The Wall Street-Chipotle Love Affair is Over

After the close on Friday, Chipotle slashed numbers due to ecoli concerns. I warned that the brand was in the proces of being McDonald’d. After viewing the sheer, unadulterated, hatred in CMG’s analyst reports this morning, it’s safe to say the love affair between the burrito clowns and Wall Street is over.

Here is a summary of this morning’s notes.

Chipotle Mexican Grill: Color on warning following E. coli incident

Maxim Group lowers their CMG tgt to $495 from $585 as the scope of the E. coli outbreak has expanded to more states. Late Friday, management warned of negative 4Q15E (December) comps and withdrew comp guidance for 2016E after the Centers for Disease Control (CDC) warned earlier in the day that the E. coli outbreak had expanded to three additional states. They now believe that a return to positive comps is unlikely before 2H16E, and they argue that heightened top-line uncertainty and higher compliance costs warrant a further reduction in multiples.

RBC Capital Mkts lowers their CMG tgt to $575 from $825 reflecting the impact of the recent E. Coli outbreak. Firm’s new base case assumes a back-half weighted sales recovery in 2016. However, in a downside scenario firm foresees a high-single digit SSS decline, with a modest rebound in 2017.
Guggenheim downgrades to Neutral.

Cowen downgrades to Market Perform

CMG is off $50 in pre-market trade, or 9.1%.

The biotech variety show continues. The jokers at Morgan Stanley upgraded BLUE on 10/5, affixing a price target of $143 to it. Tonight, after some hard data was revealed, that showed BLUE to be nothing more than a devlopmental piece of shit, the spazzes at MS downgraded them in a mea culpa report, slashing the target to a clowish $69.

Why $69?

Because everyone gets fucked that way.

Why bother posting more? All drivel.

Stick to names like AMGN, GILD and EW– avoid the glorified research labs like the plague.

I can’t believe what I just witnessed, the President of the United States, who, by the way looks like complete shit, giving a speech to the American people talking about how Muslim Americans are our friends and how the 16 mo plan against “ISIL” is working.

Fuck, really?

80% of U.S. sorties return without dropping ordnance because of the strict rules of engagement he has imposed on ISIS targets. We haven’t taken out their oil wells, which funds ISIS to the tune of $1.5 mill per day (fuck you very much Turkey), because of environmental concerns.

Really.

Ahead of a scheduled black tie event with his Hollywood friends, Obama offered the American people a solution, to make sure people on the no fly list cannot buy a gun.

I am not kidding.

It’s worth noting that the killers from San Bernardino were not on the no fly list.

Lastly, he chastised us to “stay true” to American ideals, as if we were all morons from W. Virginia, explaining to us how 99.9% of muslims are good and how ISIS is nothing more than thugs, criminals and do not represent islam.

Seriously?

The fuck.

Twitter is buzzing this morning after AG Lynch said Obama’s address to the people this evening will focus on ‘protecting’ the American people, by possibly stripping them of their guns. Personally, I live in an area that will imprison you for 5 years for carrying an unlicensed firearm. Right across the NJ-PA border, which is 5 minutes away from me, you can carry all of the guns to your heart’s delight. I’ve read numerous stories of folk accidentally carrying their firearms over the PA border into NJ and getting hammered with a mandatory 5 year ass rape jail sentence.

That’s fucking retarded.

State’s rights are super important, but not when they’re designed to ass rape the American people.

Back to AG Lynch: her staff confirmed her double-speak meant he was going to ask Congress to act.

She also said that he’ll speak on the actions the United States has taken to keep the homeland safe since the attacks in Paris last month. But there will be an element of politics to the speech.

President Obama will do more than just call for calm, he will ask “Congress to review measures and take action.”

Lynch’s staff later confirmed that the president will specifically call on Congress to review certain gun control measures.

As an aside, the morning after th San Bernardino massacre, AG Lynch was out worrying about speech that “edges towards violence” against muslims. Again, there’s nothing wrong about wanting to protect persons of this country, who happen to be muslim, from fantical nutjobs seeking to hurt them.

“Now obviously this is a country that is based on free speech,” she said. “but when it edges towards violence, when we see the potential for someone lifting that mantle of anti-Muslim rhetoric or, as we saw after 9/11, violence against individuals… when we see that, we will take action.”…

“I think it’s important that as we again talk about the importance of free speech we make it clear that actions predicated on violent talk are not America. They are not who we are, they are not what we do, and they will be prosecuted,” she concluded.

However, it does show you where the minds are with the people in the administation. Their focus is on rules, restrictions and control of the American people. It’s okay for us to smoke bowls of marijuana–because that makes us doscile. The term “hate speech” can be stretched wide and far by an overzealous AG. Just don’t get in the way of the President’s trojan horse immigration plan for Syrian ‘refugees’, else you too might be considered a person of interest and tossed into a gulag for an indeterminate amount of time.

Also, the IRS is watching.

Hahaha, this shit is too funny. Enjoy your freedoms.

A lunatic in London slashed 2 people and stabbed another yesterday, then began screaming and raging inside of the Leytonstone tube, shortly before police tasered him and made him shut the fuck up.

