The Airlines are Fixing to Bankrupt Themselves Again

The airline stocks haven’t been doing shit this year, despite the price of jetfuel plummeting to lows.  Part of the reason is Americans hate the airlines, always have and always will. We select the cheapest fare and lament over waiting in the 3rd world styled airports, amidst insane delays and ridiculous cancellations. In a sense, our air travel industry is the very worst this great country has to offer, which is why we have ZERO loyalty to any brand.

“Given that 50 percent of our revenue is up for grabs in these markets and that these carriers have had so much success when they weren’t matched, we know that we have to match their fares,” Kirby said. More than a quarter of American’s domestic capacity overlaps with Spirit’s, he said.

The fare bargains are causing a bit of an existential crisis among some who had turned bullish on the consolidated industry. Does the world’s largest airline need to join a race to the bottom to lure the most price-sensitive customers? United and Delta aren’t matching the cheap fares to the same degree.

And were Spirit executives foolish to think they could expand their flying 30 percent in 2015 without sparking a fierce backlash from rivals, at a time when cheap fuel is helping bolster American even more than others in the industry? American doesn’t hedge its fuel needs, meaning it hasn’t paid above-market prices this year or last, unlike its three largest rivals. That financial benefit has soared into the millions.

Florida-based Spirit is now “our No. 2 competitor” at Dallas-Fort Worth International Airport, with 25 nonstop routes—more flights than Delta or United, Kirby said. “In those 25 routes in Dallas that Spirit flies, they have 20 percent market share, huge market share,” he said. In Chicago, where American has a hub, Spirit has 60 daily flights to 24 cities.

As a result of Spirit’s low fares, American plans a new, no-frills fare in 2016, much as Delta devised “Basic Economy” as a way to match Spirit in competitive nonstop markets. American declined to discuss specifics of the new economy fare.

More broadly, the bare-bones fare innovations at Delta and American are the latest permutation in legacy airlines’ decades-long effort to combat the rise of low-cost rivals. In the early 2000s, after the vaunted “Southwest effect” had begun lowering fares in major markets, legacy carriers turned to an “airline-within-an-airline” model, with a goal of flying a lower-cost airline alongside their mainline operations. In 2003, Delta started Song and United followed not long after with Ted. Both flew only briefly.

I bought Centene. I have little regard for the industry and I’m not a fan of our moronic healthcare system. Nevertheless, this stock should work, as they rip their way through the middle and lower classes of American society, further ingratiating themselves with the lavish lifestyle God demanded that they have.

I have no fucking idea why I thought these two piece of shit dogs were going to trade up. Maybe I got caught up in the moment and it passed and I held to long (obviously). I just sold out of SLCA and CNX for big percentage sized losses. I am going to state a singular silver lining, which also happens to be the biggest crock of shit: they were both small positions.

So fucking what? Small positions that nibbled away at my essence each and every day. CNX reported earnings this morning and they’re fucked. SLCA is down in sympathy of EMES and HCLP, with one of the two getting slapped with ZERO dollar price targets. The frac sand market is dead. I knew that, but held on for a “trade.”

Do you know what happens when you buy a stock, that you know is a piece of shit, but want to squeeze a fucking trade out of it?

THIS HAPPENS

Spy futs -5, Europe lower by 0.6%, oil -2%, gold -0.3%, dollar flat; FUCKED

Higher

Earnings nonsense: IDTI +9.5% (made a bullshit acquisition), BABA +8.5%, ASC +6.9%, EW +6%, SAVE +5.4%, AGEN +5.2%, CNC +5.1%, COH +4.9%, PCRX +4.8%, ROSG +4.4%, MGLN +4.2%, AGII +3.7%, BMY +3.6%, PAH +3.4%, ONE +3.2%, PFE +2.8%, UTHR +2.8%, YNDX +1.8%, MDSO +1.7%, CIGI +1.4%, MRK +1.2%, TXT +1.1%, BP +1.1%, .

Mergers and Executions: PRSN +166.6% (Some moron is buying this company), TRIV +55% (acquired for $9.10 by ELGX), RIVR +29.6% (The Germans are buying this for $9.90)

Chinese lottery winners: WBAI +5.6%, JD +4.7%, DANG +3.5%, JMEI +3%, BIDU +1.9%

Random horseshit: UQM +24.6% (China pyramid scamming, most likely), ASTI +18.2% (mapping for Mars. Talk about horseshit), CYTK +13.9% (rubbish), SBBP +9.2% (RA Capital Management discloses 12.7% passive stake in 13G filing–these guys are boss), SHPG +5.6% (phase 3 stuff), AGEN +5.2% (more biotech boredom ), YHOO +5.1% (riding BABA dick), PBMD +3.3% (fucking biotech), LOOK +2.8% (don’t bother), RMBS +2.5% (100mill buyback), TWTR +1.7% (IBM announces collaboration with Twitter and The Weather Channel), TASR +1.6% (Baltimore body cams-Reuters) AA +1.3% (CRAMER PUMP)

