson's house or the female condom in Britney Spears' house.

In small cap news, AAPL's strong demand for the iPad could bode well for CRUS if CRUS actually has a chip in the iPad like they do the iPhone.  The stock is reacting well today to the INTC blow out quarter and potentially the iPad news.  Money McBags thinks they can earn $.73 next year but assumes only 12% topline growth so if their energy business can continue to come back and if their audio business just slows down a little from their current 80% growth rate, that number should be surpassed easier than a 3rd grader surpasses Kim Kardashian's reading level.  The stock is now near $10, and remember Money McBags has been talking about CRUS since 1/12/10 when it was trading just under $8 and he mentioned he bought some on 1/29/10 when it had fallen below $7, so a >40% gain in 2+ months isn't too bad.  Money McBags hopes you all joined him on this ride and have been able to take your lady friends (or man friends) out to many lobster tail and bj dinners.  That said, they have $2 in cash so they are really trading at ~10x Money McBags admittedly cautious estimate for this year which is pretty fucking cheap for a company that sells a chip to the biggest fucking electronics seller/fad in the Universe.  Also, JOEZ is rallying today after the huge sell off from their earnings.  Money McBags is still on the sidelines here for reasons he has laid out over the past few days.  Basically, if you're in the market today you can't lose, like flipping a two headed coin, having your brother be the Governor of the state you need to win in a contested election, or being Alexis Texas in a great ass contest.  One stock that is down which Money McBags is going to start looking in to again is CKSW which produces the best logistics/scheduling software for fleets.  The company announced a 15MM share shelf offering today which is really fucking odd since they only have 30MM shares outstanding so this would be hella dilutive if they actually went through with the full offering.  Money McBags is going to look more in to this over the next few days as the company apparently has the best software, but a shelf like that is more perplexing than Jennifer Love Hewitt's career or an Amish computer camp.

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