Thursday, July 8, 2010

7/8/10 Midday Report: More bulls hit

The market jolted up on unemployment news this morning before remembering it had already gone up yesterday and thus quickly settled in like an environmentally friendly squatter in Al Gore's mansion.  The big macro news is that new claims for unemployment dropped to 454k or some number higher than that depending on how much the (No) Labor Department manipulates/readjusts numbers next week.  Money McBags is not a betting man (unless there is money to be won or young ladies to impress) but he is willing to wager that next week we learn that new claims for this week should have actually been 459k.  Anyway, claims were down by 21k, unless you use the number the (No) Labor Department released last week of 472k (not the 475k they redjusted it to this week) and in that case claims were down 18k (though when this week's number gets manipulated up to ~459k, this week's drop will go down in the books as only a 13k drop, but whatever).  Regardless of what the number actually was, it likely beat analyst guesses of 460k which would be great if 450k+ new unemployment claims didn't signal an economy less healthy than a Grilled Cheese Burger Melt topped with a spread of Crisco and Pam Anderson's hepatitis.

To be frank (and if Money McBags is going to be frank, he only hopes it is the awesomely named Frank AllCock and not Frank Stallone), the high unemployment rate and the inability of the global economy to bounce out of this is more confusing to Money McBags than a condom is to Shawn Kemp or the definition of securities fraud is to SEC promoted Meaghan Chung.  Money McBags understands there are unkowns, half-knowns, and can't-knows in a dynamic global economy, but there are 15k+ PhDs of economics in just the US alone so either all of them are complete idiots or that degree is more worthless than the smallest Vietnamese dong.  Seriously, how can we have all of these people who trained for years on this one specific topic not have any fucking answers?

For fucksake, a solar powered plane just flew for 26 consecutive hours and while Money McBags is not a heliologist (though he ardently studies Page 3 of The Sun), he is pretty sure for many of those hours the sun wasn't even fucking out.   So let me get this straight.  The human race can build something that goes 28k feet in the air and flies around for 26 hours, powered by nothing but the sun and will continue to fly when there is no fucking sun, and yet we can't figure out how to find jobs for 20MM people?  WTF?  Money McBags is officially announcing the death of the entire field of Economics until one of the 15k+ US PhDs can figure something the fuck out.  What other discipline awards titles for studying theories that don't work and coming up with hypotheses that can't be proved?  Just think about it.  The profession of an economist is a more worthless calling than an Amish computer camp instructor or Heidi Montag's singing instructor.  Anyway, the economy continues to struggle and economists continue to watch it melt as they are more helpless than a dyslexic trying to use a calculator set for reverse polish notation (as opposed to reverse polish cowboy).

In other US news, retailers announced same store sales and results were mixed despite discounts, warm weather, and a flurry of unconventional sales efforts including Sam's Cub making small business loans, Office Depot selling items for a penny, and Hot Topic giving away free canwiches with every purchase of a Twilight t-shirt.  The Gap led the disappointments with flat sales compared to guesses of up 3.4% as apparently the late 1990s are officially over.

Internationally, the IMF raised their growth forecast  from none to none +1, or 4.2% to 4.6% for 2010, whichever you prefer best.  They also warned that risks of a calamity have increased faster than the popularity of the high school girl who puts out first and that growth will slow at the end of this year and next year.  To quote the release:

“In the near term, the main risk is an escalation of financial stress and contagion, prompted by rising concern over sovereign risk, this could lead to additional increases in funding costs and weaker bank balance sheets, and hence to tighter lending conditions, declining business and consumer confidence, and abrupt changes in exchange rates.” 

So no biggie, right?   Sign me up for the 4.6% revised upwards growth, nothing to see here.  Unfortunately the IMF was not so positive on US growth prospects estimating that growth will fall short of 3% annually for at least the next five years and urged the US to raise taxes, cut spending, and give Alice Eve her own 24 hour cable channel.

Also internationally, the ECB and the Bank of England held rates at historic lows in order to allow already toxic banks to continue to not lend to people and Greece approved a pension overhaul which will raise the retirement age to 65 from birth, will calculate retirement benefits on average pay rather than highest pay, and will cut annual vacation days from 365 to 340.

In US stock news GPS has a bit more than a gap in their strategy (one may call it a hole more gaping than whatever is in the Octomom's pants) as it is plunging like Lara Bingle's neckline.  As mentioned earlier, their same store sales disapointed with Old Navy posting flat comps, Banana Republic up 6% after a 20% down in the year ago quarter, and The Gap seeing same store sales drop 3% on top of a 10% down comp.  Wow, that is so bad that not even Johnnie Cochran would have defended it.  Finally, tax preparer HRB was down ~7% to a 9 year low due to the surprising resignation of their CEO who claims he is about to get a CEO job at a bigger company and HRB should just write-off the losses anyway.

In small cap stocks, news is light today as investors wait for earnings and try not to panic sell everything as they think about the challenges of the economy and the illiquidity of most of these names.  LHCG had its second strong day in a row after getting clobbered last week on news that competitors AFAM and AMED were being investigated for false medicare claims.  Money McBags broke them down for you last week and thinks it is an ok entry point right now if you need some healthcare exposure.  They are in a growing market, offer a superior service, and are relatively cheap for their growth.  Sure they don't have control over the majorty of their pricing, sure they are a roll up story, and sure these companies have been dicier than a night in the Baghdad Hilton Suites, but people aren't getting any younger or healthier and hospitals aren't getting any bigger.  So if you want a way to play the "we're all getting old and sick and can't pay for it" trend, this is a company to do that with and at a reasonable mulitple.

1 comment:

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