Pricing Power is BACK

Rio Tinto plc (ADR) [[RTP]] is looking to jack iron ore prices by 40%, according to recent reports. Your iron ore plays are Rio Tinto plc (ADR) [[RTP]] , [[VALE]] and BHP Billiton Limited (ADR) [[BHP]] . Producers of  iron ore pellets include United States Steel Corporation [[X]] and Cleveland-Cliffs Inc [[CLF]] . However, in addition to that, this means pricing power is coming back to the commodity space. Look for those costs to get passed down the line, all the way down to you—the retail dipshit.

Based upon the return of pricing power, throughout 2010, I favour [sic] the entire iron/ore/steel sector. Names like POSCO (ADR) [[PKX]] , AK Steel Holding Corporation [[AKS]] , Nucor Corporation [[NUE]] and United States Steel Corporation [[X]] are names that will be bought aggressively, as the world economy recovers. Naturally, these names are subject to wild price fluctuations. Nevertheless, it’s worth noting the real time changes in the industry are looking increasingly, and might I add exceedingly,  positive.

NOTE: Analysts predict record steel demand in 2010 (35% yoy increase). I believe that is the biggest one year jump ever. However, don’t quote me on that. I read a lot of research and for some reason that stuck in my head.

SPY and PPT correlation. Typically The PPT would push down below 2.30, prior to a market melt-up. Needless to say, this rally is still suspect.

At the close of trading, some of my favorite longs were Masco Corporation [[MAS]] , Cummins Inc. [[CMI]] , POSCO (ADR) [[PKX]] , Nucor Corporation [[NUE]] , TEKELEC [[TKLC]] , SandRidge Energy Inc. [[SD]] , Green Mountain Coffee Roasters Inc. [[GMCR]] , Ctrip.com International, Ltd. (ADR) [[CTRP]] , Wimm-Bill-Dann Foods OJSC (ADR) [[WBD]] , [[CBD]] and Corinthian Colleges, Inc. [[COCO]]

You cocksuckers are getting what you deserve: capital losses. For months, you bearshitters have been twiddling your mustaches, plotting to take this market down. Over the past two weeks, as the market fell, you made preposterous youtube videos and posted prolifically on twitter—warning assholes who are just like you to “SELL NOW” and “re-enter the FAZmobile.” You stockpiled on rice and beans and instructed your wife to “stop spending money” on “unnecessary items,” proclaiming “the end is here, darling.”

Much to your wife’s chagrin, you are a fucking idiot, with little knowledge of anything outside of grand conspiracy theories. You are not qualified to invest money, just like retards are not qualified to drive school buses.

See pal, “The Fly” has the patience of an elephant, not the homo GOP variety, but an elephant nonetheless.

For the day, I am up more than 2.5%, mainly thanks to the men at Cummins Inc. [[CMI]] —a place where real engines are built—not that pussy shit in Europe or Asia.

In short, we’re rolling downhill now and the next phase of this market will involve outrageous short squeezes.

Poisition yourself accordingly.

Despite my enthusiasm and desire to see higher stock prices, I am not buying here. I am 90% invested long and have no desire to allocate the rest of my cash into stocks here. Perhaps if we dipped another 5%, I’d be willing to step in. However, for now, I’ll just sit back and watch this fuck of a market, with my 3-D glasses on.

In pre-market activity, Cummins Inc. [[CMI]] and Corinthian Colleges, Inc. [[COCO]] were ripping to the upside, based upon better than expected earnings. Now that the market is open, both stocks are selling off in size. Cocksucking, motherfucker.

At any rate, the news out of Cummins Inc. [[CMI]] is extraordinarily bullish. I will buy that stock on any dips. And, moreover, I shall go “loco for COCO” on stupid sell offs.

Bottom line: Do not react too quickly to minute by minute market machinations. Take your time. Eat sandwiches and let the Gods guide you over a longer period of time than your small ADD addled mind is accustomed to.

Top picks: Ctrip.com International, Ltd. (ADR) [[CTRP]] , Cummins Inc. [[CMI]] , Nucor Corporation [[NUE]] , Masco Corporation [[MAS]] and TEKELEC [[TKLC]]

Betting against “The Fly” is pure madness.

Two of my top 5 positions with monster better than expected earnings results, indeud.

Corinthian Colleges, Inc. [[COCO]]

COCO Corinthian Colleges beats by $0.04, beats on revs; guides Q3 revs and EPS above consensus; raises FY10 EPS and revs guidance (14.34 ) Reports Q2 (Dec) earnings of $0.44 per share, $0.04 better than the First Call consensus of $0.40; revenues rose 30.2% year/year to $414.3 mln vs the $404.5 mln consensus. Total student starts were 29,156 versus 26,334, an increase of 10.7%. Co issues upside guidance for Q3, sees EPS of $0.45-0.47 vs. $0.44 consensus; sees Q3 revs of $470-480 mln vs. $431.03 mln consensus. “We expect new student growth in Q3 10 of 6% – 8% compared with the third quarter of the prior year. This expected growth rate includes Heald on a pro forma basis. Excluding Heald from the Q3 09 base, but adding Heald students for Q3 10, the projected growth rate would be 18% – 20%.” Co raises guidance for FY10, sees EPS of $1.63-1.68 vs. $1.59 consensus, up from $1.55-1.60 previously; sees FY10 revs of $1.74-1.76 bln vs. $1.66 bln consensus, up from $1.62-1.64 bln previously. “We continue to expect new student growth in fiscal 2010 of 11% – 13% in fiscal 2010 compared with fiscal 2009. This expected growth rate includes Heald on a pro forma basis. Excluding Heald from the fiscal 2009 base, but adding Heald students for fiscal 2010, the projected growth rate would be 17% – 19%.

