2009 finally ends tonight and what a year it has been. The market sunk to a low of 666 before being exorcised by a low quality rally and a bottle of jesus juice, the US goverment bailed out the financial system and printed enough money to make Bill Gates seem like a pauper, unemployment spiked to multi-year highs bringing back Great Depression slogans such as "Brother can you spare a dime?" and "What can we get for $10?" (the answer of course being "everything you want."), and Hannah Hilton announced her retirement sending Money McBags into a deep and prolonged depression of his own. It was a momentous year but that is in the past and as the year 2010 begins, we all need to refocus on the markets and follow the data closely because things aint so cheap out there anymore so mistakes can be made (though probably not as big as this mistake or this one). [more]
With the year coming to a close, trading is thinner than a bulimic after a good gastric banding while market news is scarcer than Paris Hilton's panties or Bernie Madoff's investment returns. The only real market news out today is that the Chicago ISM was released and measured a whopping 60, though it is unclear what 60 is out of and what 60 actually means, but it was higher than estimates so that must be good. Apparently, readings over 50 signal expansion which means every time Bar Refaeli shows up on my screen, my pants would read about a 99 on the Chicago ISM scale. Directionally, the results point to manufacturing in the midwest gaining strength and could signal positive changes for the job market as long as you are looking for a job as a competitve eater, snow shoveler, or corrupt politician (Chicago's 3 big industries). [more]
Data came out today showing a rise in consumer confidence for the second consecutive month, despite consumers rating their current situation as the worst since February 1983 (and to give you an idea about how long ago February 1983 was, Tennessee Williams was alive for most of the month, Case had yet to mix his chocolate with Shiller's peanut butter, Beat It was released as a single (and Michael Jackson was still black, and alive), and Hilary Scott was born and thus had yet to expertly fellate her first johnson). That's right, in the same report today, the consumer's expectations of wages and jobs fell to 26 year lows while consumer confidence rose. So it all makes perfect sense. Consumer confidence is rising, while falling to new lows at the same f*king time. Somewhere Kafka is happily sitting up in his grave and applauding while Zeno Cosini has his last cigarette. [more]
The only real news today (other than that Nell Mcandrew is still hot) is that the extra day of shopping this year led to an increase in retail sales. Amazingly enough, analysts also found that an extra serving at dinner led to an increase in people gaining weight, an extra shot of Jager led to an increase in people throwing up, and an extra hour in a Bangkok brothel led to an increase in people getting AIDS (and Money McBags loves any city whose name is a verb followed by a noun). Retail sales were up 3.6% as retailers were better able to hold price and manage inventory, plus that whole extra day thing. Without the extra day, analysts estimate retail sales were up 1% to 4%, so throw your favorite dart at whatever number you prefer. Interestingly though and a positive sign, sales of electronics were up 6% as consumers still want their iPhones, netbooks, and Rabbit Habits. [more]
Yes Money McBags lights the menorah and it looks like the market wants him to get those table dances tonight as it is up again on positively mixed news. Durable goods orders rose, though missed expectations with weakness in autos and airplanes which is not suurprising since "Cash for Clunkers" went away like Tom DeLay's dignity. Taking out transportation, durable goods demand demolished estimates like Kirstie Alley demolishes her Christmas ham (and it is reasons like this that NTRI has been absolutely killing it lately). Orders were up 2% ex-transportation, led by demand for machinery, metals, computers, and stripper poles. The question remains whether this is real demand or just inventory build back, so we're trying to temper our excitement and make it last longer by just thinking about baseball. [more]
Another day and more mixed data so Bulls and Bears can both rejoice (Yay!!! Things are getting better and Yay!! Things are staying crappy. See we can all get along, you hear that Israel and Palestine and Tiger and Elin?). US consumer confidence rose to 72.5 according to the Michigan Consumer Sentiment Index, though it was down from the preliminary reading of 73.4 just over a week ago. It's good to see even Michigan is adopting the Commerce's departments' "downward revision" strategy which Money McBags outlined for you yesterday. In addition to Consumer Sentiment rising to some undefined number, personal spending and incomes were up (though less than forecast) as the second derivative of unemployment has slowed and the economy has been stimulated from flaccid to almost semi-erect with all of the dollars the government has printed and strategically placed into their g-string. [more]
The market got mixed news today as sales of existing homes grew 7.4% to a two year high of a 6.5MM annual rate (and we thank our lucky pornstars for tax breaks, 4% lower median home prices, foreclosure sales of houses formerly owned by the unemployed, and Faye Reagan) while GDP was revised downward from 2.8% to 2.2% growth. The commerce department loves downward revisions like WGO loves losing money ($.14 last q, don't let the tax break fool you) and America loves watching stuff that sucks. [more]
The market is rising today as people are becoming convinced that the economic recovery is real and not just the beginning of a double-dip recession (which is actually worse than double-dipping your chip at a party and not nearly as exciting as a good ATM double dip). Chicago Fed Chief Charles "Chuck E." Evans maintains that inflation will be tame (woohoo), unemployment will remain high (boohoo), and the Fed will keep rates low to help stimulate the economy (market voodoo). Meanwhile, the market is betting on inflation as it can actually count the amount of dollars the US has printed/borrowed/pulled out of a hat during the recession. The inflation debate now promises to be one of the three most hotly argued questions over the next several months along with the always fun post holiday "Does my ass look fat in these jeans?" and "Brittany Murphy: Cocaine, anorexia, or who gives a shi*t?"
