Wednesday, June 1, 2016
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Joined Nov 10, 2007
12,997 Blog Posts

Fed President’s Enjoy Gratutitous Pay Hikes, Greatly Outpacing Inflation

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Correct me if I’m wrong, but if there was ever an institution that should base its pay hikes off inflation, shouldn’t it be the Fed? Their jobs are to do nothing, basically. Yet, the tax payers are paying these Fed President’s a King’s ransom, to traverse the country, giving speeches at elaborate events.

The Fed’s salaries rose by 4% last year, following a gangbuster +6.6% in 2014. Albeit, that’s coming off a pay freeze from 2011 thru 2013. But still, these fuckers are greatly outpacing the national pay increase (2.6%) and inflation, which is saddled at around 2%.

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Bill Dudley makes the most out of the lot, at $466,500 per annum, followed by John Williams at $422,900, who also enjoyed a 12% wage hike in 2015. Perhaps his pay is tethered to San Francisco real estate?

Fed’s Bullard is the piker of the group at just $339,700.

God bless Bullard’s family for enduring his meagerly living.

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Greenlight Capital Sheds 1.9% in May

Einhorn

The S&P was higher by more than 1.5% for the month of May, yet Greenlight managed to lose money. Einhorn had been outperforming the broader indices and was one of the few funds to escape the January collapse, through a combination of shorts (bubble basket) and his long bets on gold, M and KORS–all of which surged early on.

Since then, however, things have soured. I’m actually surprised the fund managed to contain the losses to only 1.9%.

Over the past month, some of David’s positions did very poorly.

gold was lower by 5.9%
KORS was lower by 17%
DDS was lower by 16%
CNXC was lower by 10%

And his largest position was higher by 7%, which was Apple.

If you take all of his reported positions, the median loss is just 0.87%. If we throw gold in there, perhaps we get to -1.2%. The rest must be due to his ‘Bubble Basket’. Lucky for you, I’ve actually recreated it in Exodus, basing it off some of the things he imparted to me in private emails.

His churn is a lot more than my static basket. His basket underperformed mine through mid-February, by 5%. Over the past month, my Bubble Basket is up 6%. Ergo, having a basket of 100 stocks short, up 6%, is, indelibly, a bad thing for one’s performance.

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Warning: BofA/Merrill Calls For Summer Stock Market Crash

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This is some insane shit. BofA/Merrill is calling for a 15% drop this summer. The rationale is a logical one: DON’T FUCKING TIGHTEN CREDIT INTO THE TEETH OF AN EARNINGS RECESSION. Moreover, they cite tightening credit conditions and a market at historically rich valuations, as a reason to fear the Fed.

Naturally, I agree, whole heartedly, with this call. It has always been a childhood dream of mine to preside over a stock market calamity, whilst in treasuries and laughing at defenseless people NOT on the ark. In my wildest dreams, I imagined myself to be a great captain at the helm of such an ark, ordering the zebras below to eat any persons who dared to climb aboard the vessel uninvited.

Her call is for SPY 2,000, in short order.

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THE INTERNET IS OVERBOUGHT

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This is one of my favorite features in Exodus, aka the best market intelligence platform ever created. Seeing stocks like TWTR, YELP and MEET shoot higher got me to go check out the industry to see what the algorithms were saying. Lo and behold, as demonstrated by the chart that I am about to show you, which measures the strength of this specific industry using ‘complex mathematical models’ (I always feel like an asshole saying that), the internet is, in fact, OVERBOUGHT (scratch that off my bucket list).

Exodus

Each time the oscillator stretched out this far, over the past year, a Shining style courrection of sorts presided short thereafter.

Here are some of the index members and their gratuitous one week percentage gains.

Internet

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$WDAY Lower in After-Hours, Following Earnings Beat and Guide Up

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Like CRM, this company will never actually post earnings. They will have great free cash flow numbers and growth, but keen financial engineering with continue to obfuscate the great successes Workday is truly undergoing.

