6/10/10 Midevening Report: Market rallies in anticipation of tomorrow's sell off

Readers, Money McBags apologizes for his absence yesterday, unfortunately he has a life outside of the great When Genius Prevailed and that life required him to spend all day watching Anna Paquin scenes now that she is oh so comfortable with her bisexuality, so you can't really fault him for that.  Anyway, today the market seems to be running like a lobotomized senior citizen with an advanced case of alzheimers as it forgets Europe is about to collapse under a pile of oversized debt, the US unemployment rate is stagnating like the rebuilding of the Twin Towers, and the great Hannah Hilton remains retired.  That said, short term macro news is pushing the markets to new heights, levels it hasn't seen since at least last Friday, so ring those bells because the economy is all of a sudden back (until tomorrow).

Driving the market up today was that the ECB raised their growth forecasts, China showed an increasing trade surplus, and clothes-less emperors are now becoming the rage (because despite today's numbers, the economy still has no pants).  The ECB said GDP growth for 2010 will now be 1% which is above the .8% they had repviously predicted and above the potential 0% on which most investors are betting.  While they raised 2010 GDP forecasts, they lowered 2011 from 1.5% to 1.2% which means the absolute level of GDP at the end of 2011 is now expected to be lower than it previously was (since multiplying last year's GDP by 1% and then 1.2% yields a lower number than multiplying it by the previous forecast of .8% and then 1.5%), but why let math get in the way of a market rally?  Honestly, if logic, common sense, and facts mattered then the markets would be efficient and Burton Malkiel would be so celebrated that he would be applauded by young and old on his daily random walks.  In other big news, China's trade surplus rose in May giving investors hope that China can keep fueling an expanding global economy.  Imports and exports both grew by ~50% in May driven largely by an increase in purchases of lead paint to go with an increase in sales of toys.  With a $19.5B trade surplus for the month, the Chinese government should get loved for a long time at the Beijing Rick's Cabaret but is getting even more pressure to let the renminbi float like Kelly Madison's renminbis in the deep end of the pool in her San Fernando Valley abode.  Finally, Japan revised their GDP upwards from 4.9% to 5% as they forgot to include the new buttress they put up around Tokyo to defend Godzilla's impending attack.

While international news seemed to be strong, US macro news was mixed at best, which has left Money McBags scratching his head over today's rally (though it could also be the lice).  The good news is that the budget deficit fell to $136B (and for those of you scoring at home $136B might be more than the price of all of the tea in China) thanks to higher tax receipts.  Money McBags is not clear where the higher tax receipts came from as unemployment has remained the same so perhaps it is from people filing their quarterly capital gains taxes which should have been higher with the strong market rally which has now fallen faster and harder than Money McBags did for the lovely Amanda Seyfried.  So we've got that going for us.  In other US news, the trade deficit widened and housing foreclosures fell largely because banks have run out of repo men as bank repossesions reached a record high last month.  While fewer foreclosures are good for the markets, the reason for it is as positive as saying fewer people walked out of the last Robin Williams movie (since of course fewer people attended).  Finally, new claims for unemployment came out today and were worse than analyst guesses as claims fell by 3k to 456k.  Making things more confusing was that last week's new claims for unemployment were 453k so once again the (No) Labor Department has either confused the basic tenets of addition, lost some beads off of their abacus (no doubt purposely taken off to replace one of the office's missing anal beads that likely got lodged in Hilda Solis' shapely derriere during the department's recently passed Memorial day picnic), or is just MAKING THE FUCKING NUMBERS UP.  Last week Money McBags wrote how 460k -10k somehow = 453k and now the (No) Labor department is at it again by restating last week's number from 453k to 459k, which is how this week we get 453k - 3k = 456k.  So last week's disappointing number was actually more disappointing than previously thought (which Money McBags predicted) which makes the new claims for unemployment numbers now less believable than Ellen Degeneres as a romantic lead (like in the ironically named Mr. Wrong, and of course what was wrong with Mr. was that he peed standing up).  The market seems to think that continuing claims falling by 255k to 4.46MM is good news except for the fact that: 1.  It's not clear that the 255k drop wasn't just people exhuasting their benefits, having been unemployed longer than the making of The Man Who Killed Don Quixote has been in production.  and 2.  4.46MM people unemployed is still a fuckload of people.  But hey, rally on my freinds, rally on.

In stock news, just about everything was up except for GS which has broken through their $135 support level on their way towards extinction.  It will be interesting to see how aggressive the government goes after itself (I mean Goldman) because even Meagan Cheung could find fraud on their trading desks.  Also, BP rose 6% after Jim Cramer finally said to sell which once again proves his ability to be negatively correlated with the markets.  That said, Money McBags wouldn't go near BP unless he were wearing an extra strength contamination suit and had a lifetime supply of Lamivudine.

In small cap news, KITD hit its first short squeeze and jumped 8%+ and Money McBags hopes this is the first of many while MLNK was up a bit after crapping all over itself with yesterday's earnings announcement.  Money McBags is short on time today but tomorrow he will break down MLNK's shit awful Q where their EBITDA dropped in half, their cash flow barely broke even, and they continued to pawn it off on new business taking longer to start-up.  Wow.  You know what Money McBags calls it when your new business takes longer to develop?  Deep doodoo, and yes that is a bit of a technical term.