1/15/10 Midday Report: JPM sends the market down on estimate beat, promises to do worse next time

It is a bizarre day on the market today as INTC crushed numbers and is down, JP Morgan turned a huge profit, yet disappointed, and the dollar actually gained last night as apparently Amanda Drury was at the New York Rick's Cabaret and only accepted the local currency (ok, the last one may not have been true, but Money McBags would certainly contribute his market insights to Ms. Drury's Squawk Box anytime).  Before we get to earnings today, there were a flurry of macroeconomic reports this morning.  Inflation was flatter that Lindsay Lohan's derrierre as the consumer price index rose only .1% and the Michigan Consumer Sentiment index rose only slightly from "holy fuck" to "we're just kind of screwed."  These data points continue to signal that the lack of job creation and lingering 10% unemployment are likely to temper the economic recovery like ALS tempered Stephen Hawkings' dreams of becoming a dancer.  With inflation proving to be tamer than a Jay Leno monologue, the fed is poised to keep rates low for the near and immediate future.  This should be continued good news for the banking industry (and again, the only business plan better than lending free money for more than free is the US Mint, mmmmmmm mint) despite JP Morgan's topline miss today.  Given that yields are still juicy and rates unlikely to go up, smart investors may want to dabble in NLY and their 16%ish dividend yield as those guys just know how to make money (of course, investing in a company that relies on repo funding makes Money McBags more skittish than a paraskevidekatriaphobic at an all day Jason Vorhees marathon on Friday the 13th, so buyer beware).

As for stock news today, INTC blew away their quarter like they were auditioning for an upcoming role in a bukakke kings film.  Expectations were for $.30 eps and they dropped $.40 eps on analysts' excel models while hitting record gross margins and guided to above Street revenue.  The fact that they are trading off today is nuttier than a cock sandwich with extra balls as analysts question whether things can get any better.  INTC is suffering from Wall Street's buy the rumor, sell the news mentality which doesn't make sense to Money McBags.  It's like boning Brooklyn Decker and then complaining that you'll never do better.  Hey assholes, you're still boning Brooklyn Decker so quit your whining and ride out INTC.  Just because she's 22 doesn't mean she's peaked and just because INTC had record gross margins doesn't mean Moore's Law won't still propel them to better quarters.  I mean INTC had a record gross margin despite the record sales of their lower end Atom chip.   There is still room to grow here.

The bigger news on the market today is that JP Morgan's profitlicious quarter disappointed The Street as revenue was a little light (though not as light as a bulimic with a supercharged gag reflex), the retail bank put up a loss, and while EPS beat estimates, the beat was seen as lower quality than a Rollex watch or a Louis Vuittone bag as it was driven by tax benefits, lower comp, and the end of lobster Wednesdays.  The low quality beat has sent the market down as investors now worry about other, less well-managed big banks (Citi, cough, Citi) and their retail exposures.

In small cap news today, COOL not only shit the proverbial bed, but they then remade the bed and shit in it all over again before tucking themselves in for the night.  Analysts expected $.11 of eps and COOL was able to deliver a not so cool $.16 eps loss.  For those of you not familiar with the company, they license and buy the rights to cheap crappy games for the Wii and DS aimed at families and girls in what is called the "casual gaming" segment ("casual" of course being an interesting epithet for "non").  Anyway, in a neat trick (though not as neat as the hidden button illusion) COOL has seen revenues increase but bottom line decrease as they believe profitability is just a suggestion.  After diluting shareholders last Q by raising $9MM in cash, COOL further ingratiating themselves to their owners by accruing a $.10 impairment loss because nobody actually wanted their crappy games, a $.05 charge because their Our House franchise was apparently foreclosed upon, and another $.07 eps drop from lower margins due to something called "poor sales".  Their gross margin dipped from 28% to 3% and they guided to 2010 non-gaap eps of $.05, so even though they are down 22% today, they are still trading at 20ish times 2010 eps and that number is less believable than Larry Craig having a wide stance.  This company continues to grow revenue and become less profitable every quarter (and for their next trick they will lose weight and become more unattractive) and should probably trade at no more than $.50 or 10x their unlikely 2010 eps.  If you were short them, congratulations.  Money McBags was on the sidelines for this one, but thought the company was potentially cheap if management could show progress, which of course they didn't.

Enjoy the long weekend,  Money McBags will be back when the market reopens on Tuesday.

1/5/10 Midday Report: After 330 years, stock market proves Isaac Newton wrong: Gravity, schmavity. What goes down, must keep going up

The market continues it's latest rally despite at best mixed news today.  The biggest news is that pending home sales dropped more than Dolly Parton's boobs have in the past 5 years (and for the record, she now calls them "anklets").  The 16% drop was more than the expectation of a 2% drop after a 3.7% gain last month.  Of course the gain last month was due to the first time home buyer tax credit which stimulated the existing home sales market like Simona Halep once stimulated the WTA.  The number today should not be shocking as when there are incentives for something, and then those incentives go away, that behavior does not always remain when it comes to a non-reflex behavior like Economics.  You hear that Pavlov?  You can keep ringing that bell, but I know there is no tax-incentive in the dish, so stop fucking with me and get me my $5k deduction while I lick my balls some more.  On second thought, I'm just gonna keep doing this, so you can get me the deduction later. Arf.  Therefore, it is not surprising that the initial sell-off in the morning based on this news has reversed.

The one real effect of the news though was the dollar falling again as optimism that the Fed will raise rates sooner rather than later is beginning to wane, like Alan Greenspan's misguided influence.  This thought was reitirated yesterday at The Boar's Nest by Fed Governor and Bo and Luke's long lost and full chromosome having cousin, the lovely Elizabeth Duke.  Ms. Duke was quoted as saying:  "In the current environment, the FOMC continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."  So perhaps Greenspan's influence isn't waning afterall, ugh.  Duke then went on to say, "to quote my good friend Roscoe P. Coltrane, in time, the economy will be "Good, Good, Good.""

In market news, Ford has reached it's highest price since 2005 as traders anticipate Ford's December sales numbers which are being released today.  A strong number will be very positive for the economy because if people are buying Ford's shitty cars, they will likely buy anything and thus discretionary spend will be back.  Finally, Kraft upped their offer to buy Cadbury to the tune of issuing 370MM new shares in the proposed take over.  This has drawn the ire of Warren Buffett who owns a 9.4% stake in Kraft.  Buffet argued that issuing shares will dilute the already cheap Kraft stock at a price $6ish below where Kraft bought shares back themselves in 2007, will give Kraft a "blank check" to renegotiate the deal higher whenever they want, and will make him really really angry to the point that he will go to his room and not come out or talk to anyone until the company rejects the plan.  The 78 year old Buffett was then heard to complain about those damn kids on his lawn, CBS's decision to take Matlock off the air, and the fact that dames no longer have yams like Eleanor Powell.