David Einhorn, who has been resurgent as of late with some good calls, said in a conference call today, in no uncertain terms, the commodity super cycle is over. This is not your 2012 global growth story, spearheaded by robust Chinese stockpiling of raw materials.
Moreover, he said he was short heavy machinery, which probably means CAT, JOY or something like them.
“Bulls are assuming the current commodity environment is an ordinary cyclical downturn,” Einhorn said Tuesday on a conference call discussing results for Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where he is chairman. “We believe it is the end of a commodity supercycle, and this will exert a long period of earnings headwinds for these companies.” He didn’t specify which manufacturers he’s shorting.
“Currently, market participants seem to be concerned about a global slowdown, and are losing faith in central bankers,” he said. “The U.S. economy is challenged due to the strong dollar and beaten-down energy sector, and policymakers have very little room to maneuver in the event of a real downturn.”
On the upside to his call, he believes the ruinous drop in oil will be a boon for the US consumer, in spite of the fact that we’ve yet to see any evidence of this occurring. Furthermore, aside from the occasional dead cat bounce in retail specific names, the industry has been rotting from within for the better half of 10 years.
Perhaps he’s beaming from his recent successes in both KORS and M, both of which have very little prospects for sustainable long term growth.
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Saudi says “ expect no cuts“ from them
Einhorn is rather lame on this. When SPX was 1755ish that is when it was over, huge shipments of commodities were heading to China with no buyers. He is rather late to the party. Yes, Copper topped in 2011…but there were still buyers until it collapsed two years ago.
American vehicle fleet is 250M … to switch over to electric vehicles would require 160 lbs of copper per car… 40 B lbs.?
How much do we mine each year 18 thousand metric tonnes ( 2204.62 lbs= tonne) call it 40M lbs
How much copper which is recyclable has been mined to date? 700B lbs
globally there are 1.2B vehicles on the roads….maybe it isn’t going to happen tomorrow but the demand for copper will increase as the new dawn of electric vehicles approaches…..
wind farms with 300K feet of copper wire…..as we move to having solar panels on all of our buildings the demand for copper wire is mind boggling
Einhorn either is stupid short sighted or Clever trying to talk down spaces he would like to buy into…..
MA calls copper the new gold
Isn’t that what Jamie Dimon says, sorta?
dave needs a snickers bar