The market dropped in the morning like Ted Stevens’ plane (too soon?) which Money McBags read about on the series of tubes some people call the internets (perhaps if there had been a bridge going somewhere instead of nowhere, the plane wouldn’t have been needed, but Money McBags digresses), until Ben Bernanke got his quantitative easing on and told the world that the economy is getting worse.  Rally fucking on as stocks pared losses after the Fed’s statement on the economy which was about as uplifting as a Sylvia Plath poem (though less rhymey).  The market paring losses on that news is a bit like Dick Cheney’s health insurance premiums going down after his 7th heart attack or Magic Johnson being invited to more orgies (or is it orgi?) after he got AIDS, but it is what it is.

In the statement released by the Fed, we learned positive things about the economy such as:

1.  Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.

2.  Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls.

3.  Housing starts remain at a depressed level.

4.  Bank lending has continued to contract.

5.  We might be a little fucked, like Bridget the Midget in Cock Smokers 15


That said, the Fed continues to look on the bright side of life and while the recovery now appears to be going slower than Stephen Hawking’s reflexes and may take longer than it takes a stutterer to successfully repeat a tongue twister, it is still sort of happening with just a little bit more Fed intervention.

Since the Fed was so successful with their first quantitative easing and ably got us out of the recession (and yes that was sarcasm), they are now ready for another round and announced that they will “keep constant” their “holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities” and “The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.” So the party has just begun as the Fed hopes that buying longterm Treasuries will somehow keep rates low enough to stave off deflation while potentially stimulating the economy despite longterm rates already being lower than they have been since the 1950s (and as always, Money McBags recommends hiring Hanna Hilton to give the the economy a loving massage as a cheaper way of stimulating it, but perhaps that kind of out of the box (and hopefully in the box) thinking is why he does not work for the Fed).

Noted hater Thomas “T Ho” Hoenig was the only dissenter at the Fed as he told Bennie B. to talk to the hand as keeping short term rates near zero for an extended period limits the Feds’ flexibility to fuck things up even more.  It is the fifth consecutive time that T Ho has dissented and insiders worry that this constant dissension may lead the band to break up and send them in to what is usually the third segment of the Behind the Music special when band members devolve in to drugs, alcohol, and Pamela Des Barres‘ vagina.

Look, Money McBags is no economist and he certainly doesn’t play one on TV (though if he did play one on TV, he would want his character to be named something cool like Mack Ronomics, Val Youation, or Opie Lee and live in Jamaica and thus be referred to as Mon Opie Lee, while he wouldn’t want to be named something lame like Ben Stein) but it seems to him that the macro data continues to show the stimulus package has worn out and the economy is now limping along like Heather Mills with a cramped calf.  It would be great if the market could continue to run, but Money McBags just doesn’t see the business spend, employment data, or job creation for that to keep happening and apparently neither does the Fed as they once again reach deep into their asses to see what they can pull out (and in Donald Kohn’s case, Money McBags bets it’s a rabbit).

In other US macro news, productivity fell for the first time in 18 months thanks to workers spending too much time guessing muffs and not enough time producing shit people want to buy (though Money McBags does applaud their efforts).  Output grew slower while labor costs increased as those people who are still employed get some of the money companies saved by laying people off and yet not surprisingly, produce less output.  The only place productivity did not decline is with economists who continue to put out incorrect estimates at a pace faster than the very NSFW Lindsay Lohan can ruin her career (and Money McBags almost made that picture his entire column today) though without any negative repercussions.  Also, US wholesale inventories were up slightly but sales fell 0.7% after a downwardly revised 0.5% decline in May continuing the marginally bad macro data fueled market recovery.

Internationally, China’s trade surplus climbed to $28.7B which was greater than the $19B guessed at by economists and was due to the rest of the world only being able to afford cheap shit.  The spiking surplus has reignited fears that China is not doing enough to let the yuan appreciate and is manipulating their currency in ways that makes even their renminbis blush.  The surplus was also driven by slower import growth as China’s demand for raw materials has declined thanks to their overinflated construction boom which is now cooling off like Steven Slater’s candidacy for Jet Blue employee of the year.

Also internationally, the Bank of Japan held rates at .1% which is where they have been since December of 2008 and are the lowest they can go without being an imaginary number (like boogerteen).  A research firm called High Frequency Economics echoed this fact by saying “The BOJ has already exhausted all options to support this challenged economy,” before adding “perhaps Daisuke Serizawa can save us once again from potential destruction.”

In stock news, NFLX closed a deal to stream video from Paramount, MGM, and Paris Hilton’ bedroom.  In the deal NFLX will pay EPIX, a failed cable pay movie channel that currently owns the rights to those libraries, ~$1B for the right to show new releases shortly after they leave the theaters which in the case of M. Night Shyamalan would be opening night.  Money McBags has been a fan of NFLX for awhile and though he has never owned them, he has often kicked himself repeatedly for not doing so.  There is a lot of AMZN circa 1998 in this name but they keep doing the right things (and the next right thing would be cutting a deal with Vivid Video so streamed Savanna Sampson videos could put the “box” in “set top box”) and evolving their business model to focus on getting content to the home regardless of delivery method.  When the market sells off here, Money McBags is going to think long and hard about Ms. Sampson, and then he is going to think long and hard about picking up some NFLX after he does a bit more due diligence.

In other stock news both INTC and AMD sold off today after a JP Morgan analyst warned that his channel checks showed that PC orders were “falling off a cliff” faster than Claire fell off a Cliff while in the reverse cowboy position in the thrilling Not the Cosbys.  An analyst from Robert Baird echoed those thoughts by also downgrading INTC and downgrading a company the same day JP Morgan does is the only way Robert Baird will ever move the markets.

Money McBags is pressed for time today so he won’t have a small cap stock update but he will point out that KIRK jumped 4% today, likely on news they are going in to the S&P 600 small cap index, and ZAGG seems to have put up a good Q after hours which hopefully Money McBags will break down tomorrow.   Money McBags thinks ZAGG is a worse investment than fake boobs were for Sheyla Hershey so it will be interesting to see how they proved him wrong this Q.

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