Shares of $BKS Run Higher After Reporting Abysmal Earnings

Try to figure this one out. BKS is higher by 6% in the after-hours after reporting worse than expected results for both the bottom and top line. Comps for their stores fell by 1%, while Nook sales plunged in the magnitude of 20%.

Perhaps investors are stoked around the idea of the launch of 10 concept stores set to launch. Or, maybe they just like to buy dips in stocks who just reported abysmal earnings.

Reports Q4 (Apr) loss of $0.42 per share, $0.18 worse than the Capital IQ Consensus of ($0.24); revenues fell 3.7% year/year to $876.7 mln vs the $879.23 mln Capital IQ Consensus.

Comparable store sales declined 0.8% for the quarter and were flat for the full year, in-line with Company guidance. “Core” comparable store sales, which exclude sales of NOOK products, declined 0.8% for the quarter, while increasing 0.4% for the full year, slightly below expectations of an ~1% increase. Sales for both the quarter and the year were also impacted by store closures and lower online sales.

NOOK sales, which include digital content, devices and accessories, were $42.0 million for the quarter and $191.5 million for the full year, decreasing 20.0% and 27.4%, respectively, due primarily to lower device and content sales.

“We believe our marketing, merchandising and Membership initiatives will lead to increased traffic and conversion in our stores. We are also excited about our plans to open four new concept stores opening later this year, beginning with the first store opening this October in Eastchester, NY. We look forward to discussing these initiatives at our Investor Day.”

For fiscal year 2017, the co expects comparable bookstore sales to be ~flat to an increase of ~1%. The Company also expects full year consolidated EBITDA to be in a range of $200-250 mln, with Retail EBITDA of $240-280 million and NOOK EBITDA losses declining to a range of $30-40 million, including previously announced transitional costs.

It was a fairly low volume, beguiling tape, as traders sit on their thumbs ahead of tomorrow’s BREXIT vote. Absentee, summering, hedge fund managers are probably instructing their junior traders to go to cash and avoid risk, else feel the end of their lash.

Personally, I have no idea where the vote will land. All I know is that it’s a red herring, a distraction from the true underlying issues plaguing markets.

Nevertheless, markets will be on edge tomorrow, on this momentous occasion–which is probably the most important referendum post WW2.

Top picks: The Ark, Gold.

It looks like D. Trump isn’t the only one interested in protectionist policies. I find what’s taking place in the steel industry supremely important to the facade of free trade, that, seemingly, goes just one way. For years, U.S. steel workers have been crucified by asshole Chinese dumping tactics, which drove scores of producers out of business. Apparently, the Chinese went too far and the United States is responding, in kind.

The FT is reporting the U.S. is set to impose a gangster 500% tariff on Chinese steel.

Via FT:

Wednesday’s ruling by the International Trade Commission, an independent government agency, follows a recommendation by the US Commerce Department in May for heavy duties to be imposed on imports of cold-rolled steel products from China and Japan.

The anti-dumping case brought by the US industry last year is one of three that Washington is considering this summer and comes amid a growing row between the US and China over steel, reports Shawn Donnan in Washington.

It also comes as the EU is considering whether to bow to Beijing’s demands and grant it “market economy” status in the World Trade Organisation.

The issue is a hugely popular one in rust belt states, particularly in an election year.

Senator Rob Portman, who is fighting a tough battle for re-election in Ohio, claimed on Wednesday that his testimony to the ITC had helped secure the ruling.

“Ohio steelworkers produce the highest quality steel in the world, and yet they are facing a crisis,” said Portman. “Nearly 1,500 Ohio steelworkers were laid off last year through no fault of their own. Today the ITC recognized exactly what I told them: that unfair, dishonest practices from competitors in China and Japan are hurting our communities. Today’s ruling is the next step in leveling the playing field, and it is a big win for Ohio steelworkers.”

This is net benefit for X, NUE, AKS, NUE and STLD.

NOTE: X is one of my 15 GARP portfolio stocks for the second half of 2016, based around this very thesis.

I like this crash bet. Only the good Lord and baby Jesus know where stocks will end up on Friday, following a possible BREXIT. The very idea of England messing up the globalist apple card is enough to drive G. Soros insane, let alone tank the British pound again. There could be extreme pressures asserted onto markets, which may, in fact, force the British government to ignore the will of the people, for the good of the people.

Traders are throwing powerball bets at the SPY, betting on imminent catastrophe, something venerably delightful to yours truly. Odds are these contracts will expire worthless, just like the euro, eventually. But for now, like a lotto ticket, the allure of turning a 100,000% profit on a weekly SPY put contract, betting on a 20% market drop, is what dreams are made from.

Consider one S&P 500 contract that would move in the money should the index plunge 20 percent to 1,675 by Friday. Open interest in the put has doubled and is now the second highest of any bearish weekly contract tracked by Bloomberg. “It’s a black swan type of put,” said Steve Sosnick of Timber Hill LLC. “It’s very possible there will be an extreme result, and people like to have insurance against a low-probability, high-outcome event.”

