Apple

Unlike Dan Loeb, David Einhorn did a far more calculated portfolio reshuffle in the three months of Q2, purging only 6 positions among which RIM, CA, Dell, HCA, the GDXJ Junior Gold Miners ETF, and Roundys. He appears to have also hired a new healthcare/insurance analyst after adding positions in Cigna, Coventry Health, UnitedHealth, Humana, Wellpoint, as well as Einstein Noah Restaurants, Virgin Media, Hess, Chipotle, Genworth and some Oaktree bonds. His top 5 positions are Apple, Seagate, Microsoft, Marvell Tech and Cigna. Overall, it does not appear as if he has had a major shift in perspective on the economy. Total reported long equity AUM as of June 30 was $6.4 billion.

In Q2 Dan Loeb went to town to his holdings as of March 31. Of his roughly 38 different positions, Loeb cut 24 names to zero among which Cisco, Marvell Technology, Sara Lee, Google, Wells Fargo (with the Octogenarian of Omaha likely buying every share), El Paso, Abercrobmie, Goldman and many others. Of course, he kept his stake in Yahoo and added to Apple, while cutting his Delphi stake from 13.34 million shares to 11.5 million. He used the proceeds from these sales to add to new positions (latest 13F here) in new names such aws AIG, Aetna, Chesapeake, Cigna, Coca Cola, Enphase, Humana, News Corp, and Unitedhealth Group. Also, Loeb went quite optically against Bill Ackman and bought a $6.5 million share equivalent put in JCPenney. He is significantly in the money in this.  Altogether, his disclosed equity stake was at $3.3 billion as of June 30, down from $4.1 billion at March 31. Dry powder? Or more likely getting more into bonds (which he doesn't have to disclose on any filing).

Android is near 70% market share. At which point should one expect network effects to take over and push Android into the de facto mobile computing standard, much like Office is the standard for documents in the workplace?

• Must be those evil speculators' fault: Oil price inflates as speculators bet on stimulus (Reuters)
• Need moar stimulus: UK Coalition plans housebuilding stimulus (FT)
• Paul Ryan brings fundraising prowess to Romney presidential bid (Reuters)
• Chinese serial killer shot dead after massive manhunt (Reuters)
• Silver Hoard Near Record As Hedge-Fund Bulls Recoil (Bloomberg)
• World powers eye emergency food meeting; action doubted (Reuters)
• Clegg Said to Have Role in Picking King Successor as BOE Chief (Bloomberg)
• Standard Chartered CEO takes charge of Iran probe talks (Reuters)
• Risks must not hide positive China trends (FT)
• BOJ should not rule out any policy options: July minutes (Reuters)
• India Says Growth Sacrifice Needed in Inflation Fight (Bloomberg)

We think as a matter of political reality, given the German polls, that Berlin will refuse to adequately fund Greece and that they will be forced back to the Drachma as a matter of Ms. Merkel’s desire for re-election. The honest truth is that the Greek debts have become so large and so impossible to pay that unless there is absolute debt forgiveness, which we think is politically impossible in Germany and a number of other European countries; the country must roll over as a matter of fiscal reality. In March, the last figures that are available, the Spanish banks lost $66 billion of capital as the citizens of Spain moved their money to safer havens. What the LTRO gave, the populace took away and the situation is unsustainable. Spain will soon be forced into a full-fledged bailout in my opinion which will require money for the regions and for the banks. What amazes us the most is that so many people have the honest opinion that Sir Draghi is going to come charging out from the round table, from the gilded gates of the ECB and save Europe. That White Knight is subject to the whims of Germany and the rest and all of the talk of independence and the separation of Church and State is just that; talk.

• Oil hits 3-month high above $114 on supply concern (Reuters)
• G20 plans response to rising food prices (FT)
• First centrally planned FX, now real estate - SNB Seen Targeting Bank Capital to Curb Property Boom (Bloomberg)
• EU hedge funds face pay threat (FT)
• Euro-Area Crisis Has ‘No Obvious End in Sight,’ BOE’s King Says (Bloomberg)
• King urged to widen recovery measures (FT)
• All threats "dwarfed" by Iran nuclear work: Israel PM (Reuters)
• Obama campaign attacks Romney’s pick (FT)
• Romney, Ryan hit the road in an energized campaign (Reuters)
• Yellen Must Show How 12 Fed Opinions Become One Policy (Bloomberg)

To get private debt to a sustainable level via tax cuts, Ryan would have to cut taxes to zero for a very long time (and hope that people use their tax cut to pay down debt instead of spending it at Chipotle and the Apple Store). The biggest problem with that? Over 75% of Federal spending is mandated by law, and so US public debt — which Ryan believes is the real problem — would soar (as has happened in Britain). Ryan might seem worried about the future possibility of massive public debt (as opposed to the current reality of massive total debt), but his plan could conceivably result in much higher public debt  — after all the OMB and CBO have gotten it all very wrong before, just twelve years ago foreseeing massive tax surpluses of $48 and $87 billion respectively in 2012. So does he have any real plan to significantly raise revenues? In his entire 98-page manifesto, Ryan doesn’t name any — but he has ruled out taxing capital gains as income, surely the biggest tax loophole of all, and one that has seriously benefited his running mate.

