5/18/10 Midafternoon Report: If you want to short in Germany, you now have to wear pants

The markets fell again today as US macro news was mediocre at best, fears in China have risen from red alert to Kung Pao levels, and Germany has banned naked short selling of stocks and CDS (though you are still encouraged to get long Salzgitter and Money McBags' "salzgitter" would get very long for Sonya Kraus and he would certainly let her take the other side of his Siemens trade).  With the ban on naked short selling in Germany, the markets floundered as traders sought to unwind positions and find alternative ways, or countries, to continue with the same bets they have been making.  This market reeks of dislocation worse than Ronnie Brown's lisfranc.

Not helping matters was that US macro data was more mixed than a can of nuts (and please, write your own punchline).  Home building rose in April with new home starts up 5.8%, the most since October 2008 as home builders prove to be more optimistic than Brooklyn Decker's bikini waxer.  However, construction plans fell to their lowest level this year as the tax credit ran out and people remain unfucking employed.  Building permits were down 11.5% and economists had guessed that they would be moderately up which once again proves that a broken clock is wrong 86,498 times a day.  In other macro news, seasonally adjusted PPI was down .1% last month due to more people keeping their eyelids shut as a result of allergies (and yes Money McBags has used the PPI pun before, but it is still horribly funny).  Core PPI, which excludes the essentials such as food, energy, and oxygen, was up .2%.  Money McBags always loves that economists apparently don't care about food and energy prices as a gauge of inflation which is as rational as a pareto inefficient nash equilibrium like the prisoner's dilemma (and if Money McBags were ever a prisoner, he would have no dilemma because he simply wouldn't pick up the soap).  Interestingly, energy prices actually slumped by .8% thanks to natural gas prices retreating from booming to silent but deadly and food prices declined by .2% despite meat rising 5.1% and thus beating meat price rises going back seven years.  The good news though is that inflation appears to be tamer than a Dane Cook stand up routine. 

Internationally, in addition to Germany banning naked shorting (and Money McBags hopes they don't ban naked cavorting), the EU sent 14.5B euro to Greece today and told them to keep the tip.  With that 14.5B, the EU hopes to stave off Greek defaults, restore order to the European financial system, and receive a free two-liter of coke with their souvlaki since their order exceeded $20.  Also, the ZEW Center for European Economic Research (ZEW of course standing for zero economic worth) said its indicator of German economic sentiment fell in May to 46 from 53.  The good news is that the indicator’s historical average is 27, the bad news is that the 46 was below the consensus guess of 47, and the even worse news is that Lucy Pinder has never been in my kitchen.  But it's not just Europe that is going in to the crapper like last night's bean burrito washed down with an extra large cup of metamucil and healthy dollop of "we're fucked," but also China as Chinese investors are also starting to get more nervous than Jackie Chan trying to roll his "r"s.  The stock market in China remains lackluster, down 21% for the year despite being sprinkled with MSG to keep investors coming back for more.  Driving the sell off has been expectations of rising interest rates,  fear of tighter bank lending to help rein in inflation and quiet soaring property prices, and fortune cookies throughout the region reading "You're going down" (in bed.  Booooyah!!).  The markets remain more jittery than Sarah Palin in a spelling bee, so remain careful.

In stock news, Walmart put up a good quarter beating analyst guesses of $.85 eps by $.03.  The world's largest seller of cheap crap had sales of $99B which were up 6% despite a 1.4% drop in same store sales.  Guidance was generally inline though management said sales are shifting away from entertainment and apparel and into do-it yourself auto repairs, pharmacy, and tight fitting tops.  Home Depot announced a good quarter and raised their outlook, yet the stock traded down as analysts think the outlook to be too rosy after Lowe's took a giant dump on Q2 forecasts yesterday.  Finally, financials fell again as potential new credit card regulations hit card issuers and fear of Europe imploding hit banks.  In all, it is uglier out there than Minnie Driver's face and tomorrow could get much much worse as fear has seeped back in to the market.

In small cap stocks, everything sucked.  KITD got hit with another big block trade around midday despite both Merriman Curhan Ford and Roth Capital's analysts raising price targets after yesterday's Q.  Money McBags promised he would listen to or watch their quarterly call today but he has been too busy to follow through on that, so his analysis from yesterday still stands.  The fact is it is a weird little company, exposed to many different currencies, and highly acquisitve in a market that may soon like none of those three things.  So the market may trade this down on technicals and fears, but fundamentally, if you don't mind some pain for awhile, it is worth holding on to like a drowning straight man would hold on to Christina Hendricks' life preservers.