The standoff occurred around 7pm last night and left one man with serious wounds, while two others suffered minor injuries.
Witnesses said that until police arrived, the knifeman, 29, attacked people at random for up to ten minutes screaming: ‘This is what happens when you f*** with mother Syria. All of your blood will be spilled.’

After reportedly slashing his victim’s throat, the man allegedly threatened several other passengers before being confronted by a number of unarmed police officers.
Despite officers ordering the man to drop his weapon, he continued to wave the large knife. One video shows the man lunge towards the police, with witnesses shouting ‘he’s stabbed someone’.

This moron isn’t likely to have a connection to a terror cell. Or, maybe he does, since terrorists are inhenrently stupid, by design. Nevertheless, it’s just another example of the stupidity of man, wasting time and energy on being destructive.

Thank god our weapons are more destructive than theirs. Thank allah that our civilizations are 1,000 years more advanced than theirs and they’ll never be able or permitted to build a standing navy or fly an aircraft that can reach us.

In the meantime, we need to be vigilant of the rats that fester inside of our subways and sewers.

I wonder where this lad was coming from, just before he decided to cut someone’s throat?

I almost feel like a child recommending that you watch a super hero movie. But the Nolan take on Batman isn’t like the clownish version of Batman that you and I grew up watching on the teevee.

Nolan made three movies. Although Heath Ledger gave a performance of a lifetime, playing the Joker in part 2, Tom Hardy’s performance in part 3 stole the show. It’s worth noting that the dystopian storyline in part three was the best part of the film, making it a classic must watch movie of all time.

This doesn’t entail all of the sheer fuckery that has taken place with private deals in the investment banking community, only publicly traded debt of companies whose share prices have sunken so far that their debt/eq levels exceed 5x.

When a publicly traded entity is unable to raise capital in the debt markets, due to deteriorating business conditions, often times they’ll use their equity to fill gaps. Back in the financial crisis, banks were mostly able to do super dilutive financings, using equity, to the chagrin of shareholders. If present conditions persist, you are going to see a slew of high profile oil and gas names head into bankruptcy or raise capital via dilutive secondaries.

The following screen is data provided by Exodus, highlighting the fact that there is more than $245 billion in distressed debt. Interestingly, there is an additional $400 billion in debt from companies with debt/eq levels, ranging from 2-4.99.

In other words, this can really get a lot worse if share prices don’t recover soon.

The next question to posit is who has exposure to this debt? Which banks will write it down in 2016?

Yesterday the market hated Draghi and the Fed; today the market loves them. The market allegedly rallied off good jobs numbers today, numbers that are sure to provide the Fed with the excuse they need to raise rates, something stocks have responded adversely to for the past 5 years. As sure as I’m sitting here, come Monday, everyone gets fucked. We remain in a trendless sea of shit, with just one oar to fight against the coriolis forces of the toilet bowl we find ourselves in.

I was stymied by SHAK and PAH today, placing me in the bottom quartile of all long investors in N. America, up just 0.95%. I had a few redeeming stocks today, namely CNC, AAPL, PANW, COST and JAZZ. But, for the most part, my day was uneventful.

Two thousand and fifteen is nearly done and I’ve made 15%, in a tape that can only be described as a “sordid affair of fuckery intermingled with the nefarious ongoings of asshats.”

Talking with clients all day, I can tell you that formulating a strategy for 2016 is hard. On one hand, commodity and retail stocks offer “potential” upside reversals, merely tradable events. On the other are solid companies, like PANW, SBUX and others trading at crazy premiums.

Do you chase the performance and buy the free cash flow, or do you buy what’s being thrown away here, heading into 2016?

Had you done the latter in 2014, you made a mint in the opening month’s of 2015. Either way, this is a hard tape to gauge and I’m gonna play it slow.

In addition to that, I’m working on my GARP stocks in Exodus, a portfolio of 15 stocks that I manage twice per year. The first half picks gained almost 15%. During the second half, my picks underperformed–putting 2015 at almost a wash. The index started the year at $132, got as high as $157, and now trades at $132. I’ll make a greater effort in 2016.

I bought more PAH, despite it sucking the money out from my portfolios today.

My faith in William Albert Ackman is unwavering.

Real delusional talk coming out from the mouth of Draghi this afternoon, while visiting NYC. Obviously, he needed to say something to soothe markets, after yesterday’s disappointment. So, he got his bestest yarn together and knitted up a nice comfy blanket for Wall Street to cover itself with.

“There cannot be any limit to how far we are willing to deploy our instruments, within our mandate,” Draghi said at an event in New York on Friday, a day after announcing a weaker-than-expected stimulus package that roiled global markets. “There is no doubt that if we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would.”

Following the old adage that if you tell as big enough lie often enough, people will begin to believe it, Draghi declared deflation to be dead in the EU.

“This will strengthen our forward guidance on interest rates and ensure that liquidity will remain very supportive in the long term,” Draghi said. “Thanks to our monetary-policy actions, the risk of deflation in the euro area is firmly off the table.”

Markets are eating this shit up, as I’m being proven wrong about the underlying weakness in the tape and will be forced to eat part of my dining room table, as penance for my great sins.

My sole consolation is that I am making money today.