Yahoooooo!!!!! (As You Lose Your Job!)

2-second Executive Summary - Arrogance knows no boundaries.

Here's the thing - neither Microsoft or Yahoo has been able to do dick and squat in the search business. Google, love 'em or hate 'em, has been mopping the floor with both.

So now we take two Janitors and try to make a rockstar out of them? Oh yeah, right.

I suspect that the reality here is that Microsoft basically had to do something like this, or just surrender in the online content war. That, of course, they didn't want to do - thus, the bid.

We all know that Microsoft and Yahoo have been talking for more than a year, and with Yahoo's stock mortally wounded, it gave Microsoft an almost-impossible-to-ignore shot to pull a "Murdoch."

If you're a Yahoo shareholder, how do you vote no? You can't. You basically have to vote yes; a 60% premium to last night's price? The deal is in the bag kids, and nobody is going to come in with a higher one. Not here, not now.

The key is whether or not this makes any sense for Microsoft. I suspect the answer is that they are in a corner - the "where do you go next" question has been on the table for a while. XBox360, while a success in terms of penetration, is a huge lose technically and monetarily they're bleeding cash from the femoral artery. They can't even get the cooling right and are STILL experiencing an unreasonable field failure rate a year later on that product.

What comes "after Vista"? Yawn. I still run XP and will continue to do so. Why not? Eventually they'll stop "supporting" it, but do I care? Well, in a few years, maybe. But now? No.

For Yahoo the choice is really one of survival. They were the 900lb Gorilla at one time, but have been stomped by the 9,000lb Gorilla - Google - and mercilessly ground into the pavement.

So in truth I see nothing here to really crow about. It is entirely illogical for the market to rally hard on this news, as it is of course totally company-specific. It in fact likely damages Google further, in that while Yahoo/Microsoft almost certainly loses to Google, it pulls firepower off advancing new initiatives and forces them into defending their moat - a shallow moat with no gators, and only really protected by snipers in the watchtower. It spends Microsoft's cash at an above-market price, and could turn out to be an act of pissing into a singularity, but it will be a couple of years before we can judge that.

But the real story here isn't Yahoo. Its Non-Farm Payrolls, which showed an actual job loss, and huge revisions backward.

Anyone who's arguing that there is no recession needs to have their head examined.

There was no wage growth of substance either, and January is where people usually get their raises.

Companies, in other words, don't need to pay to retain people because there is no competition for those employees.

Oh, and hours worked fell too.

All I can say is that Yahoo picked a good day to get bought, because its about the only way this market wasn't going to be down 300 at the open.

There is also chatter about a consortium of banks trying to figure out how to "bail out" the monolines. Here's the problem - those who are actually participating in that little cluster are self-identifying themselves as body-hiders - maybe not the smartest thing to do, unless you are toting around a grenade with a missing pin and your sweaty palms are trying to hold onto that spoon!

Oh, as an aside, Exxon/Mobil reported excellent numbers. Oil price volatility didn't hurt them!

You can bet this will spike yet more calls for "tax the rich" out of the Demoncrats, and come next year, the taxes will appear like flowers in the spring.

ISM came in stronger than expected, but UofM Consumer Sentiment was down two full points - a horrible print.

Finally, this afternoon Egan-Jones came on CNBC and told the truth about the monoline insurers - they need $30 billion EACH to be "AAA" credit quality. Who is Egan-Jones? A ratings agency NOT PAID BY THE ISSUER, who by the way, has a NINETY FIVE PERCENT accuracy rate in their ratings. They're the ones who blew the whistle on ENRON and MCI, among others.

Ignore them at your peril - they are very rarely wrong.

In short, we live in interesting times and the market certainly is going to provide us with plenty of entertainment - and potential profit - over the next few weeks and months. It is also guaranteed to provide us with plenty of whipsaws and traps for both Bulls and Bears.

Play carefully and nimbly or, if you can't, just bail off and sit on the sidelines.

You can't lose your money if its parked in cash, and the headfake quotient is going to continue to be somewhere north of Mars.

Here's your technical!