The 5 Dumbest Things on Wall Street: August 5

5. Yahoo!'s Punctuation Problem

Are we alone or does anybody else think it's long past time to yank the exclamation point from Yahoo! ( YHOO) and replace it with a question mark? Because it's a mystery to us how these guys continue to operate the way they do.

Alibaba Group, the Chinese internet giant which is 43% owned by Yahoo!, will potentially reap up to $6 billion in a spin-off of its Alipay e-payment division under a deal announced last Friday. Alibaba will pocket no less than $2 billion in proceeds if Alipay goes public or cashes out in some other type of "liquidity event." Shares of Yahoo! initially popped on the long-awaited transaction, but finished the day 3% lower as investors failed to figure out what's in it for them. And as we are constantly reminded, the market hates uncertainty.

As for us, we just hate stupidity. And from our vantage point this whole puzzling transaction seems tilted in that direction.

Just to step back a bit. Yahoo! claimed in May that Alibaba's CEO Jack Ma had essentially stolen Alipay from under its nose in a so-called corporate restructuring. Alibaba disputed Yahoo!'s version, saying Jerry Yang, the former Yahoo! CEO and member of both boards, was indeed aware of the transaction, which blindsided current Yahoo! CEO Carol Bartz.

Meanwhile, as a result of all this bewildering behavior, hedge fund honcho David Einhorn bailed out of his recently acquired chunk of Yahoo! stock stating: "This wasn't what we signed up for."

Einhorn, like many others, originally bought into the stock on the belief that Yahoo! could capitalize on its Asian assets. And while last week's announcement explains how Alibaba can make good on Alipay, it unfortunately doesn't offer any real insight as to how Yahoo! can turn its Alibaba stake into cold hard cash.

So mark our words Carol Bartz. Until you start answering some of these fairly simple questions, you better be willing to accept some nasty exclamations from your shareholders.

Get the point?

4. Nursing Stocks Get Sick

Somebody please save us! The skilled nursing sector is dying as we speak. Is there an analyst in the house?

Um, no.

Shares of Kindred Healthcare ( KND) and its kindred competitors were sent to the intensive care ward Monday after the Center for Medicare & Medicaid Services announced late last week its plan to reduce payments for skilled nursing facilities by $3.87 billion in fiscal 2012 from this year's levels. In its statement, the CMS said the changed rates will "correct for an unintended spike in payment levels and better align Medicare payments with costs."

Kindred's stock was knocked down 29% while Sun Healthcare ( SUNH) sank 52%. Other names hammered by the news included Skilled Healthcare ( SKH) which plunged 42%, as well as Ensign Group ( ENSG), Five Star Quality Care ( FVE) and Omnicare ( OCR) which fell 22%, 10% and 7% respectively.

Yes, it was ugly across the board. And no, don't expect the Congress to intervene and replace those funds. In case you spent the debt ceiling debate in a coma, Uncle Sam is being squeezed to slash Medicare costs which are expected to nearly double in the next decade to $1.02 trillion.

"CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care," said CMS Administrator Donald Berwick. "The adjustments to the payment rates for next year reflect that policy."

Okay. That's what the guy doing the cutting has to say. What about the folks getting their funding cut?

"This will threaten our ability to provide quality care to America's seniors," said Mark Parkinson, president and CEO of the American Health Care Association in a statement. "Coupled with changes in group therapy definitions, this drastic reduction will be especially challenging for skilled nursing facilities to manage."

Fair enough. Now what about the brain surgeons on Wall Street? Did the analyst community offer any warning whatsoever that could have prevented investors from seeing their stocks suddenly get crippled?

Nope. Almost 60% of the 46 ratings for the 6 shellacked stocks were at buy or strong buy with nearly the entire remainder being listed as holds. There were three underperform calls (whatever that means) but not a single sell in the bunch.

Talk about malpractice.

3. MetroPCS Mess

After hours of exhaustive investigation and research, we here at the Five Dumbest Lab finally concluded that the best way to read MetroPCS Communications' ( PCS) second-quarter results is while standing on our heads. Yep, everything is headed in the right direction at the wireless carrier when viewed upside down, especially the share price which plunged more than 35% on Tuesday.

See! Doesn't that chart look great this way? What a spike! Heck, if only the blood would stop rushing to our heads, we might even buy this stock.

Here's what was down that should have been up.

MetroPCS reported a net 198,810 new customers in the quarter, far below the 248,400 expected by Wall Street. As a result, profit came in at 24 cents per share, excluding unusual items, compared with the average analyst prediction of 29 cents. Revenue also underwhelmed, rising 19% percent to $1.21 billion, compared with the average Wall Street estimate of $1.23 billion.

And here's what was up that should have been down.

Churn, or customer defections, rose to 3.9% from 3.3% in the year-earlier quarter. The cost of attracting new customers jumped 8% compared with the year-ago quarter. And the company said it now expects capital spending of $900 million to $1 billion for the year, up from its previous budget of $700 million to $900 million announced in May, as heavy use of data services keeps clogging its wireless network.

