Look out belowwwwwwwwwwwwwwwwww as the market is falling faster than Eliot Spitzer’s pants at the Mayflower hotel.  Investors have finally decided to ignore the marginally good earnings data this quarter which was a lot of bottom line growth with weak toplines and instead pay some attention to macro data which is trending worse than Club Muzique‘s rating among Chubby Chaser’s members (and yes, Money McBags had to do way too much heavy lifting for that joke with not much payoff, but it is what it is).


The big news today was that new claims for unemployment were out and were unsurprisingly worse than analyst guesses (though obviously they were surprising to analysts who made those bad guesses, but Money McBags has discounted analyst/economist models moreso than he has discounted Bernie Madoff’s advice on investing, Roger Clemens‘ advice on testifying in front of congress, or Antonio Cromartie‘s advice on how to practice safe sex).  Analysts predicted that claims would fall by 8k but instead they rose by 12k (or 16k if you are using the ANNOUNCED fucking number from last week before it was UPWARDLY revised again) since apparently there is no “common sense” function in Microsoft Excel’s data pack.  Overall, new claims rose to an even 500k, that is until next week when they are once again revised up in the “hold the shock and hope for no awe strategy” which appears to be backfiring worse than abstinence speeches in Alaskan high schools.  Look, it doesn’t take Nostrafuckingdamus to see that things are getting worse now that the stimulus money has left the economy and the job market remains more touch and go than a dancer at Rick’s Cabaret.  Things are getting bad enough that Money McBags predicts a new stimulus package to be announced in the next several months since no politician wants the economy to die on their watch (except for maybe Herbert Hoover and look how that wound up for him).

In other macro news, the Philly Fed announced that manufacturing in the Mid-Atlantic region fell by 7.7% dropping to its lowest level in a year and reaffirming Philadelphia as the Detroit of the East Coast, or the “Armpit of America” if you will.  Analysts guessed that the index would rise by 7% so their guess was better than usual as they were only off by a fucking “-” sign.  When asked to explain the drop, the Philly Fed spokesman said “Hey, it’s Philly.  Anything produced here is going to get stolen anyway so it’s a huge deterrent to businesses.”  And it wasn’t just Philly that showed the economy heading down faster than Jillian Grace on a casting couch, but the Conference Board’s index of leading economic indicators showed that the only place economic indicators are leading us is in to the shitter.  The index was up .1% in July, and was 50% below analyst guesses (see how Money McBags says 50% below to make it seem worse than it was?), as half of the indicators declined including building permits, the money supply, and hope.

Finally, the Congressional Budget Office was out today with a revised budget deficit claiming the deficit will now only be $1.34T instead of $1.35T in 2010 as the White House finally hired a plumber to fix the toilets from constantly running.  While that might sound like moderately good news (like learning your rectal bleeding is the result of anal warts and not colon cancer), Money McBags doesn’t believe anything the head of the CBO, Douglas Elmendorf, says because Money McBags doesn’t trust anyone with a beard.  While the deficit may be a nut hair lower this year, next year’s estimate was revised upwards from $980B to $1.07T and assumes the Bush tax cuts expire, there is no further stimulus, and the CBO’s forecasting models are even remotely correct (and Money McBags would bet a night with Abigail Clancy that those projections are off by at least two standard deviations as his confidence interval in anything done by an economist is narrower than a termite’s sphincter, and while Money McBags is no entomologist, he is pretty sure if termites have sphincters, they are very narrow).  Other cheery news from the CBO includes the deficit amounting to 9.1% of GDP, unemployment not returning to 5% until 2014 (or until all of the unemployed people simply become discouraged and give up looking for work, thus lowering the labor force participation rate and artificially lowering the unemployment rate), GDP growth of only 2% for 2011, and a deficit so unmanageable that it can’t even be balanced on Carmella Bing‘s generous assets.  All in all, macro news today was worse than a shit sandwich without the lettuce.


