The market was up stronger today than a shot of tequila washed down with a hefty glass of grain alcohol or as its known in the Hasselhoff household: "breakfast." If you haven't heard, the Chinese are coming and this time it's not just from looking at Gaile Lok it's because they are still hella interested in investing in Europe because apparently they love them some Lucy Pinder. As a tribute to Art Linkletter, China’s foreign exchange regulator said one of the darndest things today by refuting reports that China was reviewing their euro holdings as being “groundless." Of course Money McBags would take it more seriously if the statement from the Chinese government didn't end with "in bed." Fears of China dumping their Euro debt holdings caused the market to tank in the close of trading yesterday but investors appetites for equities have quickly come back as if it is 30 minutes after eating chinese food. Investors are hoping this puts a floor on the Euro but more importantly, they are hoping the coke they were given by the Chinese foreign exchange regulator at press conference contained no pee pee.
In US news, GDP was revised lower going from 3.2% to 3% leaving everyone guessing whether the next downward revision will be 2.8% or the square root of -3 since the number is completely fucking imaginary. The reasons for the downward revision were that consumers spent less than initially estimated (duh), business spent less than initially estimated (big duh), the trade deficit widened, and we're in a FUCKING GLOBAL RECESSION with markets that are less decoupled than two hydrogen atoms in a covalent bond or the lovely ladies at the end of an extremely NSFW Ultimate Surrender match. In addition to lower consumer and business spend, state and local governments saw their spending drop by 3.9%, the fastest that rate has dropped since 1981 which was so long ago CDO's didn't exist, Ben Bernanke was still teaching MBAs at Stanford, and the competitive NSFW sport of muff guessing had not yet been invented. A decline in state and local spending will mean more teachers being laid off, fewer police on patrol, and an increase in car axle sales due to larger and more prevalent street potholes. In other bad US macro news, new claims for unemployment fell by 14k to 460k, but missed analyst guesses and sent the 4 week moving average higher. The disappointement will only be matched by next week's disappointment when new claims are revised lower.
In stock news, everything was fucking up, well, everything except for MCO. Moody's once again is taking a hit as hedge fund investor David Einhorn ripped the company a new ratings model in his speech at a hoity toity hedge fund dinner where the managers drank the blood of young bald eagles while rolling around in $1,000 bills and the tears of the first Dalai Lama. Einhorn's biggest issues with MCO are that they don't have a long enough time frame and they suck at their jobs. Money McBags has been riding the short MCO gravy train for quite awhile now as he maintains there is absolutely no reason for ratings agencies to exist other than to serve investment banks and help them perpetuate fraud in order to maximize the bankers' internal profitability. In earnings news, Tiffany's put up a good quarter with profit more than doubling to $.50 per share causing analysts to throw up their breakfasts as TIF easily beat their guesses of $.35 per share. The company cited strong growth in Asia and Europe with sales up 50% and 25% respectively as apparently rich people don't give a fuck about the global recession. The company also raised guidance above estimates citing continued strong demand and their customers not being in touch with reality. In other earnings news, both Costco and Jo-Ann Stores put up good numbers as people bough the shit out of bulk goods and cloth to make their own pantaloons. Appraently people are doing this in order to save up for a Tiffany's bracelet.
In small cap news, everything rose like Gemma Arterton's popularity during take your kid to work day on the set of the Prince of Persia. Leading the way was TSYS which was up 20% and Money McBags has mentioned them before as the sell off in the name has been way overdone. Sure they put up a quarter crappier than Wilford Brimley's used adult diaper with NIM falling and their government systems business showing weak organic growth, but their guidance is still stellar. Guidance is for $85MM EBITDA and 30% revenue growth which means they are trading at ~5x EV/EBITDA. So sure competition from GOOG and NOK is coming and sure their management team talks a good game, but with the sell off, they are now just too cheap and set up for a couple of quarters of expectaion beats with analysts dashing to take down numbers. Money McBags wouldn't buy today as there was likely more short covering than on a swimsuit photo shoot in the Middle East, but value investors should dig in to this company.