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Rewards from a hard seat at SOHN

Yesterday I sat seven hours on a hard, cramped, narrow seat at Lincoln Center listening to SOHN Conference speakers.

SOHN is the second New York conference of the year where speakers — mostly billionaire hedge fund managers — pronounce their “best ideas” to a thousand or so people who paid $1,500 on up to benefit a charity — curing child cancer in SOHN’s case, or helping New York’s poor in the case of Robin Hood Foundation’s conference (in November).

Yesterday’s tone was overwhelmingly negative — right down to one famous, rich hedgie who recommended we sell everything and go 100% to cash.

That hedge was Stanley Druckenmiller who summed his feelings:

+ There is no alternative to equity markets because interest rates are so low today.

+ The Fed with its low interest rate policy seems to have no objective, except to stop the S&P falling 6%.

+ No new money has flowed into equities.

+ Washington’s reckless printing of money and low interest has caused massive government borrowing, sowing the seeds of the next disaster.

+ The corporate sector is stuck with flat growth and we’re paying 18 times inflated earnings.

+ Druckenmiller is negative on China. They do not need more debt or more houses.

+ The bull market has exhausted itself.

+ This market feels like just before he 2008 crisis.

Recommendation: Go to cash.

These guys are talented:

Two years ago, PointState Capital’s Zach Schreiber told the SOHN conference to go short oil. At the time the price of oil was about $100 a barrel. It fell below $30 earlier this year. He allegedly made $1 billion on that trad

Other speakers highlighted what oil’s drop had done to many economies — One speaker highlighted the mess that Saudi Arabia was in. Simply put, its it couldn’t afford its expenses any longer. Here’s one chart which summarized it.

SaudiArabiaexpenses

This chart is also persusasive:

persistentcapitalflight

Conclusion: Go long the U.S. dollar, short the Saudi riyal.

Several publishers – from the Wall Street Journal, to Forbes to CNBC covered SOHN in depth. CNBC parked a truck outside:

CNBCSatelliteTruck

And brought an enormous number of worker-bees to help. There were another ten or so tending the truck and the communications.

CNBCWorkers

The Wall Street Journal did a long piece:

From Einhorn to Chanos to Gundlach, Live Analysis of the Sohn Conference
Some of the biggest names in the hedge-fund world are pitching new investment ideas at the Sohn Investment Conference Wednesday

It covered all the speeches and their recommendations. Silly of me to repeat it all. You can read it here.

My favorite recommendations from yesterday:

+ Short OZRK, Bank of the Ozarks. their loans are too highly concentrated in real estate, especially construction loans, the riskiest of them all.

+ There’s a 65% upside in Hyatt.

+ Amazon. Two reasons: Amazon Prime and AWS. It’s the best and most popular cloud in the sky. Amazon enhances it constantly. And drops its AWS prices constantly.

+ Short CAT.  “CAT should trade for half its price,” said David Einhorn. CAT is 22 times earnings. GM is only six times. Buy GM.

+ Short MTN. They’re a cell phone provider with interests in all the wrong places, like South Africa and Nigeria. Can you believe a 52.6% youth unemployment in South Africa?

+ And from Jeffrey Gundlach of DoubleLine Capital:

GundlachRecommendation

Clearly, bets have been placed on these recommendations. But most are not too late.

Trump becomes President.

That’s the prevailing bet. Trump as president is frightening to many. But to many his advantage is that he’s not from today’s politics. He’s “something different.” The hope is he may actually get things done in Washington. Congress will probably stay in Republican hands.

One pundit thinks Trump winning the Republican nomination means the Fed won’t raise rates this year.

It’s hard to see the Fed raising rates, given the today’s weak economy and lack of inflation.

My favorite old campaign button:

Reagin80

Favorite LBJ targeting Barry Goldwater: “In your guts, you know he’s nuts.”

Why do people take take such an instant dislike to Ted Cruz? It just takes time.

My favorite recent Borowitz:

Mounrning

Favorite quote from SOHN: 

Policymakers have no endgame. Markets do.

HarryNewton
Harry Newton, whose one day with out exercise(yesterday) really took its toll. I felt exhausted and as though someone had stuffed glue into my joints. Today, I’ll bike and play tennis aggressively. That should help.