• World’s Oldest Shipping Company Closes In Industry Slide (Bloomberg)
• Japan Growth May Slow to Half Previous Pace as Exports Wane (Bloomberg)
• China Export Growth Slides As World Recovery Slows (Bloomberg)
• Weidmann tries to muffle not spike Draghi's ECB guns (Reuters)
• Draghi lays out toolkit to save eurozone (FT)
• Concerns grow over prospects for sterling (FT)
• RIM Said To Draw Interest From IBM On Enterprise Services (Bloomberg)
• UN urges US to cut ethanol production (FT)
• Goldman Sachs Leads Split With Obama, As GE Jilts Him Too (Bloomberg)
• New apartments boost US building sector (FT)

Today's youth are especially drawn to digital platforms because most of them don't know how to read anyway, and the grease from their sausage-fingers can be quickly wiped off the screen of their iDevice. The New American Golden Boy will collect not one, but two weekly checks from the government.  First he will get the well-deserved unemployment check, and on top of that he will receive his disability check simply for being a fat-ass. But let's be real here: these are not rational consumers making rational consumptions decisions.  This is the new America that is being engineered by corporations that force mindless individuals to become addicted to their products with zero regard for health implications.  We are witnessing consumption for capitalism's sake. An economy is the aggregate of its consumers, and just like its consumers, this economy is structurally sick.  The monetary policy pill that central planners and investors have been high on since 2008 has caused the economy to build up such a tolerance that it is no longer effective unless taken in doses that will kill the patient.

• Regulators irate at NY action against Standard Chartered (Reuters)
• Recession Generation Opts To Rent Not Buy Houses To Cars (Bloomberg)
• Egypt launches air strikes on militants in Sinai (Reuters)
• Loan-Shark Lending Surge Feared In Japan (Bloomberg)
• US seeks $3bn for Sudan oil deal (FT)
• Home Prices Climb as Supply Dwindles (WSJ)... not really- just money laundering in the form of ultra luxury home purchases soars
• A lifeline is thrown to the periphery - Smaghi (FT)
• Standard and Who? Greece Credit-Rating Outlook Lowered by S&P as Economy Weakens (Bloomberg)
• BOE Cuts Growth Forecast, Sees Inflation Below Goal in Two Years (Bloomberg)
• S&P Takes CreditWatch Actions On Four Spanish Banks (Reuters)
• Japan Gets Reprieve as Drop in Oil Eases Trade Impact (Bloomberg)

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2013, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc.

• Standard Chartered Falls Most in 24 Years on U.S. Iran Probe (Bloomberg)
• Iran accusations wipe $15 billion off StanChart shares (Reuters)
• Hilsenrath tells us that Fed Official Calls for Open-Ended Bond Buying (WSJ) - shocking indeed
• German opposition backs fiscal union, demands constitutional change and referendum (FT)
• Gary Gensler speaks: Libor, Naked and Exposed (NYT)
• IMF Pushes Europe to Ease Greek Burden (WSJ)
• Second TSE System Error in Seven Months Halts Derivatives (Bloomberg)
• Rice Hoard Offers World Respite as Food Costs Surge (Bloomberg)
• UK coalition in crisis over parliamentary reform (Reuters)
• Ethics probe could deal losing hand to Nevada Democrat (Reuters)

• U.S. nuclear bomb facility shut after security breach (Reuters)
• EU Commission Welcomes Greek Reform Pledge, Wants Implementation (Reuters) -> less talkee, more tickee
• China Cuts Stock Trading Costs to Lift Confidence (China Daily) as France hikes transactions costs
• Holding Fire—for Now—but Laying Plans (WSJ)
• ECB-Politicians’ Anti-Crisis Bargain Starts to Emerge (Bloomberg)
• Dollar falls back as non-farm payrolls loom (FT)
• Ethics Plan to Raise Consumer Confidence (China Daily)
• Brazil backslides on protecting the Amazon (Reuters) - fair weather progressive idealism?
• Japan Foreign-Bond Debate May Boost BOJ Stimulus Odds (Bloomberg)
• Japan’s Lower House Passes Bill to Let Workers Stay on to 65 (Bloomberg)

• What's wrong with this headline: Obama authorizes secret support for Syrian rebels (Reuters)
• Hilsenrath promptly dusts off ashes of sheer propaganda failure, tries again: Fed Gives Stronger Signals of Action (WSJ)
• Fed Hints at Fresh Action on Economy (FT)
• Fed Poised to Step Up Stimulus Unless Economy Strengthens (Bloomberg)
• IMF Chief Lagarde Praises Greece, Spain for Efforts (Bloomberg) - efforts to beg as loud as possible?
• US sanctions against bank 'target' China (China Daily)
• Trimming China's Financial Hedges (WSJ)
• ganda central bank cuts key lending rate to 17 pct (Reuters)
• Greece Agrees €11.5bn Spending Cuts (FT) - Agrees? Or does what a good debt slave is told to do
• Germany Retains Stable AAA Outlook at S&P After Moody’s Cut (Bloomberg)
• Spain’s Bond Auction Beats Target as Borrowing Costs Rise (Bloomberg)

• Bundesbank’s Weidmann Says ECB Shouldn’t Overstep Mandate (Bloomberg)
• Hollande and Monti Vow to Protect Euro (FT) - be begging Germany to death
• Monti Calls French, Finns to Action as Italy Yields Rises (Bloomberg)
• not working though: Banking license for bailout fund is wrong: German Economy Minister (Reuters)
• Switzerland is ‘New China’ in Currencies (FT)
• Regulator Says no to Obama Mortgage Write-Down Plan (Reuters) - tough: there will be socialism
• Gauging the Triggers to Fed Action (WSJ)
• When domestic monetization is not enough: Azumi Spurns Calls for Bank of Japan to Buy Foreign Bonds to Curb Yen (NYT)
• Indonesia’s July Inflation Accelerates on Higher Food Prices (Bloomberg) - remember: the Deep Fried black swan
• China Manufacturing Teeters Close to Contraction (Bloomberg)
• Spain Introduces Regional Debt Ceilings to Achieve Budget Goals (Bloomberg) - yes, they said "budget goals"