In market news, Intel (INTC) was upgraded by Barclays to "overweight" as the analyst claims the market has been too harsh in dinging INTC for potential peaking gross margins, an FTC investigation, and the senate's failure to ratify Moore's law. Of course this has led investors to wonder, "Who the f*ck is Barclays??" Also moving the market today....read more... [more]
The big news moving the market up today is that several tech companies beat earnings. Leading the way was RIMM who destroyed analyst forecasts of $1.04 by dropping $1.23 to their damp bottom line and growing topline by 49%. They also raised guidance, margin forecasts, and the ire of PALM who once again fell short of expectations like all of Jaimee Grubbs' parent's hopes and dreams. Apparently people still like buying Blackberries even if they don't always work as the Curve is now the number one selling smart phone, so suck on that Apple and your beautiful, fully functional iPhone which is so awesometastic it will actually wipe and bidet you for no extra charge.
In other tech news, ORCL easily beat forecasts as more companies are buying the f*ck out of whatever ORCL software does and that can only be positive, unless Oracle software is responsible for promoting Paris Hilton's album, intelligent design, or trickle-down economics.
In macro news, German business confidence rose as the Business Climate Index predicted the climate is getting..read more... [more]
A rash of negative news for the markets is out today. The dollar is rising thanks to the Fed saying they believe the economy is strengthening (they conveniently left out the part about the quadrillion dollars they printed over the past year to strengthen said economy, but I understand that is a minor detail) and the Federal Reserve Bank of Philadelphia showing a positive increase in manufacturing in the Philly region (apparently guns, crack cocaine, and Allen Iverson jerseys are included in those manufacturing numbers). This news is leading investors to bet on rates rising in the future and thus the trade out of equities and commodities is gaining a bit of momentum, like pants-less Tuesdays.
Other bad market news includes another downgrade of Greece, this time by S&P who is now giving the country a Triple-B rating (while Maria Menonous maintains her double D rating), citing the country's lingering inability to collect remunerations from the Grecco-Persian wars, the gag-inducing contributions to the entertainment world by Nia Vardalos's opus, and the fact that they have an f'load of debt with 16% of their GDP tied to the tourism industry in a global economy where no one can effing afford to travel except for Tiger Woods' wife. If Greece doesn't either collapse or fix their debt structure soon ...read more.... [more]
The market anxiously awaits Ben Bernanke's language on interest rates today after the FOMC meeting (and at the meeting, I am told they are serving GDP growth with a side of bank lending, while the kitchen has been told explicitly to hold the Rates, make sure there is absolutely no inflation, and to not put any smiley face cupcakes out). Bernanke's language in the FOMC minutes will be analyzed in greater detail than the dead sea scrolls, Natalie Portman's nude scene in Hotel Chevalier, and Tiger Woods' appointment book. Newsflash: He's going to hold rates steady for at least another effing year, because, you know, banks hate lending when they have to pay more than 0% and the stimulus is wearing off like the scent of last night's hooker, I mean advice columnist. And with the CPI out showing core inflation to be flatter than the demand for a perfectly elastic good (Giffen goods be damned), rates don't need to move anywhere yet. [more]
There are three big pieces of news out this morning: US retail sales beat expectations, China is producing the f*ck out of some sh*t, and Nell McAndrew is hot (this may not be news to some, but Money McBags is just brushing up on his British history and he would have fought the f*ck out of some Battle of Hatings for Ms. McAndrew). As far as US retail sales go, they were up 1.3% and up for the second consecutive month. Most interesting is that core retail sales (excluding gas, autos, building materials, and blumpkins) were up .6% with purchases of electronics and appliances up 2.8%. Wow, color Money McBags impressed (as long as it is a nice soft blue color to match Money McBags' eyes). Perhaps the consumer isn't as dead as feared and this is certainly a positive surprise. People love them some electronics so as long as their credit cards haven't charged off, perhaps they can continue to support the economy.