"It's a challenge," said Chief Executive Roger Linquist on the conference call, referring to the economic climate for the company.

No it's not Roger! You are just looking at it the wrong way. If MetroPCS and Sprint ( S) keep moving backward, then anti-competitive fears will make it harder for the AT&T ( T) and T-Mobile merger to move forward and really slam your business.

You see! It's all about perspective. Now excuse us before we pass out and topple over.

2. Debt Ceiling Dumbness

Thank heavens the debt ceiling debate is over. We don't know what America's CEOs would have done if our representatives in D.C. had not finally settled their differences.

Well, they would probably go back to blaming the weather for their own screw-ups. But still.

Bespoke Investment Group had a nifty little note out late last week pointing out how the country's corporate chieftains were using Washington's paralysis as a red herring for their own ineptitude. The fishy excuses were flying as Bespoke scanned conference call transcripts by S&P 500 companies "and found no shortage of executives blaming Washington for the uncertainty in the economy and business outlooks."

Here are a handful of our favorites:

¿ AutoNation ( AN): "The one caveat of course is, that's assuming that in Washington, D.C., there is some sort of debt deal that gives a road map to fiscal responsibility."

¿ Boeing ( BA): "Uncertainties remain as air transportation has been adjusting to the economic impacts of unrest in the Middle East, rising oil prices, sovereign debt issues in Europe and the U.S. debt ceiling discussion and its related impacts."

¿ Interpublic Group ( IPG): "Obviously there's an overhang, if you will, in terms of what's happening in Washington and in terms of the world economic platform."

¿ Linear Technology ( LLTC): "The U.S. is still struggling in its recovery and businesses seem cautious, awaiting resolution of the debt ceiling issue."

¿ Mack-Cali Realty ( CLI): "The debt ceiling and all of the political posturing in Washington continue to create a drag on businesses."

¿ Sealed Air ( SEE): "I think a lot of our customers are saying that they're waiting to see what Washington does before they make commitments."

Sealed Air, in case you are unfamiliar with the company, is best known for its Bubble Wrap and Jiffy envelope brands. How these bubbleheads can connect their own business to Washington's all-too familiar monkey business is beyond us. But now that the debt debate is over and the uncertainty gone, it should be smooth sailing for Sealed Air's CEO and the rest of America's captains of industry, right?

Unless, of course, they are just blowing hot air.

1. More Debt Ceiling Stupidity

Now that President Obama has put pen to paper and raised the debt ceiling, thereby averting a catastrophic (at least that's what he told us) downgrade of U.S. credit, we have a suggestion for our representatives in Washington to nullify this issue the next time it arises (and trust us, it certainly will): Bribe the ratings agencies to keep America's AAA rating.

Hey, it worked for Wall Street!

Moody's Investors Service ( MCO) and Fitch Ratings affirmed their top-notch AAA credit ratings for the United States on Tuesday. The ratings agencies did warn, however, that downgrades were possible if the government failed to follow through on its debt reduction measures and the economy weakens. Moody's currently lists the outlook for U.S. Treasury debt as negative.

The compromise "is a positive step toward reducing the future path of the deficit and the debt levels," Steven Hess, senior credit officer at Moody's in New York, told Bloomberg.

"Although the agreement is a good first step in adjusting the fiscal challenges that the U.S. faces, it is just a first step," said David Riley, Fitch's London-based head of sovereign ratings, also to Bloomberg.

Thanks for the advice guys and we promise to step-to-it. But before we do, would somebody please remind us when exactly our entire government started taking marching orders from these clowns? If memory serves, aren't these the same so-called analysts who, along with Standard & Poor's, a unit of McGraw-Hill ( MHP), were not too long ago excoriated by Congress for giving solid gold ratings to the toxic mortgage bonds which caused a real, not hypothetical, meltdown?

Damn straight. And payback sure is a bitch. Or, perhaps in this case, a potential B+ grade for our Treasuries since the ratings agencies are calling the shots now.

Let's reminisce for a second, shall we? It was just this April when Sen. Carl Levin (D., Mich.) released his final report on the financial collapse, which accused the ratings agencies of engaging in a "race to the bottom" to win Wall Street's business. According to the report, "Investment bankers who complained about rating methodologies, criteria, or decisions were often able to obtain exceptions or other favorable treatment."

So if Wall Street "fat cats" -- to borrow the President's term -- can get special treatment by paying off the ratings agencies, why not the even fatter cats in Washington? The government has all the money it can print if it wants to pay for inflated grades. And you know those greedy graders won't pass up a shot at some cheap, easy greenbacks.

The big question is whether China's Dagong Global Credit Rating Co. will be as easily bought off. China's rating agency cut its credit rating for the U.S. this week to A from A+ with a negative outlook.

And when it comes to our debt dilemma, our creditors in China are the fattest cats of all, so we better step lively. Or soon we'll be walking the plank.

-- Written by Gregg Greenberg in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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