Carl Icahn Turns Apocalyptic: "I Am More Hedged Than Ever, A Day Of Reckoning Is Coming"

Tyler Durden's picture

We profiled Carl Icahn's notorious bearishness most recently two weeks ago when we showed that for the second quarter in a row, the billionaire's hedge fund, Icahn Enterprises had kept on its record short bias, manifesting in a net -149% market exposure.

 

 

Unlike other hedge fund managers, however, Icahn does not provide monthly letters explaining his mindset which is why we eagerly watched a expansive, 40 minute interview he gave to Bloomberg's Erik Shatzker, in which in addition to a detailed discussion of Trump and how the Republican presidential candidate would change the US economy, he shared some much needed insights into his gloomy vision of the market.

Below are some of the key excerpts from his discussion of the market:

Shatzker:  Why is it that the stock market is where it is?  That with valuations so high that I noticed in the letter that -- or at least in a statement that you made with your son, Bret, earlier this month, that you don't feel confident making any large investments?

 

ICAHN:  Aabsolutely, Erik.  I have hedges on, I'm more hedged than I ever was. I will tell you there's certainly good companies. [The market] is way overvalued at 20 times the S&P and I'll tell you why: a lot of it is a result of zero interest rates.  It's just what I said. You have zero interest and a lot of buybacks. Money is not going into capital.

 

So think of it as a rich family that just decides "we're just going to have a lot of fun, we're going to sit around in the pool, and we'll keep printing up IOUs to the town, we've got a good name." You keep  doing it until you go broke.  And this is what's happening in our economy.  Zero interest rates are building huge bubbles.  You have retirees that saved a million bucks, half a million bucks. 

 

I think the market is at literally very high levels because of zero interest rates, and if you really look at it, the dollar is pretty strong right now, which is going to hurt international earnings.  The S&P, they live on international earnings.  That's going to be hurtThere's going to be a day of reckoning here.  I've seen it many times in my life.  When things look good, they look great.  You go into the sky.  But that's when you have to really pull down and really stop buying.  That being said, I'm not going to tell you it's going to happen tomorrow, next week, even next month, even next year possibly.  But it's going to happen, and you have to change the direction of our economy.  I can't say it plainer than that. 

 

* * *

 

[T]housands of CEOs understand the problem.  They say one day, a regulatory agency, EPA, waves its wand and we're bankrupt, or almost bankrupt.  We're losing a fortune.  Why the hell should I invest in more capital?  Why should I invest in more machinery?  Therefore, we can't compete, and therefore the middle class does not have manufacturing jobs and we now say, well, we're not a manufacturer, we're a service company

What could cause a crash:

Shatzker:  You say, Carl, that a day of reckoning will come for the stock market.  You can't say whether it's going to be this week, this month, even this year or next year.  Let's talk about the factors that you believe would precipitate such a correction.  What could cause stocks to fall?

 

ICAHN:  Erik, I think I've been talking about it to you this whole interview.  One of the things that's causing it to fall is happening right under your nose, that we have no capital spending.  Capital spending is going way down.  In a society like us, manufacturing is important.  I don't care, sooner or later, you can't just keep tweeting to each other.  You can't text each other. 

 

We say we're a service economy, that's great, we're a service economy.  What does that mean?  That we text more to each other.  Sooner or later, everybody is going to send a text to each other and say isn't that wonderful, so why should anybody work?  Just sit there and text to each other or watch TV.  So I am saying to you, this is what is happening as we speak.  Capital spending is down, obviously. The last two years, I mean, it's just down four percent in the last quarter which is unheard of when you don't have a recession.  OK.  Productivity has not grown.  In fact, it's the lowest growing it's ever been as far as growth goes.  These are very important things in a capitalistic system.  Unless you have a dictatorship, you're going to go the way of Cuba.  Well, Cuba was a dictatorship but it still went that way.  But then you're going to go the way of Venezuela, Argentina.  You're going to be in a major problem.

He then turns to the economy and social tubulence, where he repeats "shocking" allegations made by Trump, namely that "unemployment numbers are not accurate":

You see GDP is not going up, I could give you a lot of reasons.  But the most important is that the middle class worker is really, does not have good jobs.  This unemployment numbers are not accurate in one way, that a lot of these guys have left the work force, and two, these jobs aren't paying that well.

 

So I am saying that the middle class - that is why you saw this uprising for Bernie Sanders and you see it for Trump and you see Brexit and you see what's going on in Italy.  I think there's an undercurrent of great unrest in our global economies.  This "one percent", people resent it, and they resent government for allowing it to happen. 

Last, and certainly not least, is perhaps the key issue at the bottom of everything: the US Dollar as a reserve currency, which has permitted all of the above to happen:

Now, the thing that goes for the country as you pointed out is, we're a reserve currency.  But I don't know how long you can depend on that.  So I am just saying that sooner or later, there's going to be a massive problem, I think.

