Einhorn is Short Heavy Machinery: ‘The Commodity Super Cycle is Over’

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.

I feel like one of those caitiffs who I poke fun of for being in a seemingly permanent state of cowardice, always juxtaposing loud talk against a backdrop of useless, endless, rants of neutrality. For those of you who know me, you know that to be bold is something I am rather fond of.

Forthwith, I sold out of 1/3rd of my SPY position, as dictated by Exodus. This trade was a great success and I am very happy to have taken it. More so, I am even happier to be taking over 10 points of profit.

Let the markets do what they must. I have little interest in the minute machinations of the day to day anymore. For now, I am entirely focused on the bigger moves, the macro. Truth is, I no longer possess the time, nor the inclination, to bother myself with micro strategy calls, performing clownish acts of genius for an otherwise ungracious and obstreperous audience. Moreover, since it’s my firm belief that markets will reel from catastrophic losses by the end of 2016, I feel the best course of action is the one I am presently undertaking.

By the end of the week, I will be in a 75% cash position, only long TLT.

What a shit show this is. Icahn and his stupid commodity bets, long egregious amounts of CHK, LNG and FCX, have wreaked havoc on his publicly traded net worth inflator, aka IEP. He owns 90% of it and now S&P is threatening to slash the credit rating to junk status, due to its nefarious holdings in which the value have been subjugated to ruinous losses.

These and other bad bets have led Standard & Poor’s to warn it may downgrade Icahn Enterprises (IEP) to junk territory within the next 90 days.

S&P says Icahn’s firm had just $182 million of cash as of the end of September, down from $1.1 billion the year before. At the same time, Icahn Enterprises lists $13.4 billion in total debt, of which $1.2 billion is due early next year.

All of this has led S&P to posit whether Icahn might inject personal capital into IEP to firm up its balance sheet. This is a delirious reversal of fortune, coming from the man who made his biggest gain of his life just a few years ago in NFLX. Since then, and inexorably so, Icahn has performed miserably, conducting his fund like a man driving a speedboat into a wall of dynamite.

Even still, Forbes lists his net worth at $19 billion.

I feel obligated to mention this, since the premium is in the 50% range. NEWP is an old school dot com, networking, play that used to trade psychotic, when growth was robust and times were good.

Now some piece of shit company is going to acquire them and put an end to their meager existence.

ANDOVER, Mass., Feb. 23, 2016 (GLOBE NEWSWIRE) — MKS Instruments, Inc. (NASDAQ:MKSI), a global provider of technologies that enable advanced processes and improve productivity, and Newport Corporation (NASDAQ:NEWP), a worldwide leader in photonics solutions, today announced that they have entered into an agreement for MKS Instruments to acquire Newport Corporation for $23.00 per share. The all-cash transaction is valued at approximately $980 million.

The combined company is expected to have approximately $1.4 billion in pro forma annual revenue, based on the two companies’ 2015 historical results. The transaction is expected to be accretive to MKS Instruments’ Non-GAAP net earnings and free cash flow during the first 12 months post-closing. The combined company expects to realize $35 million in annualized cost synergies within 18 to 36 months and anticipates revenue synergies from the expansion of MKS Instruments’ served addressable markets and leverage of complementary sales channels.

“The combination of MKS Instruments and Newport Corporation creates a premier supplier of critical components and subsystems for a diverse set of growing end markets, each with a common need for highly precise technology enabling solutions,” said Gerald Colella, MKS Instruments’ Chief Executive Officer and President. “This acquisition is consistent with our strategy to pursue sustained profitable growth by expanding into adjacent markets while increasing our served addressable market in our core semiconductor business. Our shared customer requirements and complementary technologies together with our increased scale will enable us to lead in our served markets, deliver innovative and cost-effective solutions for our customers, and drive profitable growth.”

“This combination represents a great outcome for all of Newport’s stakeholders,” said Robert Phillippy, President and Chief Executive Officer of Newport Corporation. “The complementary nature of the two companies’ technologies and customer base will create exciting opportunities for our employees, and enable the combined company to deliver innovative solutions to our customers. We look forward to working closely with the MKS Instruments team to ensure a smooth transition.”

Good riddance.

There are a lot of random little things worth mentioning, but none of which that deserve its own post. For example, Macy’s beat on the top and bottom line; but do you really give a shit?

I thought not.