Internationally, Britain’s budget deficit shrank faster than economists guessed after the government cut off the Queen’s access to the Playboy channel on demand.  Net borrowing narrowed by ~1/3 to $5B and retail sales were up 1.1% thanks to Harrods getting in a new shipment of black jeans.  That said, the smaller budget deficit in July was mainly the result of higher corporate tax revenue as banks and other companies returned to profit after cutting costs so given the topline stagnation and the fact that companies can only cut costs so much, the budget deficit isn’t likely to shrink anymore unless it is doused in cold water and shown a picture of Kathy Bates.  Also internationally, Germany raised their GDP forecast to 3.0% from 1.9% on the strength of their last Q and their desire to round up to the nearest 3.

In the market, GM filed to go public again, hoping everyone who lost money on them last time will forget what a shitty company they are.  GM won’t receive any of the proceeds from the offering, rather they will go to current shareholders like the government who hopes to get their holdings in GM down to below 50% so they can stop focusing on what features to include in the 2011 Hummer (and Money McBags suggest all hummers come with extra traction control and front airbags) and start focusing on fixing the fucking economy.  In other news, INTC announced plans to buy McAfee, or at least that’s what Money McBags thinks happened but a virus seems to have eaten the press release.  The deal is valued at $7.7B, a 60% premium to McAfee’s closing price yesterday and INTC hopes the deal will allow them to combine McAfee’s software with their hardware and somehow make their chips operate faster and with fewer requests for money from Nigerian princes.

As for earnings, Sears put up a shitacular quarter, sending their shares down 10% as part of their strategy to make everything at the company a blue light special.  EPS was a $.36 loss, double the $.18 loss guessed at by analysts with revenues down slightly year over year and a bit below guesses.  Same store sales overall were down 2.2% and the company blamed poor food sales at Kmart, poor home and garden sales at Sears, and poor people.

SPLS also announced their Q and in a trend more prevalent (and less delicious) than jeggings they grew their profits by ~40% despite flat top line growth resulting from the need to increase coupons, discounting, and special offers (though if those special offers had involved Riley Steele and stain remover, they might have done much better).  The company is forecasting a modest recovery in the second half as apparently they employ the same shitty economists as the US government and the sell side.  Finally, PetSmart shares were unleashed today and they rose strongly thanks to a solid quarter which consisted of a 6% rise in sales, a 24% rise in profits, and a 50% rise in bones after Jessica Alba stopped by to shop for pet supplies.  The company earned $.41 per share which beat guesses of $.36 per share and gave full year guidance of $1.91 to $1.99 per share which was better than analyst guesses of $1.90 leading the company to remark that even in tough times, people still like to make sure their pets are properly taken care of and that they continue with the latest doggie style.

In small cap news, a number of Money McBags’ favorite names got pounded today as if they were auditioning for Seymour Butts’ next opus.  QCOR down 7%, CRUS down 7%, KITD down 7%, heck the only thing that treaded water was TMRK.  But that’s the thing with these little low liquidity names on days when the market is going to zero, it only takes one PM to get a bit nervous and puke some shares out to absolutely crush the stock.  And once that big seller leaves, the optics start looking shitty and new buyers are harder to attract, like anyone who has dated Charlie Sheen.  So Money McBags looks at times like this as a buying opportunity as nothing about KITD or QCOR’s businesses have changed (CRUS being more consumer focused is a bit more tenuous).  That said, WGO continues to drop and remember months ago Money McBags told you this stock was at most worth $7.50 and while it has taken awhile for them to start breaking down, we are making money on it and think it still has room to drop (because really, who the fuck is going to be dumping $40k-$100k on a new Winnebago when the used market is cheaper and discretionary income is shriveling up like Lindsay Lohan‘s career, and her liver?).   So be patient with these names and be ready for some ugliness if the market trades down.  Money McBags will sure as fuck let you all know if his opinion on a name changes as he did with his brief fling with LHCG and his top ticking of RICK.

That said, Money McBags apologizes for not getting to a more detailed small cap analysis today.  He has been swamped for time (dick jokes don’t write themselves, nor does research, unless it is from the sell side) and as all he charges for his analysis is your dignity, he sometimes needs to focus elsewhere.  That said, welcome everyone from college humor where Money McBags’ attempt to get a facebook account was linked to today.  Money McBags hopes you play around on the site a bit and even if you don’t understand finance, you at least enjoy the Sofia Vergara.

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