2/8/10 Midday Report: Debt crisis forces EU to pull Super Bowl ad, can only afford to broadcast it on new 24 hour Michael Bolton Hip Hop Channel

The market opened down again before bouncing back a bit as people are more worried about Europe's debt problems than they are about global warming, health care spending, and that thing on Drew Brees' face.  The President of the EU's Central Bank, Jean Claude Trichet (and it must be pointed out that his name is an anagram for "tend rich ejaculate," which is exactly what he is doing by tending to the crisis caused by an overspending splooge filled orgy by the already rich European bankers), is steadfast that Europe's debt problems are not an issue and budgets can be cut but he has as much sway on how Europe's countries operate as James Polk did over the Treaty of Guadalupe Hidalgo (Shout out to Nicholas Trist. Word word).  The point is Monsieur Trichet can recommend whatever he wants and can publicly fellate Greece/Portugal/the whole Iberian Peninsula until he is blue in the face (pun completely intended), but it will likely come down to the countries of the EU acting in unison to bail out a country (or several) which are irrelevant to them.  The EU is the ultimate free rider system for small countries like Greece to continually take risks since there are no real political repercussions as the rest of the EU has exactly zero votes in any Greek election or Greek policy.  So when Monsieur Trichet said over the weekend when being asked questions about Greece: "I doubt that, in a press conference, Ben Bernanke would have a question on Alaska or Massachusetts," that was a completely bogus, non-sensical, and irrelevant remark because Bernanke/the US Federal Government could absolutely fuck with Alaska or Massachusetts while all the EU can really do to Greece is tell them their kabobs were a little dry and to "maybe not suck so much at  managing your budet."  Any other line of action could potentially lead to a complete disbanding of the EU and that would be about as helpful to the global economy as Mr. Horton was helpul to Arnold and Dudley in picking out bikes in that very special Diff'rent Strokes.  The problem is that the EU may simply prove to be pareto inefficient, like lesbian porn where somehow adding a money shot would make everyone better off.

In US news, a flurry of blue chip upgrades are keeping the market from continuing it's sell-off.  Google was upgraded by Merrill Lynch/BAC (from hereon out to be known as "at least we're not Rodman Renshaw"), as the analyst cited their cheap valuation based on the metric he decided to use which would support that cheap valuation (mutiple of cash flow less cash).  Of course all the analyst had to do was point out GOOG's recent jizztastic quarter (and for those of you not down with the lingo, there are very few things that are better than jizztastic), the fact that they are down 10% since then, and say "They're fucking Google dipshits."   The other big upgrade was Home Dept being added to Morgan Stanley's best ideas list.  This caused Money McBags to also update his best idea list to now include a threesome with Hanna Hilton and Jessica Biel, lobster newburgh, and the light bulb.  Disney was also upgraded to neutral by Morgan Stanley due to an improving economic outlook and CIT hired a worldclass rain maker in John Thain to take over the company as it climbs out of bankruptcy.  Now Money McBags loves to deride CEOs for their bad decisions and big egos, but he is a fan of Mr. Thain who was able to actually get something for Merrill Lynch in selling it to BAC as the market was free-falling like Scott Lee Cohen's political career.  Thain is a terrific choice for the potentially undervalued CIT and this company deserves a new look by investors.

Interestingly, companies have been performing well this quarter with more than 73% of S&P 500 companies that have reported, beating analysts’ estimates which is the 2nd highest percentage since Bloomberg began tracking the data in 1993.  Of course, the market rose in anticipation of this since the market is more forward looking than Roman Polanski's dating rolodex (and seriously, if you don't get that one e-mail me at moneymcbags@gmail.com and I'll explain it).  So we're now at an important inflection point with Europe potentially imploding, the US maybe getting on solid footing, and jobs still harder to come by than an original or funny Jay Leno monologue.

In small cap news today, an analyst from Robert Baird (and if you've never heard of Robert Baird, don't worry, neither has Mrs. Baird) upgraded Winnebago from underperform to neutral based on "valuation."  Now Money McBags finds nothing more convincing than a valuation upgrade of a company who HAS NO EARNINGS and is not going have any earnings for 2010 and maybe even 2011.  That is awesome, really.  If Money McBags were to guess what the analyst based his valuation on, he would guess the number of shots of tequila that analyst had last night to dull the pain he feels for having to work at Robert Baird and not a sell side shop that people have heard of before.  After upgrading WGO, the analyst was seen climbing into his Edsel and heading to his home on Three Mile Island while eating a packet of pop rocks and chugging a coca cola. Now look, Money Mcbags does not have the report and does not know what Baird's price target for WGO is, but if it is anything above $8, it is way too much.  This was Money McBags' analysis of WGO from 2 months ago, and while his short call has worked about as well as the brakes on a Toyota Prius, he stands by that call like WGO stands by their losses.

Oh yeah, one more thing.  Money McBags preemptively signed up for twitter at this account www.twitter.com/moneymcbags He has no idea if he will ever use it, but it is there.