David Einhorn’s fourth quarter letter to investors is a slampiece against Ben Bernanke.
It’s really beautiful. First Einhorn sets Bernanke up to look like a fool by reminding us all what happened to commodities prices when he announced QE2. And then he knocks him down, using a hilarious line we won’t spoil for you. Read it below.
On August 27, 2010, Fed Reserve Bank Chairman Ben Bernanke gave a speech in Jackson Hole, Wyoming where he hinted that the Fed would provide additional monetary easing. At the time, the S&P 500 was down more than 3% for the year. From that point through the end of the year, the s&P rallied 19%. At the same time, oil prices rose 16%, copper prices rose 32%, coffee prices rose 34%, corn prices rose 43%, and cotton prices rose 57%.
In front of Congress, Mr. Bernanke credited his policies for “significant improvements in stock prices” which are “contributing to a better outlook for the economy.” Mr. Bernanke also said his policies are not to blame for the sharp increase in the price of oil, which he claimed is the result of strong demand from emerging markets. Does Mr. Bernanke really believe anyone buys that? Ostensibly, it’s a coincidence that many of the necessities of life came into simultaneous shortage and shot up in price just as Mr. Bernanke promised additional monetary stimulus.
Later in the letter, Einhorn continues the tirade against Bernanke for the following reasons:
- Bernanke told “60 Minutes” that he was 100% certain that the Fed could control inflation. Einhorn: “As for the future, we are 100% certain of nothing.”
- Greenlight made money last quarter thanks to rising chemical and oil prices (in Arkema and Ensco). Einhorn: “Thanks Mr. Bernanke.”
- Because Greenlight made money in last quarter in oil, so he took out a new stake in BP. (Thanks again?)
Also notable: Einhorn took out a new position in Sprint, and he closed his position in Barrick Gold, a gold mining company.