The market was quiet for most of the day in anticipation of a statement from the FOMC where it was thought Bennie B. may let his hair down (pun completely intended) and talk honestly (and yes that was sarcasm) about the stagnant recovery.  In the end though, the Fed just gave us more of the same with a statement almost identical to last month’s except for some verbiage around inflation “trending lower,” the need to promote “price stability,” and Thomas “T Ho” Hoenig being “an asshat” (though that was in the really small fine print at the bottom).

The key points to the statement though were that rates are going to kept near zero until the next bubble and the Fed is going to continue “reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities” and “roll over the Federal Reserve’s holdings of Treasury securities as they mature.” As always, T Ho was the only dissenter which caused Janet Yellen to take him in to the Fed’s conference room and give him a purple nurple until he cried “Uncle Greenspan.”

So basically, the Fed said things still kind of suck, but there’s not much they can do right now other than continue to buy debt to artificially inflate the economy until they think of something better, like telling China they were just kidding about repaying all of those bonds or hiring the Shannon Sisters to jello wrestle on CNBC to distract investors while economy burns.  The market initially rallied a bit on the news before closing a bit lower on the day while gold once again spiked to new highs since not only is it bright and shiny, but it can’t be produced with a printing press (alchemists be damned).

In macro news today, housing starts were at their highest level in four months as new construction began on 598k “pre-foreclosures” as they are being called these days.  The jump in new construction was driven by a ~30% increase in multi-family dwellings which tend to be more volatile than an overactive Weiner process (causing deep Brownian motion) or the lovely JWoww from Jersey Shore when she misses a steroid cycle (and Money McBags was tickled this morning when he learned Ms. Woww may soon be gracing the pages of playboy so teenage boys across the country can get a glimpse of what herpes simplex looks like up close*).   Of course as usual, in the governments’ “Hold the shock and hope for no awe” strategy, they revised last months pre-foreclosure starts number down from 546k to 541k.

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Internationally, every shitty country in Europe was able to sell bonds to keep the global ponzi scheme going including Ireland, Greece, Spain and Freedonia (where time flies like an arrow and fruit flies like a banana).  Ireland is now in the most precarious position (perhaps like an Iraqi Drill Press or even a Helen Keller) of those countries with rumors circulating that they will be next Greece which caused them to have to raise the yields on their bond sales by 100 bps over last month’s auction so investors can get paid more before the bonds become worthless.

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In the market, a couple of analysts put some sand in Sandisk’s vagina by lowering estimates which caused the stock to drop ~7%.  GOOG continues to rally and technically looks like it is ready to break out, but then again, Money McBags believes in technicals as much as he believes in Economics or married women who like to swallow, so whatever.  While GOOG’s growth may be moderating and while they seem desperately to be grasping at straws (and cell phones, and social media platforms, and email), their core business is still fine and should remain strong in any global meltdown (because no matter how poor people get, they are still going to use the internet, with it’s chatroulette and pictures of Melissa Satta as a way to escape reality) so the stock is overdue for a breakout of its sluggishness.  Finally, WFMI was downgraded to “underperform” by a Credit Suisse analyst who cited slowing sales and his lack of understanding of the high end organic grocery space.

In small cap news, SFI got yammied as if they were going bankrupt (oh wait, they might be).  During the mortgage boom and the beginning of the bust, Money McBags covered this company closely and all anyone would ever say was how smart SFI’s fucking management team was (well to be fair, they must have been smart if they were able to perpetuate their bs this long) even though they were trafficking in the shittiest of the shit commercial mortgage CDOs (ok, maybe RAS was shittier).  Fuck, all one had to do was see they were financing a shit load of construction loans in places as grim as Philadelphia where occupancy rates for new condos at anything above a 50% discount to asking price are somewhere between 0% and “you’ve gotta be fucking kidding me?”

So while SFI is unimportant for any of you reading this today, unless you somehow think they can meet their $3B debt burden for next year, it should be a lesson to us all.  Whenever someone dealing in complex financial instruments is said to be the fucking smartest guys in the room, odds are they are going to fuck things up worse than Charlie Sheen after two jack and cokes.  Hubris always wins, but more importantly, most equity investors won’t dig deep in to the bowels of a complex financial company and instead prefer to take the Street’s consensus and close their eyes and hope for the best.   This is why Money McBags follows a few simple rules:

1.  Never invest in anything that sounds convoluted and takes more than 10 minutes to explain no matter how smart the people behind it are and no matter how much of a trend it might be.

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2.  Never invest in any growing lending companies.  Money McBags is happy to miss out on the run up in order not to be an owner for the run down.

3.  Never get involved in a land war in Asia.

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* Dear readers, should you ever find yourself writing a column where a herpes reference is necessary and in order to get some scientific facts to perhaps make a more robust joke, you decide to go to the genital herpes wikipedia page, DO NOT, Money McBags repeats, DO NOT look at the picture at the top right of the page.  Money McBags is still not sure exactly what it was he saw, but it caused him to become so nauseated that he threw up what he believes to be his liver and part of his lefticle, so consider yourselves warned.

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