The full 40 minutes interview is below.

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bamawatson's picture

drug test hillary

Here2Go's picture
Here2Go (not verified) gmrpeabody Aug 17, 2016 4:08 PM

2

 

 

2

 

 

8

 

 

4

Here2Go's picture
Here2Go (not verified) Here2Go Aug 17, 2016 5:42 PM

I'll double down for all you dimwitted hacks...

 

9/2

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Here2Go Aug 17, 2016 6:26 PM

I was just saying that to an affronted stranger on public transportation the other day, but it just came out as word salad...

Here2Go's picture

There's never a shortage of hackasaurases in the world... That you can always count on.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Here2Go Aug 17, 2016 7:52 PM

So, you are saying that on September 2nd you are planning a 2284?  And you will achieve this through hacking?

Say hi to the Afghan Container Massacre witnesses when they stuff you in Gitmo, lol.

And I'll bet dollars against dimes that you are targeting a conpot.

I MISS KUDLOW's picture

Ichan and Trump are best buds,,,,,,,Trumps only been out the last few years to protect his buds and his own family i assure u trump has no REAL desire for presdient,,,,,and it will be Joe Biden elected after a reckoning or email finding

TahoeBilly2012's picture

Shatzker and Icahn, sounds like a law firm.

johngaltfla's picture

I agree with Icahn for once. IMHO, the odds of an "accidental" World War beginning are as high as they have been since the mid-1980's since we have rank amateurs running foreign policy in America and Europe. The difference this time is that it will be enough to break economic growth patterns as opposed to 1939 when it caused a market rally after the initial shock of the war beginning.

Did Europe Just Witness an August 1939 Von Ribbentrop Moment?
CPL's picture

Fuck the jews, fuck Israel and fuck that pretend-mason-born-again-jew-wanna-be Albert Pike the worthless pedophile piece of shit AND those dumb cunts in the cult of the two headed mutant bird.  If the jews and their slaves want to die, permission is granted for them to suicide themselves.  There are publically accessible rooftops, bridges and jugs of drano for a jonestown picnic. 

Jump fuckers!  Jump.

jcaz's picture

Yet you own a third of the float of that scam Herbalife,  Carl?

You're full of shit as usual.....

SomethingSomethingDarkSide's picture

The Portfolio is falling, and Icahn't get up!

Antifaschistische's picture

"I've seen it many times in my life"

he has not seen this at ANY time in his life. 20T in debt, massive corp debt, zero productivity gains, YOY declining real income, etc, etc...


Oldwood's picture

You are just not grasping the New World Economy, not based on productivity but delusion.

assistedliving's picture

and he made money.  u gotta problem?

sessinpo's picture

But how do you really feel?

TahoeBilly2012's picture

What? Putin is going to invade Ukraine? Okay Bro, send me some of that stuff ur smokin'...

johngaltfla's picture

Only after the Ukraine "starts" it again. FWIW, there are at least 40,000 soldiers we know of in position to intervene from the Crimea and along the Rostov Oblast region bordering the Donbass. That's what we know of; what is inside of the Donbass now is unknown to the public.

HopefulCynical's picture

Right after Obama invades Uranus.

Squid-puppets a-go-go's picture

what we also know of is that even BEFORE the Ukraine coup when crimea was still part of it, and at peace, Russia was by agreement allowed to station up to 25 000 troops in crimea to defend infrastructure.

40 000 aint exactly much by way of an 'escalation' in the context of revolution, civil war, western agitation, coup attempts in turkey, etc etc

johngaltfla's picture

That's 40,000 we know of on the Ukraine border; reports are that there now up to 14,000 or more in Crimea alone with at least 3 armored brigades and an unknown number of Marines and Airborne forces.

HopefulCynical's picture

I just don't see it happening yet. And especially with all these vermin parasites screaming SELL SELL SELL!

johngaltfla's picture

Who owns the Ukraine?

George Soros

Who has a massive short position on the S&P 500 and long position on the USD?

George Soros

Read the info. I've posted all of it up this week. Soros WANTS a major war so he's going to buy one. All it takes is one of the CIA , er Ukrainian militias shooting down a Russian plane or hitting a Russian patrol boat with artillery fire.

Scuba Steve's picture

1 more to add to Zero Squads mission 1 night 

Soros Family Tree. Including the fuckin dog.

lasvegaspersona's picture

johnalt

Putin sounds worried too. He asked journalists recently...'Do you people not see what is going on here?'

If Putin is worried then I'm worried. A worried guy with a nuclear arenal is a worried guy I'd pay attention to. He has also stated that he is tired of being blamed for every problem in the world....even more worrisome is that he bought up the 2008 war in South Osettia.

Now that was 8 years ago. It sounds to me like he is taking stock. He is doing some accounting. He is coming to a conclusion.

What I'm afraid of is that his conclusion will be: 'fuck all, no one is listening and they are building missile bases that can wipe out my wealpons and hit Moscow in 10 minutes.....hmmmm, maybe I should DO something rather than just complain...after all no one likes a complainer.