The company just reported great numbers, beating on both the top and bottom line, in addition to upping guidance. Yet, in the after-hours, shares are lower by 4%.

Total revenues were $345.4 million, an increase of 38% from the first quarter of fiscal 2016. Subscription revenues were $280.0 million, an increase of 39% from the same period last year.

Operating loss was $73.6 million, or negative 21% of revenues, compared to an operating loss of $53.4 million, or negative 21% of revenues, in the same period last year. Non-GAAP operating profit for the first quarter was $11.1 million, or 3% of revenues, compared to a non-GAAP operating loss of $2.1 million last year, or negative 0.8% of revenues.1

Net loss per basic and diluted share was $0.41, compared to a net loss per basic and diluted share of $0.33 in the first quarter of fiscal 2016. Non-GAAP net income per diluted share was $0.05, compared to a non-GAAP net loss per basic and diluted share of $0.02 for the same period last year.1

Operating cash flows for the first quarter were $161.5 million and free cash flows were $127.0 million. For the trailing twelve months, operating cash flows were $327.9 million and free cash flows were $188.1 million.2

Cash, cash equivalents and marketable securities were approximately $2.1 billion as of April 30, 2016. Unearned revenues were $926.1 million, a 42% increase from last year.

“We delivered great results and growth across all of our products in the first quarter,” said Aneel Bhusri, co-founder and CEO, Workday. “We continue to see increased customer adoption of Workday Financial Management as well as strong demand in EMEA and APJ as more organizations take finance and HR to the cloud. We are on track to deliver innovative new products — Workday Planning, Workday Learning, and Workday Student — later this year, which we believe will accelerate our momentum based on extremely positive customer feedback and interest.”

The valuation of WDAY continues to compress, as Wall Street ignores record growth and free cash flow numbers. This is a failure on the part of management, unable to properly tell their story. Over the past two years, the stock is down 3.5%. Since they’ve been growing revenues like a weed, the price to sales ratio has collapsed from 20x to 12x. The only software company of comparable size with a price to sales ratio this high is MBLY.

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Under Armour Warns, Citing the Bankruptcy of The Sports Authority as a Chief Concern

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Due to the liquidation of The Sports Authority, the assholes who don’t know how to spell the word ‘armor’ as guiding down for 2016 and beyond. Aside from the fact that youth these days rather Snapchat that toss a ball around the yard, UA is facing a small hiccup in sales as TSA goes away.

As a result of the impairment as well as the loss of further planned sales to The Sports Authority, the co now expects 2016 net rev of ~$4.925 bln compared to previously issued guidance of $5 bln vs. $5.03 bln consensus, representing growth of 24% over 2015, and 2016 operating income of ~$440 mln to $445 mln from $503-507 mln.

With regard to the second quarter of 2016, the co continues to expect rev growth to be in the high 20% range, consistent with previously issued guidance.
However, as a result of the impairment noted above, operating income is now expected to range from $17 mln to $19 mln.

Much of TSA’s share will be gobbled up by Dick’s, and other nefarious vendors of overpriced sports goods. However, some will, indelibly, be lost to the sands of time. On this news, in spite of S. Curry advancing to the NBA finals, shares of UA are lower by 3.5% in the after-hours.

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Former CEO of $VRX Gets $9 Million Severance Package, Following 90% Drop in Share Price

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After driving Valeant Pharmaceuticals into the ground, Michael C. Pearson will receive a modest stipend of $83,333 per month, as a consultant, during 2016. During the calendar year of 2017, Mr. M. Pearson will receive $15,000 per month, and an additional $3,750 per day for his sagely consultations on HOW TO DRIVE A FUCKING STOCK INTO THE DIRT.

 

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Moreover, Michael has agreed to cooperate with authorities whenever they should call upon him.

 

As you were.

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Rich Swiss Town Pays 200,000 Pound Fine in Order to Avoid Taking in 10 Syrian Refugees

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The media is trying to paint the town of Oberwil-Lieli village as a bunch of racist rich fuckers, who are paying off authorities in order avoid harboring potentially psychotic throw-backs from the 8th century.

