UTILITIES PLUNGE 4%; Hilarity Ensues

I just need you to think this through, just for a second.

Rates are at zero percent and possibly going up by 25bps in a month. Because of that, people are selling their REITs and Utilities today, like rabid fucking dogs, because that 4% yield is gonna see some competition soon?

For fucks sake, TLT is down less than 2% today. In classic Wall Street fashion, everyone is getting so dramatic over the specter of slightly higher rates. Let me remind you: America has $20 trillion in debt. Don’t worry, the Fed isn’t going to raise rates to 5% and bankrupt the country.

I don’t own any REITs or Utes and I probably won’t buy any on this dip either. I do recall, however, REITs getting slammed to hell a few months back on the same concerns, only to come crawling right back to new highs, months later.

For now, the trade is short commodities, long banks. The yield curve will widen. Banks will rape people on credit card rates; and the market will accept the idea that rates can rise a little at the same time as Apple can still sell iPhones and people can still watch Netflix and take medicine and buy cars.

For fucks sake, I am surrounded by morons.

You do realize the fuckery that this market thrusts upon you, yes? It literally wants to make you a bad person, rooting for your neighbors to lose their jobs, pray that the minimum wage isn’t raised, and hope for loopholes to be created so that corporations can avoid paying U.S. taxes.

Fuck what the market is saying today, down 30 NASDAQS and looking ominous. Two hundred and seventy one thousand jobs were created last month. The unemployment rate is at 5%. Raw commodity prices are dropping. The dollar is rising, effectively increasing the buying power for all Americans and making our real estate super attractive to foreign buyers.

Regional banks are soaring. My largest bank holding is SBNY.

I’m bullish on these numbers and couldn’t care less if the Fed hiked in December, all things considered. It affects me not. Moreover, I can’t think of a better scenario for the U.S. consumer than a booming jobs market, heading into the holiday season.

Stocks should be bought.

Fuckery at its finest. Citi now joins a chorus of Fed hike cheerleaders, in what could only be described as “well, shit, that didn’t work, so let’s try this.”

“The growing size of household holdings of interest-bearing assets has reached the point where the ‘permanent’ income gained from sustained higher interest rates has a material impact on expenditures,” Lee asserted. “Consequently, if interest rates rise by one percentage point, this could boost the household income by $170 billion (i.e., $256.2 billion to $85.4 billion) and consumption by 1 percent.”

In other words, this analyst no longer believes in the ‘wealth effect’ of higher stock prices, which was crammed down our throats for the past 5 years. Now, he believes higher rates will enable old fuckers with CDs to save more; hence, they’ll be able to buy more wheeled chairs, for cash, money.

Yellen must have a fucking hard on after reading these numbers.

October Nonfarm Payrolls 271K vs 181K consensus; Prior revised to 137K from 142K

October Hourly Earnings +0.4% vs +0.2% Briefing.com consensus; Prior 0.0%

The unemployment rate is at 5%.

These are the best numbers of 2015, which is sure to cause investors to believe the Fed will hike rates in December. The dollar is spiking hard, up 1.25% v the euro. Futures aren’t really moving too much, which is suspect as fuck.

UPDATE: The market is pricing in a 74% chance of a Dec rate hike.

It appears the bullshit payment traansaction company is going to have its first down round. But don’t worry about their awesome VC investors. They’ll be taken care of.

The investors, including the private equity firm Rizvi Traverse and an arm of JPMorgan Chase, will benefit from a provision they negotiated that is known as a ratchet. Increasingly common in startup financings, ratchets are promises that investors will be issued additional shares if the company’s IPO prices at a disappointing value.

In Square’s case, investors bought $150 million of stock last year at a price of $15.46 per share, giving the company a reported valuation of $6 billion. What the numbers didn’t show was that investors had secured provisions to significantly limit their risk of losing money.

Now, if the IPO doesn’t translate to 20% gains for these late-stage investors, Square has promised to issue them enough additional shares to create that return, the filing shows.

The provision is buried in a single paragraph deep into the IPO prospectus. If the IPO prices below $18.56 per share, the ratchet will be triggered, the filing says.

The fuck? It must be good to be a banker.

It looks like Square’s IPO filing places the proposed valuation at around $4.1 billion, well under the private value of $6 billion. Dollars to donuts says it trades even lower once public.

Ahead of the most important economic data of the year, the jobs report, Jeff Gundlach is shooting his trebuchet at the Fed, trying to reason and teach mathematics and philosophy to a classroom of orangutans.

DoubleLine Capital co-founder Jeffrey Gundlach, widely followed for his investment calls, warned on Thursday that the U.S. Federal Reserve should not raise rates in December as economic and financial conditions have become vulnerable.
Gundlach said the Goldman Sachs Financial Conditions Index shows the market has already tightened for the Fed as the index sits at its worst level since 2014 and the Great Recession.
Gundlach, speaking at the Inside Fixed Income conference, also cited trailing earnings, which are not trending in the right direction. It also appears “the dollar has started another leg up,” he noted.
The biggest reason the Fed should not raise rates is the implied inflation rate in bond market pricing, he said. Implied inflation for the next two years is “darn near zero,” said Gundlach, whose Los Angeles-based DoubleLine was overseeing $81 billion in assets under management as of the end of the third quarter.
“Junk bonds are signaling with clarion bells: Do not raise interest rates,” Gundlach said. Excessive issuance of covenant-lite debt is yet another sign of danger in the credit markets, he added. Junk bonds should be sold on strength, he said.
If oil stays below $50, downgrades will come to the investment-grade bond market, he said

That last line is the most important. Any person in this market knows that there is debilitating deflationary pressures out there: fuck the jobs market. Take a look at prices and whole industries being ruined before your eyes, as the Apple-Amazon vortex of deep deflation makes its way to a shopping mall near you.