It is that kind of worrying that makes me think I should step up my own worrying.

johngaltfla's picture

Don't worry, be happy.

I'm stocking up on cigars to smoke before they become illegal to own. Then I'll worry when the mushroom clouds begin. Of course, I'm far enough away to not worry about CENTCOM but I would like to sit on my porch with a scotch and good Diamond Crown before the fallout becomes an issue.

sonya55's picture

I moved next to a Major Military Target.

Do not want to survive unless I can do it all the way.

Can be fully off grid in under 2 Years.

Wish me luck.

johngaltfla's picture

Good luck. I moved as far away as practical to be out of blast zones and fallout as much as possible.

adanata's picture

 

Putin is very smart and he is not operating in a vacuum. China's blocking for him... at least at the moment... but the potential for betrayal is everywhere. Having said that, there isn't a damn thing you can do about it so I suggest; once you've prepared as well as you can, you simply get on with your life for these are indeed "the good old days".

tarsubil's picture

Hopefully Putin will focus on American leaders and not the people.

Consuelo's picture

 

 

,Weinstein & Schmekel

 

You gotta have that 'quartet' to roll off the tongue and make 'em sound important & stuff...

froze25's picture

I read most of the Talmud, It is one seriously diabolical piece of literature. If a group of people are disciplined enough to follow it they could end up owning pretty much everything. Now it will also get everyone else to hate you in the process but it is diabolical.

ParticularlyStupidHumanoid's picture

NPR is shutting down their comments section:

Note: On August 23, we will no longer support commenting on NPR.org stories. But you can find us every day on Facebook, Twitter, email, and many other platforms. Questions about this change? Learn more or contact us.

delmar Jackson's picture

I stopped listening to NPR the day I figured out laRaza and BLM and AIPAC could write all of their stories and no one would notice.

ParticularlyStupidHumanoid's picture

Yeah, it sucks, but a lot of people think they're balanced, and don't know they're getting completely biased coverage, completely censored coverage!

SJEqualizer's picture

Left wing mass media has the most incredibly brainwashed following.  It's an incredible (yet extremely evil) accomplishment by the 'progressive' leftists.

SJEqualizer's picture

Follow the money.  @FordFoundation, George Sorros.  Sorros gets all the attention on ZH, but the Ford Foundation is at least as evil, if not more so.  They just don't have a crypt keeper fucking walking dead punching bag like Sorros, but Darren Walker is a great punching bad as well.

https://twitter.com/FordFoundation

I'd love to see ZH (and the collective brainpower of the readership) expose these cultural Marxist foundations.  Dig deep and the influence they have over our culture is immense...and very much under the radar for the average Joe.

http://discoverthenetworks.org

SomethingSomethingDarkSide's picture

Grow some fucking nuts, Icahn, and start putting hits on Central Bankers.  Your portfolio will triple overnight.  See Casino Royale, you rich, dumb fuck.

N0TaREALmerican's picture
N0TaREALmerican (not verified) Aug 17, 2016 3:00 PM

Carl,  stop reading ZH.    Give Janet a call,  she'll give you some REAL advise. 

Shad_ow's picture

His words tell us she already has.  You sell, he buys.  Profits to the moon for him.

Yen Cross's picture

     Does that mean you're going to join the Trump team, and possibly a Trump administration Carl???

  It's easy for guys like you to spend money. If you're hedged hopefully NOT leveraged at 2-3-4 hundred percent on margin, like your peers, then why don't you come out?

 

   It's pretty obvious that you got stung by those TWA, Clorox, Chrysler, ect deals, and you're laying low.

  Tell it like it is Carl, and join Trump. You would make a great Finance Tzar.

SomethingSomethingDarkSide's picture

I wouldn't mind him personally folding every bloated corporate entity like a lawn chair for his own profit.  In the end, it is in my own best interests, and honestly, what the fuck am I or anyone else without billions and balls to do?  You go, Carl.  Go hard in the paint.

Yen Cross's picture

   That was a great comment.  TBTF would be like going to Six Flags Amerika for Carl.

     He would love restructuring all those worthless banks, and the * caugh * caugh  primary dealers.

  People don't realize that the United States was set up as a corporation. The corporation is bloated, and in excessive debt.

 It needs to be consolidated, also unprofitable brands  "sold off".

    NATO comes to mind. World Bank comes to mind.  IMF comes to mind.

sleigher's picture

some realize...

 

"2015, the UNITED STATES, INC., is not only bankrupt, but insolvent, and liquidation of the CORPORATION and its assets begins.  And included in those assets, you guessed it, are the assets of the JOHN MICHAEL DOE trust accounts."

Are we ready for war yet?  Or is this when the UN starts to move in on their new property?

sessinpo's picture

Nor do they realize as citizens, we are forced labor, slaves, to that corporation.