Monday, April 26, 2010

4/26/10 Midafternoon Report: Financial reform bill coming after Senators talk dirty to it

The markets were relatively flat today despite the financial sector reaching down for its cankles as the Senate prepares to probe the sectors' cavernous derivatives loophole.  Financial reform is coming, the only question is if it will be weak or really weak but until then financials should be a bit volatile with a downward bias.  While it is likely any Senate bill will be more toothless than Amy Winehouse after downing a box of pixie sticks, smoking a case Stallion cigarettes, and getting punched in the fucking mouth, the markets hate uncertainty like Ron Paul hates the Fed, Hemingway hates adjectives, and females hate giving blumpkins.  That said, the US Treasury is apparently going to start dumping their shares of C before C once again becomes too big and fails.  At current prices the government stands to make $11B which should be enough to finally get new drapes in the Lincoln Bedroom, something other than Natty Light in the White House fridge, and enough tech support to clean all of the SEC computers of porn.  C is trading down 4% on the news but is still above book value and still above zero so it's too early for Money McBags to buy.

Internationally, Greek bonds are still plunging lower than necklines at the AVN awards or on German Chancellor Angela Merkel at the Lolas.   Merkel is out shouting "nein" to the Greek bailout until Greece shows a "sustainable and credible" plan for fiscal responsibility as opposed to their current plan which involves stealing underwear and then somehow profiting.  Germany keeps hedging on their support for Greece and nothing German has been this indecisive since Aschenbach eyed little Tadzio for days on a beach in Venice.  But it's no longer just Greece that has the EU's panties all in a bunch as CDS in Portugal have hit record highs.  Portuguese Foreign Minister Luis Amado said "We are not in such a critical situation as Greece. We didn't cheat with our statistics" he then went on to say "that's right, we fucked up the old fashioned way, we earned it."  It looks like JFK's old Domino Theory in foreign policy may finally be coming to fruition but instead of the spread of communism, bankruptcy is spreading from one country to the next.  

In stock news Catepillar put up a nice quarter which would likely have sent noted lepidopterist Vladmir Nabokov into a tizzy.  Revenue fell but the company earned a profit and raised 2010 guidance as they were able to metamorphosize their operations to a leaner cost structure.  Guidance for 2010 was raised from $2.50 per share to $2.50 to $3.25 per share as the company cited rebounding mining and construction especially in China and Heidi Montag's pantsWhirlpool also put up a ginormous quarter and is up 10%+ as the emerging middle classes in China and Latin America drove appliance sales.  The company earned $2.51 per share demolishing analyst guesses of $1.33 per share and they raised their full year guidance to 4% to 6% growth and eps to $8.00 to $8.50 from $6.50 to $7.00.  Interestingly, what helped drive sales in the US was people ordering refrigerators in order to use the boxes as shelters once their homes were foreclosed upon.  Finally GOOG is down today after some research showed their market share dropped in China and after they dropped Verizon as the provider of wireless access for their Nexus One phone.  GOOG is now dropping to Money McBags "add fucking more price" as the company is getting very cheap for an entity that is dominating the world like Rasputin dominated young Russian lasses in the early 1900s.  Money McBags is going to wait for the stock to settle but will likely be adding more in the next few days.

In small cap stocks, TMRK raised $50MM through 12% senior secured notes which is actually pretty big for the company.  Money McBags has talked about this stock quite a bit but has continued to hold out as he was pretty sure they were going to have to raise capital in the next year and wasn't sure what their plan was to do so.  Well now we know and the stock is up 4% on the news.  They are in a terrific growth area as cloud computing is as certain as death, taxes, and Heather Vandeven being hot.  TMRK is trading at ~9x 2011 EV/EBITDA and ~15x Money McBags' 2011 eps estimate so it's not wicked cheap but it is more reasonably priced than dignity in reality TV or a date with Jessica Pare.

No comments: