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Morgan Stanley: The Treasury's New Man


Does government know what it's doing?


Hello from New York, where I'm pondering getting the FTC to make the Whole Foods (WFMI) CEO change his name to John "No Relation to Jeff" Mackey as a condition of WFMI's merger with Wild Oats. Candidly, I'm seldom confused with Mr. Mackey. For that matter our names aren't even spelled the same. Regardless, if "sense" were part of the equation the FTC wouldn't be able to keep a straight face while considering, yet again, the notion that merging two beatnik grocery chains in any way constitutes a monopoly. I'm citing both the absurd concessions Sirius (SIRI) and XM Satellite (XMSR) were forced to make and Marvelous Marvin Hagler as my dual legal precedents for my name change demands.

In the meantime, let's repeat the tradable lesson of Whole Foods together: "Specialty Retail is Where Love Goes to Die." Whole Foods broke long ago, Minyans. Trading struggling merchants is like dating strippers; It sounds more fun than it is and it's going to end poorly, most likely before you even get all the glitter off your clothes.

Here's what I'm watching when not making slightly over-sharing metaphors:

  • It's only kind of specialty retail but it is offering pain: CarMax (KMX) is getting dented today after announcing losses in June and noting that it is in the business of selling used cars. As a retail concept I'd place used cars ahead of selling earaches but behind TCBY stands, in terms of fundamental prospects.

  • "The screen is so realistic it's like I can actually feel the money being sucked out of Superfly's college fund!" For what it's worth (NB: "Nothing"), I've initiated a baby long position in Imax (IMAX) ahead of company earnings tonight. It's less a vote of confidence in the company than a vote of cynicism about the economy. Tonight's quarter is anyone's guess (The Dark Knight is still doing huge business but isn't part of tonight's results. My "bright" idea is that Imax works to the larger trend of studios wanting, indeed needing, to create bigger and better experiences to get consumers off the couch. Meantime, the oil, auto and airline industries seem dedicated to nothing so much as making it as unpleasant as humanly possible to travel too far from the couch. Imax is serving the niche' in the middle. A mediocre company in a good position. Of such set-ups are small, wee, elf-sized starter longs made.

  • Terry Woo, Minyanville editor, is asking me if the Treasury hiring Morgan Stanley (MS) to study exposure at Fannie (FNM) and Freddie (FRE) suggests that "The Treasury doesn't know what's going on." Ahhh, Terry, you adorable, unjaded little forest creature of a man. Of course Treasury has no idea what's going on. For that matter, did you see Morgan's quarter? You don't turn in those kind of results when you know what's going on, son. The entire selling pitch of the products which caused this mess was making things so complicated that no one really had a clue. That way we could side-step answers to thorny questions like "how does adding up a bunch of lousy mortgages create a package of good mortgages?"

  • And Terry, at the risk of crushing what's left of your fragile sense of justice in the world; we're A) not remotely through the current financial mess yet and B) about a decade away from the next "8-sigma, statistically impossible" financial crisis which threatens to crash the whole system. Shake it off, son. Why don't you take yourself out to see that new Batman movie at an Imax theater this afternoon. I'm telling you, Heath Ledger is going to be a big star.

  • [Shhhhh... We'll tell him about Heath and the Olsen girl tomorrow.]

  • is offering its typically unbiased, fair and balanced view of Wal-Mart's (WMT) absurd foray into politics. I'm still annoyed by WMT restarting the Grotesque PR Bumbling initiative. I thought it had laid to rest in 2007 but the stock's 52-week high is keeping me from getting too worked up about it. So, instead of carping I'll offer Bentonville's Finest some free advice on my way out the door: Take it from a guy working in the "Belly of the Liberal Media Elite," Wal-Mart. The fancy Dans up here in New York love it when you do stuff like this. New Yorkers are thrilled when anyone in the fly-over states confirm their belief that the Red States consist of in-bred, moonshine farmers who can't read. I know you can, in fact, read. So read this bit of advice: stop helping the media make fun of you. Avoid politics and stick to what you do best (getting $5 worth of labor for $3 of pay and crushing your suppliers to within an inch of their lives). Thank you.
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Position in IMAX, WMT

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