Cummins Inc. [[CMI]]

CMI Cummins beats by $0.60, beats on revs; guides FY10 revs above consensus (46.94 )
Reports Q4 (Dec) earnings of $1.36 per share, $0.60 better than the First Call consensus of $0.76; revenues rose 3.4% year/year to $3.4 bln vs the $2.83 bln consensus. Co issues upside guidance for FY10, sees FY10 revs of $11 bln vs. $10.23 bln consensus. The co’s fourth quarter results were driven by continued strength in China, India and Brazil, along with a significant increase for on-highway truck engines and components in North America in advance of new emissions standards that took effect at the beginning of 2010… The increase in truck engine and components sales in the United States during the fourth quarter was largely the result of OEM customers buying 2009 engines in advance of the EPA emissions regulations, which took effect on Jan. 1, 2010. Based on current orders and forecasts for the first part of this year, North American truck and bus engine shipments could fall by as much as 80 percent in the first half of 2010, compared to the second half of 2009. This translates into a 50 percent drop in externally reported revenue for heavy-duty truck and medium-duty truck and bus in the first half of 2010 compared to the second half of 2009. That weakness also will affect the Company’s components businesses, although higher Cummins component content on the 2010 engines and improved truck sales in emerging markets will partially offset this drop in demand. In addition, the Company is expecting its Power Generation business to perform at levels consistent with 2009. This late-cycle segment bottomed out in the third quarter of 2009 but has yet to resume strong growth. The weakness in these segments will be offset by continued strong growth in the Company’s distribution business and further improvement in China, India and Brazil. Cummins also expects to see growth across all its business segments in the second half of the year, compared to the first six months.

Source: Briefing.com

I will not brag about my wins today. Instead, I will relish my stay of execution, as if it was my last day to live. Tonight, I shall celebrate and eat like a king. Crabs, lobsters and steaks for everybody, served on golden trays, garnished with 24k gold flowers. At the Casa de Fly, champagne flutes will overflow with Armand De Brignac and cuban cigars will be passed out, as if they were $1 bills.

God willing this rally will continue, allowing yours truly to recapture lost coin. However, I will not rely upon mere “luck by occasion.” Like I said earlier, I will use this rally to upgrade my portfolios with higher caliber equities. Stocks on my “to buy list” include: Nucor Corporation [[NUE]] , Cummins Inc. [[CMI]] , POSCO (ADR) [[PKX]] , [[CBD]] and Masco Corporation [[MAS]]

Ten thousand men, dressed in burlap dresses, stood at the edge of a preposterous mountain cliff, readying to do battle with several million patriots of humanity. Then, all of a sudden, my IT guy (Vincenzo) crashed his horse drawn wagon into what looked like a wall of burlap. A tremendous accident indeed, as 100 barrels of pure 100% extra virgin olive oil—rummaged out from the back of Vincenzo’s wrecked wagon—spilling all over the “Burlap Princes of Darkness.” The ground became so slippery, they began to fall on top of one another. All you could see was the sparks from the burlap dresses crashing with one another. The friction became so intense, a fire broke out, which was, shall we say “stoked nicely,” by all of the excess extra virgin olive oil massed on the ground. The fire spread rapidly, as Vincenzo looked on in horror, while eating a french baguette drenched in gravy.

Top picks: Nucor Corporation [[NUE]] , POSCO (ADR) [[PKX]] , Cummins Inc. [[CMI]]

Fuck you Mother Market. I will not be hoodwinked into believing that this is the bottom, not today. As much as I believe a beleaguered Greece is an absurd reason to sell stocks, people want a reason to sell—just because.

Nevertheless, I remain 90% long, into the teeth of this decline. I’ve given back all of my early 2010 gains and will allow for another 5% of downside, before doing some wholesale selling and/or initiating some short positions. If I were to short stocks, I’d target weak CRE names.

Should the market bounce here, I will look to sell some of my weaker names, in order to raise cash and/or add to higher quality names that now trade at a discount.

Bottom line: You should not be delving into low quality, small cap names down here. Like I mentioned several weeks ago on The PPT, now is the time to GET BIG and bulk up on big cap/ high quality equities, not Chinese lotto/fucking retarded gambling names. If the market dives, you will not get “napalmed” in big cap, only slightly destroyed. However, if this pullback is for real and you have a portfolio filled with small cap bullshit, you will get wiped the fuck out. No joke. Do yourself a favor, pal, GET BIG or get out.

Peter Rotesque was a 40 something year old wall street professional, with big plans to expand his burgeoning career, catering to the super wealthy. He lived in an atypical upscale suburban community. He had 4 cars, 2 homes, 1 boat, 4 kids, 1 wife and 1 mistress. His work ethic could only be described as “obsessive psychotic,” where he was a partner at an up and coming NYC investment bank, overseeing and cracking a stiff whip on an underpaid and brazenly disloyal staff of 25. Everything was fairly straightforward with Peter, with exception to one major character flaw: aside from Peter’s obsessive work ethic and infectious charm, Peter was also a fiery kleptomaniac aka “great collector of other people’s things.”

It all started one day, while at a business meeting. His devout client, Bradley Hamlargular, of 20 years had met him for lunch at The Four Seasons restaurant in NYC. While discussing a multi-million dollar deal over $25 quail egg salads, Bradley politely excused himself from the table for exactly 4.5 minutes, so that he might relieve himself inside of the Four Seasons bathroom. In a mistake that can only be described as “unfortunate,” Mr. Hamlargular left his prized Grayson Tighe Limited Edition rollerball pen on the table— with Mr. Rotesque as its primary caretaker until he returned.

To be continued…