New data is also out on China showing industrial output rose 19% and imports rose 26%. Those numbers are so Bubblicous that Cadbury is thinking of suing for patent infringement. Two important facts though...read more... [more]
The market is off to the races again as a rise in US exports turned on the cold water and created some shrinkage to the US trade deficit. The trade deficit dropped by 7% which was better than expectations of a rising deficit (and I know, it is hard to believe expectations were wrong much like it is hard to believe printing money will lead to inflation, but let's all just take deep breaths and try to move on from this).
So basically, with a weakened dollar, the US is becoming China without the lead paint and bad drivers (As an aside, the Chinese are forecast to buy more cars in 2010 than Americans, so now would be a good time to buy that auto body shop in Shanghai) as we can make much cheaper crap that other countries want to purchase. This isn't a bad thing as any sales are better than no sales, and if it can create demand and jobs then we'll have some people no longer sucking on the teet of good ole Uncle Sam (and hopefully earning enough money to suck on the teet of good ole Aunt Sam). So as long as people don't want to travel out of the country since the dollar can now only buy about fifteen minutes in an Amsterdam motel room and a half a croissant, this is decent news.
As far as jobs, the average number of Americans....read more..... [more]
What they do: They sell really expensive unneeded RVs. Apparently people use them to go camping and drive cross country and sh*t. Money McBags is not sure why people do either of those things since we have hotels and planes and thus camping and driving are so 1920s, but Money McBags also does not understand this Lady Gaga thing so whatever. The point is, RVs are expensive and we are in a little bit of an economic downturn (which you may have known had you been able to afford a computer to read this.).
Why Money McBags Thnks They Suck:
1. Their margins are truly gross: Due to the fact that their production pretty much all takes place in their plant in Forest City, Iowa (where the men and the sheep are scared), they have huge fixed costs. The fixed costs are so large that their gross margins are currently negative. That's right, negative gross margins. So it costs them more to make a Winnebago than it does to sell one. It's like using an AIDS clinic as your dating pool. Even when you score, you lose. For the last year, their cost of production (and remember, this is before SG&A) was 114% of their selling price. Now the market has bottomed for them and this should start getting better as dealer inventory picks up a bit, but even in their most recent Q it still cost them 3% more to make an RV than to sell one. You don't need to be a maffematician to see the problem with this.
2. Vertical integration ain't what it used to be: As noted above, WGO's fixed costs are so ginormous, they are sunk before they even make a delivery, but the worst part is they can't do anything to fix it. Since they have one plant that produces pretty much everything, they can't outsource parts of the process to cheaper plants in Mexico or Compton or wherever cheap labor is. They are stuck with what they have and in order to be profitable with their given logistics, they would need to deliver about 1,800 RVs a quarter. 1,800 RVs, that sounds fairly easy, right? I mean that's only about 35 RVs per state per quarter. But guess what......(read more) [more]
The big news in the market today is that gold is starting to fall as investors anticipate an increase in rates due to a faster than expected economic recovery (All 15MM+ unemployed people just groaned a sigh of relief, because sighing is still free, I think). So the dollar is up on this new sentiment while Money McBags' "dollar" is up on this new sentiment. The point is, nothing is certain and the market could still swing either way so any new data point will continue to cause overreaction in both directions, like the parents of a 16 year old boy who just found out their son had a threesome with two chicks.
In other news, the credit card sector got a tepid upgrade because now that people aren't paying their mortgages, they have a greater ability to pay down their monthly debts (wink, wink). Also, a Money McBags favorite, ROY, is being purchased by a competitor for a 50% premium as the market understands that ROY is getting into the precious metals royalty business and thus their multiple of NAV was way too low, like Jessica Simpson's IQ or Abe Vigoda's balls. [more]
The market is soaring today as the payroll report was better than expected, unemployment actually dropped from 10.2% to 10% (depending on which numerator and denominator you choose to use, but those are just details), and the government significantly revised previous job loss declines. In other news, the government also significantly revised the ending to Chasing Amy, the outcome of the Vietnam war (hey we won this time! Wooof***ingHoooo!), and the "no alcohol in fullly nude Las Vegas strip clubs" rule. Of course there are still over 15MM people unemployed which is just slightly fewer than the entire population of Chile (and it's delicious capital city of Con Carne) and slightly more than the entire population of Cambodia. So we're not quite out of the woods yet (and Elin Nordegren isn't out of the "woods" yet either, that is until they agree on a price). [more]