Anyone who is calling for a Fed rate hike is 99% bearshitter, 1% human being. Logic doesn’t exist in the Fed rate hike camp, with the U.S. oil and gas industry in tatters, and a $100 billion debt crisis looming in the on-deck circle.

Fed hikes: dollar rages on, oil crushed, $100 billion in debt goes kaput: panic and tragedy strikes Wall Street 2008 style.

Related: Double Line Capital just reported its 21st consecutive month of inflows, currently managing over $50 billion in assets.

It’s like they took the analysts who issued reports on SHAK, skulled fucked them, then threw them down a flight of stairs, lined with mustard, and then tossed hamburgers at them.

Here are the results, which were much better than what I expected.

Shake Shack prelim Q3 $0.12 vs $0.07 Capital IQ Consensus Estimate; revs $53.3 mln vs $47.27 mln Capital IQ Consensus Estimate
Shake Shack sees FY15 revs $189-190 mln from $171-174 vs $180.33 mln Capital IQ Consensus Estimate; sees FY16 $237-242 vs. $228 mln consensus

Huge numbers. I cannot stress to you how good these numbers are and what it means for the stock. The bear case has been demolished. Barring some sort of fucked up cosmic event, SHAK should rain down a serious pummeling onto the faces of short sellers tomorrow, scorched earth motherfuckers (extra Les Grossman).

I’m like the Hamburglar from the 80’s, only for SHAK. I know the stock is expensive, trading over 13x sales. For a restaurant stock, it’s fucking expensive as shit. But, I’m a huge fan of restauranteur Danny Meyer and love his vision with Shake Shack. Many of you will disagree with my boldness in SHAK, on a multitude of reasons. Let me be clear, I am not immune to the dangers of earnings. One slip and SHAK is in the 20’s, where I will take the role of a Victorian gambler and execute a martingale trade.

Some thoughts heading into the close, ahead of earnings.

Sixty four percent of the shares are sold short.

BEWARE of another secondary offering.

Co raised guidance last qt to $171-174 mill for year. Look for that number to rise. The street is at $180 mill.

For this quarter, consensus is for a profit of 7 cents with revenues of $47.2 mill.

I think anything north of $52 mill in sales for the quarter and guidance above $180 mill will make the stock spike $10. Like I said, if they miss, elevator cables will be cut and the stock smashed to pieces.

Happy Trading!

Ralph Lifshitz aka Ralph Lauren stepped down as CEO a short while ago. People started to speculate that it would mark the bottom in the stock, as the new CEO would be permitted to sheaf Ralph’s golden calves, pet projects that cost the company a fortune.

This latest quarter, just reported, was a gem, making new CEO Stefan Larsson look like a fucking genius.

The New York-based company has been reorganizing its business this year to cut $110 million in annual costs to combat weaker sales. A new CEO, Stefan Larsson, begins leading the company this month. He replaced founder Ralph Lauren, who will stay on with the company as executive chairman and chief creative officer. Larsson previously worked at Gap Inc.’s low-priced brand Old Navy and before that, H&M.

Ralph Lauren reported fiscal second-quarter net income of $160 million, or $1.86 per share. The results topped Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $1.73 per share.

Revenue slipped 1.2 percent to $1.97 billion, beating the $1.95 billion analysts expected on average, according to FactSet.

In the current quarter, which includes the important holiday shopping season, the company said it expects revenue to rise up to 2 percent from the previous year. Analysts expected revenue to rise about 1.4 percent to $2.04 billion.

This is one of the former premier retailers in the space. It fell on hard times, as fashion is very fickle. However, it appears the new CEO is fixed on cost cutting, which should boost earnings and attract institutional investors.

As an aside, for those of you unfamiliar with the front page picture and why such a maniac is clad in polo clothing, in front of a Ralph Lauren flag, like some sort of ISIS devil, but for the love of fashion instead of head cutting.

Back in the 90’s, in Brooklyn, there was a gang called “Lo Life’s”. I used to see these criminals traveling in packs of 30, ransacking Macy’s RL section. They prided themselves for their Polo garments and would regularly rob people for their Ralph Lauren outer-garments. It was like a mob of violent criminals, hell bent on acquiring and collecting Ralph Lauren clothes, which is part of the reason why Ralph once publicly lamented over ‘urban people’ wearing his clothes.

Poor Lifshitz, he changed his name to sound waspy and thought his clothing would be worn, exclusively, by yacht traveling 1%ers. Little did he know it would be hijacked by ‘urban lads’, embraced and resulted in wanton criminality, including murders, all for the love of that little man atop his horse.

I always knew this stock was too good to be true.

Apparently, the company is operated by a 29 yr old rabbi, whose previous job was in a Bronx synogogue serving 50 people. This market is so fucked up.

Sinclair Upton STRP Report-Nov 2015

The stock just hit $50 a short while ago. Now it’s under $15, dropping fast. This motherfucker is taking the straight path lower (sorry, I had to).

Here are the institutional holders (good job, JP Morgan).