4/7/10 Midnight Report: Budget? We Don’t Need No Stinking Budget

The market stumbled a bit today on news of a potential government shutdown (and politicians quibbling over a $40B budget difference is like someone quibbling over Brooklyn Decker‘s SAT scores because in the big picture, it is more irrelevant than Donald Trump), a new earthquake hitting Japan (luckily no damage was done but the Pacific plates continue to move faster than the plates on Hakuhō Shō’s table at an all you can eat Benihana), and the name of the year ballot being released which caused traders to ignore the market and furiously google Mr. Moe Lester (and for the record, Money McBags thinks Yu Arafuka will edge out Mercedes Bunz at the buzzer, though it was good to see old WGP friend Madz Negro get some more props).

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Either way the market is bouncing up against three year highs despite the recovery of the ponzeconomy™ being more of an illusion than the Fraser Spiral or Ben Bernanke’s grasp of inflation (or deflation, or anyfuckingflation), and with both the VIX going down faster than Sasha Grey on a casting couch and short interest dwindling like Money McBags’ material (hey, you try writing a daily dick joke column on the market every business day for 16 months and see how long you can come up with original jokes for weekly new claims for unemployment, the PPI, and Alan Greenspan’s taint), the market is due for a sell off (that is if anyone other than computer driven algorithms actually own any equities).

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The big macro news of the day was obviously that Katrina Bowden showed up on the delightful meinmyplace.  The second biggest news was that the government is on the verge of a shutdown (and we all know what happened the last time the government shut down, so um, let Money McBags know if Obama buddy Robert Titcomb (and yes Money McBags wrote Titcomb) is in charge of the White House’s “Shut Down” party because Money McBags would like to get an invite to that).  That said, the House passed a bill to keep the government funded for another week on the conditions of $12 billion in spending cuts and Nancy Pelosi being sent to her room without dinner (or botox).  But even if the bill passes the Senate, it will be vetoed by the President who is still trying to iron out a compromise where the budget doesn’t get cut and Republicans go fuck themselves, so as you can see, it is a very tricky compromise to negotiate.  Not only are 800k government jobs threatened by the potential cuts (including park rangers, contractors, and bank CEOs) but important departments such as the B(L)S will be shuttered leaving the administration to manipulate data the old fashioned way, by pulling it out of their own asses.  Money McBags is sure a compromise will be reached though so government officials can go back to getting paid to do nothing rather than not getting paid to do something (that something of course being bitching and moaning about maybe having to find a real job).

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In actual macro news, initial claims for unemployment fell by 10k from 388k to 382k in the B(L)S’ constant disregard for mathematical laws and believability.  As usual, last week’s 388k was revised up to 392k in the “Hold the shock and hope for no awe” strategy that has been more of a stunning success for the government than Social Security (until sometime around 2030, but lets not dwell on the negative).  Analysts guessed that the number would be 385k, but they are only what is one chromosome short of human, so you have to forgive them for their miss.  But riddle Money McBags this (because he is neither a macroeconomist nor plays one on TV), if ~380k people per week are making new claims for unemployment, that implies ~1.5MM people a month are losing their jobs, and yet from the (No) Labor Department’s Labor Force Participation Rate report released last Friday, the economy added only ~216k jobs and the unemployment rate went down.  So um, 1.5MM people a month are new unemployment receivers but the unemployment rate is going down on 216k new jobs being added, can someone explain the lunacy of those numbers since they seem to make less sense when looked at together than Christina Hendricks and this reject from the Sweat Hogs.

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Elsewhere, US retail sales rose an unexpected 1.7% in March, easily beating analyst guesses of a .7% decline. but as we know, using gaussian models to forecast an extreme world works about as well as Armenia’s internet or abstinence, so the fact that analysts actually arrived a a whole number should be considered a victory.  In addition to retail sales rising, consumer credit was up more than guesses as US consumer borrowing jumped for a fifth straight month, driven by non-revolving credit such as student loans, car loans, and insanity.  But not to worry because Fed President Lacker (Lacker? Money McBags hardly even knows her, though if this were her, he would lack away) said the stimulus should unwind by year end thanks to the momentum in economic growth which turns out to be directly fucking tied to the stimulus not going away, so um, yeah.

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Internationally, the ECB raised rates by 25bps to 125bps as they worry about rising prices on things such as food, gas, and Portugal.  While an increase in rates will mean better returns for the 3 people still with savings, it will make it harder for the now officially bankrupt countries like Portugal (and the unofficially bankrupt countries like all of them except for Germany) to continue to raise funding at non-exorbitant rates.

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And speaking of Portugal, they are negotiating a bailout of somewhere between 75B euros and “we’re really fucked” euros, with those close to the situation thinking it will be closer to the “we’re fucked” amount.  It’s not clear if Portugal will need to seek bilateral loans (and the loans will be so bilateral that they will take money from other loans of the same gender) until the bailout is agreed upon, or if they will have to put Sara Kostov up as collateral.  So with Portugal getting bailed out, 3 of the little PIIGS have had the “Big Bad WTF were they doing?” blow their economies down.  Next up Italy and Spain, that is if they can wake anyone up long enough from their work week siesta to give a shit.

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In the market, CSCO continues to struggle as CEO John Chambers’ “Foot in Mouth” Tour (with soon to be featured speakers George Allen and Rex Ryan) proceeds with abandon (the abandon being shareholders).  Chambers promised to turn shit around and refocus on the core business while saying he will also “double down” on video (and note to readers, KITD would be a hella attractive target for a CSCO, so just keep that in the back of your mind, and keep this in the front of your mind).  That said, C cut their price target on CSCO from $22 to $20 citing margin pressure and not wanting to be the last asshole left holding the bag.

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In small cap news, Money McBags analyzed the fuck out of QCOR last night for your reading pleasure and wants to punch himself in the balls for not buying SFLY after their last Q when he told you all the stock would likely keep going up but it just wasn’t for him.  Hopefully you read his analysis and not his pussying out conclusion and went in for a nice gain.

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Writer’s note: Money McBags has written nearly 300 of these daily columns and on all but ~4 or 5 of them he is happy to put his name as he works hard as shit to make sure they are not just original and funny, but also contain solid analysis and plenty of tits.  Well today Money McBags has to admit that he just didn’t have it.  Whether it was the excitement of finding the perfect theme song for if/when the award winning When Genius Prevailed goes on a road show (and then having the chorus of that song get stuck in his head), or whether it was just exhaustion from killing it on QCOR yesterday and for the 65th week in a row trying to make the new claims for unemployment report funny, he just feels like this was a bit laborious tonight.  That said, whenever he feels this way, people tend to think it is his best stuff, so WTF does he know, he just writes it.  So if by chance you didn’t enjoy today’s column, Money McBags apologizes for that, he didn’t really enjoy writing it either, and perhaps it showed.  That said, it still kicks the piss out of the other shit out there, so there’s that.