When All Else Fails, Just Buy The Dip
The market was down strong in the morning as both fears of rising
inflation in China and common sense seemed to hurt sentiment, but then
like a phoenix rising from the ashes (though luckily not River Phoenix
rising from his ashes, because that would have been weird) investors
stopped adjusting their bollinger bands, refused to overlay any more
pivot points (and Money McBags would love to over lay any of these pivot points),
threw away their Ouija boards, and remembered that the key to making
money in this market is to simply buy the fucking dip. It is a more
fool proof strategy than settling disputes using a two-headed coin or
solving a rubik's cube by merely peeling off the stickers and putting
them back on, as the "Bernanke Put" lifts all falling markets (except
for maybe Tunisia's).
As for data today, new claims for unemployment dropped by 37k to 404k which was below analyst guesses of 420k (and no surprise the guess of 420 was too high,
and strangely left analysts hungry). The most surprising thing of all
though was that last week's claims were revised down for the first time
since full bush was still in style as they dropped from 445k to 441k,
and no that is not a typo. Money McBags hasn't been this surprised by
anything since he learned that Paul Krugman won the Nobel Prize in
Economics or Maria Vagina is a real person.
As loyal readers know, the B(L)S has consistently employed the "hold
the shock and hope for no awe" strategy of announcing better numbers and
then revising them worse the next week with hopes that investors'
memories will be shorter than He Ping Ping's
taint, and it has worked marvelously so far, so Money McBags can only
scratch his head at this sudden reversal of strategy as it has made him
more confused than Joe Lieberman (though without that old man smell).
In other macro news, existing home sales were up 12.3%
to "are you fucking kidding me?" Sales reached an annual run rate of
5.28MM units which destroyed analyst guesses of 4.85MM as a 1% drop in
home prices, a jump in mortgage rates, and a buy one foreclosure get one
free deal swept the market. That said, it is hard to, well, get hard
about these numbers (unless you are reading them while Ali Sonoma
gently whispers sweet nothings in to your ear) as sales are still 3%
below last year's number and 36% of sales were from distressed homes
which include foreclosures, short sales, and wherever Charlie Sheen is
Finally, the Philly Fed index dropped to 19.3
from a downwardly revised 20.8 and those numbers mean less to Money
McBags than brevity means to Tolstoy (though Money McBags does love him
some War and Peace) or "no" means to Ben Roethlisberger.
If anything, Money McBags is surprised the Philly Fed doesn't always
register as a negative since the only thing the city knows how to
produce is crime, broken dreams, and heart attacks. Oh yeah, the Conference Board also came out with their index of leading indicators which rose 1% and brought the index to a record high thus securing its place in the annals (and anals) of economic forecasting as the least valuable index yet (just nudging out Art Laffer's random number generator and GDP).
Internationally, China's economy expanded 10.3%
in 2010 thanks to lending being looser than Arizona's gun control laws
or Alexander Hamilton's interpretation of the Constitution, a shitload
of state run infrastructure investments, and overwhelming demand for pee
pee flavored coke (and loyal readers, Money McBags is terribly sorry
for using that joke again, but you see, he has made the same reference
now for the past bazillion China stories and is experiencing a bit of
joke OCD). The big concern is that inflation continues to be high
as the rate was 4.6% in December and many economists expect that pace
to pick up again soon due to rising wages and seasonal factors like the
Lunar New Year holiday in February and the release of Yoko Matsugane's new calendar.
In the market, MS was up 5% as their profit jumped 60% to
"lobster tails and blow jobs for all." That said, the company either beat or
missed analyst guesses of $.35 eps depending what you want to count as
one-timers, gains from sales, and straight up manipulation. The driver
of MS' performance was their strong retail brokerage fees as clients
came back in to the market to buy the fucking dip and that offset
shitacular results from MS' fixed-income division. And in the fourth
most closely watched number (after 36, 24, and 34),
MS' compensation expense was 51% which dwarfed GS' sub 40% ratio and
ensured that no one at Morgan Stanley will ever have to lower themselves
to slumming in a 5 series again.
In other earnings news, EBAY was up after they beat earnings guesses on sales of $2.5B which is a fuckload of Johnny Dickshot autographs.
To be honest, the most surprising thing to Money McBags was that EBAY
is even still relevant since the last time he used them was to a buy a
new stylus for his fucking Palm Pilot. That said, Paypal revenue (and
yes, Paypal sounds like a NAMBLA dating site) was up 22% and is now 39%
of EBAY's revenue as mobile devices have made e-commerce more ubiquitous
than bad grammar or Paris Hilton's vagina.
More importantly, EBAY gave above the Street guidance for 2011 as
analysts were outbid on their guesses after EBAY waited until the last
second to make guidance public.
Elsewhere, F5 Networks was down ~20% after posting weaker than guessed results, having a book-to-bill ratio below 1, and closing fewer big deals than a member of BBW Personals Plus
with a book of McDonald's coupons and a year's supply of Crisco. You
all know Money McBags is a big proponent of cloud computing because
there is no reason for any business to have an IT department, so look to
buy into weakness in the sector. And finally. Arby's is for sale
with the bidding starting at "go fuck yourself" because why anyone
would want to buy a shitty fast food restaurant with an outdated concept
is more puzzling to Money McBags than why someone would build a cathedral from trash (or from anything) or want to watch this.
As always, Money McBags has more on small caps and Bree Olson (and yes he said moron) at the award winning When Genius Prevailed. He also messes around with the twitter if you need a quick dick joke during the day.