What The Shit

First let me get this out of the way; I bought back a small 3% position in MGM yesterday. I expected the name to drop on the debt issue, along with much of everything else. Instead, it rallied hard. My bad, I’m not missing out on a big move there. I’ve been in it too long for that. If they should post a profit next week, that stock is going insane. If it goes lower, well, I generally wanted to reestablish a position anyways so long as the company wasn’t doomed by Recession 2.0; I just got a head start.

On to more pressing matters:

What the hell is going on with oil!? Does this have to do with the CME margin adjustment? Is that why oil markets are running nuts like a gorilla on PCP?

What does a guy have to do to get a simple oil sell off around here? Who’s junk do I have to gargle to get some of you to stop going triple long oil into one of the most uncertain periods of time we’ve ever had, even as massive companies increase layoffs before your very eyes?

Oh well, it’s not all short positions shattering into my face today. AEC is up another 3%, more than recovering yesterday’s loss. That position is going past $20 inside the year. Don’t doubt it; they are already planning their next expansion.

Luxury apartments in Dallas coming soon to a…uh…Dallas near you!

Oh, and Forbes just dropped a piece detailing the coming uranium shortage. It settles good for the miners, like CCJ.

There would be a lot of good news here, if it weren’t for oil behaving like a braggard.

Exactly as I said, revenue exploded upward with a 21% increase. Read this:

Funds from operations (FFO) for the second quarter ended June 30, 2011 was $0.27 per common share (basic and diluted) compared with $0.15 per common share (basic and diluted) for the second quarter ended June 30, 2010. FFO as adjusted for the second quarter of 2011 was $0.27 per common share (basic and diluted), compared to $0.21 per common share (basic and diluted) for the second quarter ended June 30, 2010, after adjusting for non-cash charges of approximately $1.7 million associated with the redemption of the Company’s Series B preferred shares and trust preferred debt, or $0.06 per common share.

Net loss applicable to common shares was $1.6 million, or $0.04 per common share (basic and diluted) for the second quarter ended June 30, 2011, compared with net loss applicable to common shares of $4.5 million, or $0.17 per common share (basic and diluted) for the second quarter ended June 30, 2010.

Total property revenue for the second quarter of 2011 was $39.8 million compared with $33.0 million for the second quarter of 2010, a 21% increase.

Where was the loss concentrated? Well, part of it looks to be depreciation, again taking out a huge chunk of cash. But to hell with property values. First sign of stability and this thing is deep in paper profits. More importantly, the company is aggressively seizing cash flow, and their FFO is up another 5.1% on the backs of stronger revenue.

Occupancy rates and revenues, as well as Net Operating Income, were all extremely positive also.

Net operating income (NOI) for the second quarter of 2011 for the Company’s same community portfolio increased 5.3% compared with the second quarter of 2010. Revenue increased 3.4% and property operating expenses increased 0.8%. Physical occupancy was 96.8% at the end of the second quarter 2011 versus 96.6% at the end of the same period in 2010. Net rent collected per unit for the second quarter 2011 for the Company’s same community Midwest portfolio increased 4.5%; net rent collected per unit for the Company’s same community Mid-Atlantic portfolio increased 3.7%; and net rent collected per unit for the Company’s same community properties in the Southeast markets increased 1.4%.

The company sold off on the news, which I gather from the last few weeks was largely anticipated. I will be looking to add marginally, in both this position and CLP, on further dips.

Watch for CLP to report similar, high flying performance this Thursday.

Good morning, from the 9th floor. I hope your weekend was enjoyable.

Let me start by saying I am floored by the ability of this market to hold up. I really do expect jitters to get the better of it sometime this week. However, it won’t be Monday, it appears.

But it will be…there will be no big debt deal. Only a last minute extension stuffed with Republican goodies. The GOP has no incentive to make a bargain. They will cut trillions from the budget, a few hundred billion at a time, by offering only short term extensions, and pretending to bargain the rest of the time.

This issue will come back to roost before the next election. Republicans have every desire to keep Obama and the Democrats occupied by this issue. While for the moment it appears the Republicans are getting heavy blame for the issue, they have a year to turn the perception on its head by offering modest tax increases at an opportune moment.

An Obama administration that has to work on debt deals in perpetuity is an Obama administration that is not working on environmental regulation, financial reform, entitlement extensions, or administering costly programs. It’s an Obama administration that is effectively incapable of leading.

I’m fine with that.

Now today, despite not getting an oil sell off to shake the masses and breath new life into this economy, I am getting rewarded nonetheless.