Gold is higher by 0.8%. The yen is up almost a full percent vs the dollar. The Japanese are truly doomed.

Europe is lower, with the DAX leading the way, -0.8%. On a side note, Germany posted its largest trade surplus since reunification.

WTI is off by 1.1%.

Time is thinking about buying $YHOO. What a fucking joke.

Goldman upgraded LNG. Why?

Everyone with a series 7 downgraded FIT this morning. That is truly an abysmal company.

JP Morgan downgraded SCTY and RBS is coming to Ackman’s rescue, suggesting the selling in VRX is stupid and totally without merit.

X, MT downgraded by the cowards at Cowen.

FCX downgraded to sell at Citi.

That’s it for now. I’ll be selling some SPY today, then eating a few sandwiches–in that order.

The DAX is lower by 0.93% and the FTSE is down 0.63%. The first place loser goes to the Italians, meatballing all the way down by 1.15%.

Naturally, crude is lower by 2.55%, relegating the rest of risk assets to its leash.

Portugese-German bond spreads are widening again, by 2%, to 323bps. Gold and bonds are both higher, inexorably, as the riskless nomadic tribes sweep across the market.

The yen is flying higher v the dollar, up 0.75%.

Over here in the states, NASDAQ futures are down by 42.

Singapore’s largest law firm, Rajah and Tann, are out with a report, suggesting that bankruptcies are going to spread, en masse, and that creditors should expect to receive just 33 cents on the dollar.

Doom is around the bend. Is your neck long enough to take a peek?

There isn’t any hope for a beneficial outcome. All has already been lost to the dark, obsidian, sea of debt-waste. All that is to be done now is to prepare and wait.

Carter Braxton Worth was born wearing checkered pants and a was seen swinging golf clubs at the age of 2 months, at his parents private–republican only–club.

The trannies to Carter are like green eggs and ham to the Cat in the Hat. He was on Fast Money this evening, straight defecating on the market, pointing to all sorts of charts, truly beside himself with grief. He declared, the lunatic 25% run in some of the tranny (as in transports, not to be confused with transvestites also known as sexual deviants) sectors was too much to bear and it shall be undone, whilst wearing his finest garb from his ‘summertime in Nantucket’, July shirt collection.

If he could, I am sure Cater Braxton Worth would smash to pieces all of the components of the Dow Jones Transporation Index with his 9 iron, showing great displeasure and angst to all of the smaller people who the message was intended to be communicated to.

After internal review, management at VRX have discovered they’ve been completely full of shit. An earnings and revenue restatement are forthcoming, which might open the door to regulatory concerns. As such and is presently the case, the stock is careening lower to the tune of 8%.

Based on recent regulatory filings, Bill Ackman’s Pershing Square owns about 9% of Valeant Pharmaceuticals. With the stock down 8% in after hours, Broadway Bill Ackman is down a total $350 million today alone–$140 million in the after hours.

My question to the SEC is: who leaked this news throughout the trading day? Surely a company of this size and liquidity should not dive lower by 10% without news. Someone was trading on insider knowledge.

As a reader of the site, you have very little to complain about. The markets have been played like a fine tuned fiddle in 2016, with all ‘tabbed’ bloggers offering timely and often sagely advice during these tumultuous times. I had you on the ark, long TLT, then off the ark, as it docked in harbor for renovations. More recently, I alerted you to the fact that I was to be long SPY, with all of my available cash, thanks to the predictive algorithmic greatness inherent in Exodus.

Now, you are entreated to a 5 day long educational boot-camp, hosted by Jeff Macke (tonight at 7pm and tomorrow), then Jeff Kohler aka The Option Addict and then finally, Vince aka Raul for an Exodus run through in a very detailed manner. I beseech you, for the sake of your families and future offspring: reserve a seat.

Markets soared higher today, as a culmination of separate events formed a consensus opinion that all short sellers should be vanquished from the field of battle. Stocks with large short positions, particularly in the oil patch, underwent terrific rallies– relieving longs who’ve been under their torturous spells for the better half of 8 weeks.

Most impressive were the gains found in utilities, gold, and the lack of weakness in bonds, equating to an overall euphoric day whereby everyone seemed to win. Alas, all good and righteous things must end. According to the rules set forth in Exodus, I will begin the liquidation of my SPY position–leading me to a 75% cash position by the end of this week.

See you tonight, 7pm sharp, on the internets.