Here is this week’s option montage and the next. Keep note of the lunatic(s) who’ve positioned into $135 puts.

Stocks have held their ground over the past two weeks, in spite of the BREXIT fears and subsequent haranguing by our Federal Reserve. However, somewhat under the edifice of the market is widespread deterioration in a variety of industries.

I’d like to highlight some of the low lights for your right now.

Tankers -12%
Airlines -9%
Biotech -7%
Hospitals -6%
Insurance -5.5%
Residential Construction -4.5%
Gold -4.5%
Indie Oil and Gas -3.6%

The upside is littered with nothing more than boring utility stocks and antiquated memory chip manufacturers.

My Bubble Basket of high growth/risk stock was off by 5%, while my Old Man portfolio of stodgy, cranky, stocks was down just 0.22%–in line with bonds.

If we are to be true servants and slaves to the trend, it is clearly stating that you should be positioned accordingly.

Some of us don’t guess for a living. There are certain truths to this world, indelible facts that correspond neatly between wanton success and failure. Having conversed with so many of you over the years, bearing witness to the folly that you call ‘asset management’ or ‘trading’, I can confidently say that you have no idea, whatsoever, what you’re doing.

Having seen the incompetence of my fellow financial advisors, first hand, for more than 18 years in the business, I felt it was incumbent upon me to assist them, for the sake of their clients. Hence, Exodus was created.

Right now, it is flagging OVERSOLD on these ETFs, all of the inverse varietal, spelling out a great doom that beckons just around the bend.

You’ve been warned.

NOTE: If any of you are members and want a live demo, email me.

It does not compute.

I’m not expecting much of anything ahead of the all important BREXIT vote, which is putting the fear of God into the black hearts of globalists everywhere. Our early rally has evaporated. With it, the rally in oil has dissipated into the red. I’m not sure if crude is leading the market anymore, or is the market leading crude.

The yen is higher again v the dollar, to the tune of 0.3%. It’s important that you monitor that cross, for it holds with it the very essence of speculation.

Breadth is at a milquetoast 55% and TLT is higher by 3 cents, bulletproof.

Drugs and banks are solid today, while commodity related stocks, sans gold, are weak.

My bubble basket is lower by 0.54%, indicative of a risk off tape.

Question for TSLA shareholders:

How do feel about assuming the $700 mill SCTY cash burn, and gaining exposure to the wretchedly horrible business of household solar panel installation? Moreover, how do you feel about $475 million of Elon Musk’s personal lines of credit being secured by the stock prices of SCTY and TSLA?

Clearly, this is a deal that Wall Street hates with every fiber of its existence. It beckons back to a time of the Robber Barons, when men like Commodore Vanderbilt and Jay Gould worked out shady deals for the explicit purposes of self aggrandizement.

TSLA is being obliterated in the pre market. The selling is just getting started too. The media cycle around this deal is going to be vicious and very mean spirited.

Many people believed SCTY was barreling towards bankruptcy. Those people will now be given prime time media spots and will shred investor confidence of TSLA and burn it to a cinder.

Add Credit Suisse to the never ending parade of fear mongerers trying to persuade the British people to be subservient to the idle demands and caprices of effeminate men in Brussels. After all, most British people are a rubish sort, creatures of the night, traversing the coal imbued foggy streets of London in search of ale and hookers. The men in Brussels will make sure the British factories are properly outfitted with environmental filtration systems, to save the planet from a carbon apocalypse. Failure to do so will result in the seizure of said factories, to be auctioned off to the highest German bidder, should said factory owner fail to pay his carbon credit fine.

Credit Suisse is warning to never go ‘full BREXIT.’

“Into a full Brexit scenario, the impact of a stronger dollar (including the implications on both commodities and the renminbi) and disruption to the European growth cycle would be cause for us to revise down our S&P 500 year-end target,” the analysts write.

A U.K. departure from the eurozone would also impact European equities, the Credit Suisse team wrote. The firm said it will lower its year-end target for the FTSE 100 to 6,200 from 6,600 and Euro Stoxx 50 to 2,950 from 3,350. The FTSE is currently trading around 6,250 and the Euro Stoxx 50 is at 2,980.

However, the team says it is not ready to turn bearish on equities as a whole given bond markets look relatively expensive and their expectation that there will be a further shift of assets from bonds into equities once yields rise.

“Put simply, equities are neutrally valued in a world where real estate, TIPs [Treasury Inflation-Protected Securities], government bonds and thus credit are expensive,” they said in an earlier note.

The BREXIT fear comes to an end tomorrow, unfortunately. I rather enjoyed its devilish menace and hope we could get involved with another scary story, such as this one, in the not too distant future. My holdings in bonds will go higher, regardless of BREXIT. “The Fly”, all in all, is a far superior human being than all of you, not just a better investor. When I am proven right on this trade, by the inversion of the yield curve, I only ask that you cease coming to these halls from the front entrance. Instead, traverse these grounds from the back exit, and make your way around these halls through the unpainted service stairwells.

None of you little fuckers can hold a candle to me.