Analyst HORSESHIT: VMW +1.8% (upgraded to Heroin from Hold at Drexel Hamilton)

Lower

SHAMEFUL earnings: HCLP -21.4% (sand sucks), RRTS -18.5%, KN -13.8%, MSTR -13.2%, GIGA -13%, CMI -8.8%, AMKR -8.1%, ALSN -6.1%, CAKE -5.8%, HIG -5.8%, ERI -5.7%, FDC -5.7%, IACI -4.3%, CAJ -4.2%, UPS -3.9%, IPGP -3.8%, JBLU -3.3%, NVCR -2.8%, AGNC -2.7%, SWFT -2.6%, F -2.1%, CMCSA -2%, CR -1.9%, PCAR -1.6%, ICLR -1.3%

Miners that suck: MT -2.9%, BBL -1.9%, BHP -1.6%, VALE -1.3%

Oil and Gas that suck: SDRL -2.5%, RIG -1.9%, TOT -1.4%, RDS.A -1.2%, HAL -0.6%, SLB -0.5%

Random shots fired: MRVL -20.1% (PWC resigned; super red flag; Einhorn must be cursed), CTIC -13.1% (DILUTION), AAN -7.1% (in symp with RCII), GORO -5.4%, GLAD -4.3% (DILUTION), FDX -2.1% (in symp with UPS), TACO -1.9% (DILUTION)

Analyst comments: DSW -1.9% (downgraded to No Real Opinion from Buy at Sterne Agee CRT), LVS -1.7% (downgraded to Equal Shit at Barclays)

The savage Chinese are undergoing a transition, one that America underwent 100 years ago, from a manufacturing powerhouse to a bunch of consumers prancing around in $300 underwears, buying shit like gluttonous beasts.

Alibaba beats by $0.03, beats on revs; SEC inquiry has concluded with no action
Reports Q2 (Sep) earnings of $0.57 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.54; rev +32% to $3.49 bln vs. $3.39 bln consensus.
GMV transacted on our China retail marketplaces was RMB713 billion (US$112 billion), an increase of 28% year-over-year
Mobile GMV accounted for 62% of total GMV transacted on our China retail marketplaces; mobile revenue was RMB10,520 million (US$1,655 million), representing a year-on-year increase of 183%;
“Growth of our cloud computing and Internet infrastructure business accelerated, with revenue increasing 128% year-over-year to RMB649 million (US$102 million).”
“Our ecosystem continues to thrive. By the end of the September quarter, our annual active buyers grew to 386 million, and mobile MAUs grew to 346.”
Blended monetization rate to 2.42% in the current quarter from 2.30% in the same quarter of 2014.
As previously announced, we received an inquiry from the U.S. Securities and Exchange Commission in February seeking information regarding our interaction with one of our Chinese regulators, the State Administration for Industry and Commerce, and related matters. We voluntarily cooperated with the SEC’s inquiry. The SEC has notified us that it has concluded its inquiry and, based on the information it has received, it does not intend to recommend an enforcement action against us.

Jack Ma and his Alibaba family of websites are providing the Chinese with an easy to use portal, whereby he is able to extract all of the people’s savings–something that has been nearly impossible to do until now.

Unlike their American counterparts, the Chinese don’t usually spend a lot of money, opting to save it for the next 100 years instead. Thanks to technology and the infiltration of American culture, they too will succumb to our corporate hegemony, effectively opening a grand avenue for our corporations to exploit.

In other words, the Chinese economy can’t be all that bad with these sort of numbers out of BABA.

Bears will certainly feel some pressure now, as Bill Ackman doubles down and defends his $3 billion position in VRX. If there’s one thing, above all, that Bill does best, it’s tooting his own horn and talking his book.

Well, now the stage is his and the whole world will be listening.

Valeant Pharma: Bill Ackman and Pershing Square will host an investor conference call on October 30 at 9 AM ET to discuss their investment in VRX

VRX is up 4% in pre-market. For the record, I believe Ackman wins in this PR Battle Royale.

WWF styled shit, soap opera world.

The commodity unwind continues, in earnest, as oil, iron ore, copper, natty spiral into the black death created by the maniacs in Beijing. You have to look at this in perspective. This isn’t a normal unwind, mind you. The Chinese were seeking out raw commodities with an unbelievable appetite, until their party ended.

