Today we got two pieces of data - one the PermaBulls(hits) have already tried to discredit, but they're going to have a bit of trouble swallowing the second one...

The first was GM - Mr. Lutz today, while the market was open, said that all auto-makers were experiencing slowdowns in sales as a consequence of consumers being unable to use their Home ATM machine to finance their auto purchases.

That instantly hit their stock price for about a buck - I actually had a long GM position (a leftover from one of my complex option strategies that went out Friday) that hit a trailing stop before I even saw the news button pop - I didn't realize why it had gone off until I saw the wire report a few seconds later. Glad I had that trailing stop - it scalped me another couple hundred bucks on my GM complex spread trade (thanks for the gift guys!)

The markets themselves were down modestly today. Medimmune was the prime mover on the S&P - their share volume and price movement (20%) were both obscene and were responsible for skewing things materially (they got a bid from AstraZenica, which I believe borders on insanity at least on a cursory look - but I'm not Mr. Biotech here, and won't try to be.)

Anyway, following the close of the market CNBC had their usual cadre of Permabulls(hit) on and the theme of dismissal of Mr. Lutz was quite simply "GM's cars suck"; in other words, GM used the household ATM machine as an excuse, rather than being a real indicator of what's going on.

Oh really?

Hmmm.... maybe you can explain this one then:

"Shares of Target Corp. (TGT) fell 3.1 percent to $59.50 in trading after the market closed on Monday following news from the retailer that it sees "much weaker" April sales than initially expected." (link)

Oh, that article says that WalMart's shares were also hit.

Let me guess - TARGET sells crappy clothing, electronics and toys, right?

Or, if you prefer, how about this?

"The analysts said there doesn't seem to be any pent-up demand for vehicles. Consumers either have too much debt, are facing increased payments due to rising adjustable rate mortgages or are waiting to see what happens to gasoline prices."

Or, if you're still not convinced that the US Housing Market just plain old-fashioned sucks, perhaps this article will help:

"We do not expect to see a recovery for most rated home builders until 2008, under the best of circumstances," the rating agency said in a research note. "In fact, a rebound could easily slide into 2009 if a subprime contagion spreads to the Alt-A and prime products."

When all you have is a hammer, everything looks like a nail.

Be careful with that hammer Dave. You might smash your finger.

Or what little is left of your brain.

Talk about being hoist on one's own petard!

Speaking of which, I want to comment on something with CNBC. Ever notice who advertises on CNBC? Every second commercial is for a mortgage lender of one kind or another, and many - even now - are for "no doc" loans - the sort of toxic waste that caused the overheat bubble!

You don't really expect CNBC's reporting to be objective, do you? I mean, c'mon - if they had a balance of advertisers - a lender here and there, a short-side ETF company here and there, a home builder, a defense contractor, a pharma company - ok, I might think we would get something approaching balanced coverage.

Anyway, back on topic - during the day today I went back through earnings reports. I took a few internationally-exposed firms like IBM, Honeywell and CAT, and took the increase in international sales back out of their earnings.

Then I looked at the financials that have reported, along with a few other sectors. I removed the pharmaceutical company growth (yes, I know, that's real and its here in the US, but bear with me.)

Now this is not exact folks - I'd need to have my trusty computer find a data feed somewhere that can break all this down with international exposure - but my "off the cuff" estimate is that if you pulled out the strong overseas and pharma results then S&P500 earnings were actually down this quarter.

Not just flat - DOWN.

In other words it appears, at least thus far, and granted, only about 1/4 of the S&P has reported, that if you extract health care the US GDP actually contracted during the last quarter.

That was quite shocking. It doesn't quite put us into "recession" territory, but it gets a whole lot closer than you might like!

And what are the bulls saying?

"This is all about "supply and demand" - M&A and buybacks are taking stock off the market."
"We will see 14,000, 15,000." (why not 36,000, may I ask?)
"This is the beginning of a multi-year run."
"Look at all this M&A activity."
"Look at all the buybacks."

Notice anything missing in all of this bullish(it) sentiment?

Are you hearing anything about organic growth? That is, about growth based on the fundamental concept that you are supposed to be in business to make a profit?

No! The market is now being driven by people buying back their stock (a non-productive activity) and leveraged buyouts (also a non-productive activity - take a perfectly good company, dice it up, take your fees, IPO out the pieces you don't want and add billions worth of junk debt to the firm in the process.)

This is positive for the markets?

The hell it is.

(Don't start with the LBO guys "making" money. They are doing no such thing, any more than you're "making money" when you go get a cash advance on your credit card. You are in fact drowning yourself in debt doing that irrespective of how many dollar bills you have - for a few minutes - in your wallet.)

Now let's look at something else - gasoline prices. $4 gas? You bet. And probably this summer. Consumption is rising twice as fast as last year and we haven't built a refinery in the United States in 25 years! Guess what - all that stupid "greenie not in my back yard" nonsense is now going to result in $4/gallon gas - not on the back of the price of oil, but simply because we can't refine enough oil to meet the demand for gasoline! Demand up, supply down, price rises. Period.

You're going to hear people screaming about E-85 and other "alternatives." But let's be honest - I've got a truck that can burn E-85, but if I put it in my tank (I have) I get 40% less mileage! I don't think so unless its 40% less expensive - and it isn't!

Oh, and if you haven't had enough of my irrational exuberance talk yet, here's another one - Texas Instruments reported after the bell, with their net income falling 12% amid an inventory glut. Their share price? Up $2.00+ in the aftermarket.

On bad earnings.

By the way, I bought a small number of cheap PUTs expecting those bad earnings, after what appeared to be a more sober market today. They're worthless I'm sure. Good thing they were (1) cheap and (2) I figured there was a 50% chance the market's reaction would be irrational, therefore, I nibbled very lightly. Guess I should have analyzed it, discerned that earnings would be down strongly, and that means I should buy.... CALLs! Right? :->

I give up on earnings plays - bad news is good news and good news is better news. And no, I'm not going to immediately start buying those CALLs - that would be the instant the market would find its collective mind, of course. :->

Instead, I'll play the STRATEGIC side and keep the TACTICAL moves to hours when the market is open, where I can hold a nice tight trailing stop in the event of something silly.

Tomorrow there's a passel of economic data coming, with the most important being Consumer Confidence and Existing Home Sales.

Let me give you a primer - Existing Home Sales will be up from last month. They better be! After all, its now spring, right? March. Usually a good month for Home Sales - the start of the spring selling season.

The key, of course, isn't month-to-month results - its year over year. By now you should know how the headline will be reported - month-over-month - which also, by the way, has a huge statistical sampling error.

Harder to "spin" will be Consumer Confidence. And there, I expect we'll see further weakening.

Of course you know what to expect out of the market, right?

For what its worth, in early trading over in Asia there's a consistent color to the numbers..... kinda like ours were today - south. China isn't open yet, but the others are all pointing in the same direction..... will be keeping an eye on this at least until mid-evening....

"May we live in interesting times."