When hedge fund manager David Einhorn speaks, all the animals of the kingdom must listen
Dow: 13,482 (-0.24%) S&P 500: 1,446 (+0.21%)
Bieber-fever? Maybe not. The country-wide pandemonium and man-tears-of-joy Michael Jackson caused with his one-man performances…maybe. Like their Hollywood counterparts, celebrity investors are super-stars on Wall Street with enormous followings, and today the famous David Einhorn strutted his stuff at his annual value investing conference in NYC, by choosing what stocks were in, and which are out this season – Markets were enthralled by his words. Before the legendary hedge fund manager spoke, though, markets continued to toss & turn in discomfort while Spain delays a bailout request from the new European Central Bank bond-buying bailout system. Markets started down big but regained most of their losses as headliner stocks made gains and the Dow finished down 33 points.
Spanish Prime Minister refuses to formally request ECB bailout for Spain
After already arranging a 60 billion euro bailout to go directly to their banks, most European governments believe it’s inevitable that the Spanish government must also request a bailout. Their debt pile is huge and to pay it off, they must spend an arm and a leg in high interest rates because investors are scared of they won’t be paid back. Last week’s riots rendered Spain even riskier in the eyes of investors…the Spanish government is now in the hotseat. They need a bailout, but can’t get it without agreeing to the austerity conditions that come with it, which will inject even more venom into the rioting public. Today, though, the Prime Minister said that a bailout request is not “imminent,” leaving one massive dump of uncertainty in the psyche of global investors. Markets started down this morning as they just want to see some closure in the Spanish bailout question.
Einhorn concerned about Chipotle, Microsoft now 3rd largest US company
If we had a bone to pick with the high quality burrito institution Chipotle (CMG) it would be over their avocados ($2.95 for guacamole? Seriously?). But aforementioned hedge fund manager David Einhorn has a more technical perspective and noted today that rising food & healthcare costs and competition (Taco Bell, owned by Yum Brands, is introducing similar menu items) will hurt their earnings – Chipotle shares fell over 4%. On the other end of the spectrum, Microsoft (MSFT) regained its position as the 3rd largest US company by market capitalization (Apple may be grabbing headlines with its iPhone 5, but there’s life in that there Microsoft yet). The tech giant gained 0.6% today to pass Google (GOOG) and Wal-Mart (WMT) to get back its (bronze) crown.
Einhorn praises GM, Ford dips on mediocre vehicle sales
The Detroit auto company General Motors (GM) benefited from Einhorn’s flattering words despite coming up short on analyst expectations for September car sales. GM drove 2.6% higher as Einhorn raved that the stock was very cheap right now, and their future earnings justify a much higher value than their $23.60 stock would suggest. He thinks the firm should save up cash and finally buy off the rest of the legacy US government ownership from the auto crisis. Einhorn didn’t have anything to say about Ford (F), but it’s worth noting that America’s other big car maker slipped over 1% after vehicle sales dipped last month – small car sales though did reach a 10-year high, as auto sales overall this year for both companies have been steadily improving so far.
Tomorrow:
- Some big ol’ September data: The ADP Jobs Survey is a preview for Friday’s major employment report & the ISM Non-Manufacturing Index covers data for the services sector
- The 1st Presidential Debate (tailgate it if you’re in Denver)
© 2012 MarketSnacks
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