Ore with 62 percent content delivered to Qingdao lost 1.1 percent to $51.03 a dry ton on Monday, the lowest since July 16, according to Metal Bulletin Ltd. The raw material — which bottomed at $44.59 on July 8, a record in daily price data dating back to May 2009 — is headed for the first monthly loss since July.

The renewed decline shows that the global market has yet to reach a balance as the biggest miners boost cheap output while steel consumption contracts in China. Rio Tinto Group and Vale SA reported increases in quarterly supply this month as data from China showed slowing economic growth and a further drop in steel production. With many mills in China losing money as steel prices languish, Shanghai Baosteel Group Corp. Chairman Xu Lejiang has forecast nationwide output may eventually slump 20 percent.

Basically, Chinese demand caused incompetent and greedy execs to ramp up and leverage out their businesses in order to profit from this new, magical, customer. We all posited that somewhere in China was a warehouse with all of that fucking copper they had been buying. There was no way anyone could be so crazy, as to stockpile raw materials at the rate they were a few years ago.

Well, now that the magical customer ran out of dough, all that’s left is a bunch of  retarded Aussies with their dicks in their hands, wondering where to store all the excess supply.

Like the current oil glut, this gets resolved one way, and one way alone: BANKRUPTCIES.

There are people who believe the normal business cycle cannot commence until the Fed raises rates. The theory is that once money isn’t free anymore, lots of losers will be flushed out and the winners will eat the weak, paving the way for a healthier economic environment. Admittedly, this is an appealing scenario, one where 70% of the idiot oil, copper and iron ore companies dissolve, correcting the over-supply situation, effectively establishing a firm bottom in the commodity sector.

Thoughts?

First, let me preface this article with a few facts.

David has had a rich career investing for others. So rich, in fact, he’s a billionaire. Also, he’s probably one of the most down to earth guys you’ll ever talk to, considering his net worth and personal achievements. So I am not posting his losses in order to feel better about myself or point fingers and laugh “look at that guy.” Please. We’ve all been there, myself included. You get in a rut and it just seems like the world is working against you, every step of the way.

According to recent filings, here is Greenlight’s top 3 holdings.

I actually own 2 of those 3 stocks and completely understand why he bought them. He’s a value guy, with a large amount of money to manage, which makes his selection process limited to a small group of stocks. My only question is, how did he permit these stocks to trade down over 50%?

Answer: passive investing.

Passive investing has worked wonders for lots of smart people for a long, long time. One could argue that the law of averages caught up to David and now he is enduring what so many have before him, while he was basking in his green light. As a student of the market, I am much more interested how great investors fall off track. We all know the great success stories and how Warren Buffett became a billionaire from the confines of his tub, while drinking cherried coke. But we don’t really pay attention to the failures, since we’re more interested in mocking them–pretending that it could never happen to us.

His most recent filing declared a position in KORS, another dog, down big for the year. It will be interesting to see if he could dig himself out from the 17% hole he’s in right now.

Timothy Cook, CEO of the largest corporation to have ever graced the planet (or since the anunaki mining conglomerates 400,000 years ago), wants to remind you that he is still very much gay, single, and looking. I am sure he will elaborate on his sexual status during tomorrow’s conference call, one which will be more decisive for market sentiment than the Federal Reserve, led by Ms. Yellen.

Markets traded down today and natural gas plunged by fucking 9%, decapitating my CNX position. To think I made a good entry at $11, being that Einhorn bought it 65% higher. WRONG. It appears everything David touches turns to dust. All of the legacy “hot shot” fund managers are having their comeuppance this year. It should be noted that this market is hard, even for Wall Street’s finest. Those finest, as you well know, never touch upon the confines of iBankCoin, a destination whose founder is up more than 17% this year–a year when most are being placed inside of the shredder and fucking disintegrated into thin air.

My largest positions are COST, TWTR and SHAK. I pared down my GILD position towards the end of the day, after another big Señor Tropicana win.

Indeud.

My natural inclination is to find stocks that haven’t been discovered by everyone. My gene pool must derive from some gold mining fool, who traveled to the end of the earth to find treasure. Instead of treasure, he was likely eaten by a jaguar and never heard from again.

I bought COST.

I bought it because the valuation is the most expensive in a decade, on a p/s, p/b and p/e basis. Also, it’s a widely held stock near its 52 week highs. Worst case scenario, I waste a little time inside of one of America’s premier retailers.

It should be noted, I was somewhat attracted to its November seasonality statistics, so perhaps this trade is tainted and not entirely the opposite of what I wanted.

Fuck. What a conundrum.