A super-rich village in Switzerland, one of the wealthiest in Europe, has chosen to pay a fine of 200,000 pounds instead of accepting 10 refugees under the country’s newly imposed quota system.

Residents in the picturesque Oberwil-Lieli village, which has 300 millionaires in a population of 22,000, voted ‘no’ in a referendum over whether to accept the refugees.

The vote has resulted in a division in the town and led to people slamming residents for being “racist”.

But Andreas Glarner, the mayor of the village, denied that they were being racist by refusing the refugees.

“We were not to be told if the 10 were from Syria or if they are economic migrants from other countries. Yes, the refugees from Syria have to be helped and they are better served by being helped in the camps nearer their home,” said Glarner.

“Money could be sent to help them, but if we are housing them here it sends out the wrong message. Others will come and risk their lives crossing the ocean and paying people smugglers to bring them,” he was quoted as saying by metro.co.uk.

But the real story here is the unbelievably intrusive governments in Europe, forcing refugees, who have vastly different cultures and ideals, into the lives of Europeans. There seems to be no end to this politically correct horseshit. This quaint town, which is home to many millionaires, who have worked very hard to become successful, are supposed to just take in people because authorities said so? Moreover, if authorities were perfectly willing to accept money instead of shelter, why isn’t the argument or headline “Swiss Authorities Accept Bribe, In Order to Avoid Housing Refugees in Influential Town”?

In the United States, Obama and his administration are forcing well to do towns to house poor people, in order to ‘even the playing field.’ The ideal of western societies used to be work hard and try to move up in the world. Buy a bigger home and get your kids into better schools. Now those ideals have been replaced with ‘everyone is equal. You didn’t build that business. The government did.’

Communist propaganda 101.

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General Mills Recalls 10 Million Pounds of Gold Medal Flour On Ecoli Concerns

gold medal flour

They haven’t actually tested ecoli at any of their locations. However, people have been getting sick after using their products. So, they said ‘fuck it, let’s recall 10 million pounds of this junk.’

“some of the ill consumers may have also consumed raw dough or batter.” The outbreak, which began in December, has spanned 20 states.

“We felt it was important to not only recall the product and replace it for consumers if there was any doubt, but also to take this opportunity to remind our consumers how to safely handle flour,” said Liz Nordlie, president of General Mills’ baking division.

The lesson here is the average person is no smarter than Harambe and should stop eating raw batter. They should take this opportunity, while projectile vomiting into their toilet bowls, to understand how to properly handle flour.

That is all.

Shares of GIS are flat for the day.

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Stock Market Losses Worsen, The NASDAQIRI Reverses Into the Red

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Many of the defensive names in utilities and REITs are higher today, alongside government bonds (extra TLT). I understand the Fed wants to hike rates. But this should not affect long term government bonds, as long as Japanese bonds keep plunging into deeper negative territory. Treasuries are the new Swiss Bank accounts, a safe haven for large amounts of cash. With more than 2/3rd’s of government bonds donning negative yields, it doesn’t take a rocket scientist to figure out why TLT’s 2.6% yield is attractive to Joanne (née) Billionaire with $300 million to park.

Whether the market is bound to trade higher or lower is immaterial to the seasonal aspects of the market now. Most accomplished traders and investors go on cocaine binges during the summer months, traversing the genteel streets of the Hamptons to La Jolla. No one really knows where markets will end up by Labor Day, nor do most care. The primary goal for asset managers, during summers, is to preserve gains and to survive through the alcohol imbued nights. Live to fight another day, wildly swinging at the markets without a fucking clue in the world.

Interestingly, defensive consumer staples are soft today, with the market lower and bonds higher. This is a notable change in market character, which might be the start of profit taking amongst a consumer staples group trading at historically high levels.

Worst case scenario, markets begin to decline, in earnest, and traditional safe havens drop in sync–leaving investors nowhere to hide but in cash. This is a recipe for true, delicious, disaster.

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