Cameco Corporation (CCJ) is up 2% so far today, making a strong come back off the lows. Germany’s word has been questioned. And, nuclear energy shall continue yet, as a safe form of cheap, reliable power.

Just remember who jumped into the miners first, even as the world swore off the source, when the time for praise to be dished out comes.

Fucking terrorists just attacked Norway; most specifically, they blew the shit out of the Oil Ministry.

Norway is a massive provider of oil to the world. I am short oil. Hence, I am going to get my fingers ripped out.

Hooray.

I’m pretty well sick of these stupid bastards trying to tear down the world every couple of months. I just hope they killed themselves in the process so that we’re rid of them.

I wonder which country we’ll invade in response to this?

But didn’t the Gang of Six plan come out today, to the chorus of growing support, just in time to save the universe?

Well yes. But remember some promises that people made in the last election cycle.

And no, I’m not talking about taxes.

I’m talking about promises to read bills before you vote on them.

Essentially, if Congress is going to vote on this measure without slamming it through Congress, they need a finished draft by the end of the week. That’s both chambers, mind you. And right now, the House side is a little more preoccupied with their piece of legislation, which is going to get stonewalled in the Senate.

If this is going to get done, it needs to be passed by the beginning of next week. However, since it contains tax raises and entitlement adjustments, that means any discussion can slow the vote down towards the end of next week.

If anyone in the Senate filibusters, then the chamber needs to run around looking for 60 votes to break it up; and I’m not thinking it’s going to be a Senate Republican to filibuster. More likely it’ll be some grissly New Dealist from an archaic time.

Meanwhile in the House, tax increases need to pass freshmen lawmakers who are most interested in seeing the government get smaller; I’d guess that desire is just as easily satisfied by a government that starves to death as one that willfully swears off transfat…if you follow me.

So we’re looking at a situation where a massive budget bill needs to be present in both chambers by tomorrow or Friday, where it can stand over the weekend so that it can be voted and approved virtually without discussion by the beginning of next week so that the two chambers can then restitute the bills and send it to the White House where it can be voted on without oversight so that treasury officials can break it into pieces and try to fathom all the implications of the law and the effects it has on their ledgers.

Can it happen? Sure, if the government gets into high gear right now, there might even be time to spare.

But looking around, shy of the Gang of Six proposal, which is pretty extensive to be implemented as law and passed before August 4, that might be a tough mark to meet. More likely, you need to break the piece up and have a bill that raises the ceiling now, plus some sacrificial cuts, with promises to address the rest later.

And that starts up fights when one side starts claiming the other is just trying to bury the overarching reform needed for “later,” where it will never get done.

Basically, if you wanted to see the debt ceiling get raised, the best time to vote on those measures was the beginning of this week. But everyone was too busy trying to kill each other, so a lot of precious time was wasted.

Next would be the beginning of next week. I don’t expect the measure to be embraced, so good luck with that.

Which leaves us as a country approving expenditures on our debt within a week before those payments are due. Not a lot of time to complete the sales to raise the funds to make the payments, if you catch my drift.

Maybe they pay first and cover the balance owed later? Or they already have a buyer in mind (Fed??)?

But all in all, I think this discussion goes right down to the wire. The payments will probably go out, whether by the tips of the fingers or the Obama administration already preparing to implement the transactions in defiance of the law…but it will be last second and you will all be pretty fucking surprised before the end.

There’s definitely one last good shakeout in this market.

The stock is up another 2.5% today, making new highs, just as AEC has and is doing.

Six months late to the party, the world is suddenly grasping onto the idea “Wow! Renting is so much more freaking awesome than owning a home.” The latest contruction report was a huge win for renting (especially multifamily units), underlining demand for rental units is pushing for big expansion in the industry.

I could have told you that back at the start of the year, when ever operation I was checking was hanging out over 90% occupied. That’s great, when you’re a landlord, but it highlights an uncomfortable fact.

You could be making more money.

The neat thing about CLP as a business, if I recall, is that they have a decent sized construction segment in their own business lineup. So while they are already expanding their operations, they can also turn revenue by engaging in projects for others.

(I think that was CLP at least. Maybe it was AEC? I’m not taking the time to look it up, one of those is a winner for me; maybe both.)

I also added to my ERX short today, for $80.51 a share. It could go higher (much higher), but until I see a few developments in the market, I’m staying short energy. Especially crude and gasoline, which are so intertwined with industry.

If I don’t win big, maybe I’ll managed to close the loss from trading the volatility a little. However, the core of the trade stays on for now.