Tuesday, May 10, 2016

Why Carl Icahn Needs to Read the EPJ Daily Alert

According to the 10-Q of Icahn's investment vehicle, Icahn Enterprises LP, he holds, in the words of Zero Hedge, " a gargantuan, and unprecedented for Icahn, 149% net short position."

The current Fed-manipulated boom will eventually end badly, but it does not appear it will do so anytime in the near future. Icahn's massive short position is extremely dangerous at this time.

There might be some short-term weakness in the stock market, as I point out in the EPJ Daily Alert, but there is no indication that we are heading into a major collapse. My view on this could change fairly rapidly but at this point stock market trends could develop in either direction, leaving Icahn vulnerable to an extreme short squeeze.

There have been times when I have been aggressively short, but, I repeat, it is much too dangerous, because of potential upside activity, to do so now.



  1. So the Austrian-know-it-all, knows better than Icahn about where the U.S. Economy is headed. Hmmm...sorry Wenzel, I'd rather place my bets where Icahn sees things rather than some guy who charts M2, GDP, and BLS numbers.

    1. I don't know where to begin when responding to this post. The following may sound like what comedian Adam Carolla calls "ass-kiss rodeo", but I assure you the kissing is directed at Austrian Business Cycle Theory, not at Robert Wenzel. Wenzel happens to be one of the best active messengers who should be listened to.

      It was Wenzel, after all, who repeatedly back in 2008 (all denoted in his book "The Fed Flunks") examined M2 money supply growth's plunge and wrote on September 4th, 11 days before Lehman's collapse, that "if the Fed doesn't reverse engines real fast, the economy will plunge into Depression-like conditions within months, if not weeks."

      So, yes, charting M2 money supply growth is a bit of a big deal. Wenzel again, "if you print money, those sectors where money goes will boom, stop printing and those sectors will crash." ABCT. Might want to check this out, Ratfink.

      As for GDP, he's consistently been on the record that this is one of the worst economic measures. Not sure where you're getting your info that Wenzel closely monitors GDP.

      One can't deny the investing success of Icahn, but he likely only has trend following "economists" without a sound theory on booms and busts. Wenzel has Mises, Hayek, and Rothbard in his corner.

      I'll take my chances with team Bob.

    2. Harrison:

      1) ABCT has nothing to do with the metrics I pointed out above. Nobody...from Menger to Mises ever...EVER said anything about the M2 or money supply effecting the business cycle. When ABCT is discussed it is about credit/credit injection.

      2) Do you drive your car forward while staring at the rear view? If you do, well then, god bless you. This explains why you take the lagging indicators, Wenzel puts up and project them forward. Do you invest your hard earn money this way? If you do, well then, god bless you.

      3) Carl Icahn is a self-made BILLIONAIRE. He's no fool. Do you think he's made his fortune by charting M2? If you do, well then, god bless you.

      Like I said, I rather take advice from a self-made Billionaire than a wonk Austrian-know-it-all. Who claims to know it all when it comes to ABCT.

    3. Good analogy. RW will rarely post the terrible economic news that's occurring such as Macy's earnings and the unsustainable inventory-to-sales ratio at cycle highs. If retail sales comes out disappointing this week we will probably not hear a peep about it.

    4. Harrison, the Austrians I've heard, including Robert Wenzel, say ABCT is not a predictive science. So, it can't be used to critique or support Icahn's investment strategy. ABCT is really just an after-the-fact view of history.

      With that said, Wenzel's critique of Icahn isn't based on anything substantive, except his opinion that maybe the current bubble has a ways to go before it pops. Not very solid!

  2. If he is in 150%, he is obviously heavily leveraged. Is it possible that Icahn will win no matter which way the market goes? Just asking, not taking sides.