From Whitney Tilson’s latest email to investors

1) Sen. Warren called me on Wed. and told me that she’d taken down the post from 12/1 in which she attacked me. I want to thank the journalists who wrote about this (in addition to Andrew Ross Sorkin’s NYT column on Tuesday, it made the front page of the Boston Globe on Wednesday), as well as the many friends who posted on social media and contacted her on my behalf.

She was very gracious and we had a pleasant conversation for about five minutes. I won’t share anything she said during our call, other than to say that the column (below), which appeared on the Boston Globe’s web site on Wednesday afternoon, captures her sentiments well. Here’s an excerpt from it:

Elizabeth Warren is still mad as hell at the Wall Street takeover of the next White House. But she’s also a little mad at herself.

That Facebook excoriation of hedge fund manager Whitney Tilson? She shouldn’t have done it, the US senator said Wednesday afternoon, and she planned to call Tilson to tell him that.

“I think I took it too far,” Warren said in an interview.

After we spoke, she removed the post, which called Tilson “thrilled by Donald Trump’s economic team of Wall Street insiders,” and warned that “The next four years are going to be a bonanza for the Whitney Tilsons of the world.”

The problem was, Whitney Tilson isn’t that kind of guy. While he is relieved Trump isn’t putting lunatics in charge of the financial system, Tilson is a vehement critic of the president-elect, and a huge fan of Warren.

Warren sees that now.

“There are many things I agree with Whitney on, and I wish my tone had been less heated,” she said.

Susan and I feel a lot better and are glad we can go back to being enthusiastic supporters of hers once again!

PS—Bess Levin, now at Vanity Fair, had a funny take on it. In her former job writing for, her pen was so sharp that I prayed I’d never be the subject of one of her missives, but what she wrote on Tuesday (Elizabeth Warren Is Sorry She’s Not Sorry For Accidentally Trashing Her Biggest Fan) and Thursday (Elizabeth Warren Apologizes for Trashing Hedge-Fund Manager Who Agrees with Her “100%”) came out ok – and she made a very good point here:

But lo! It turns out that we can put Warren back in the column of good politicians, because she’s thought about it and decided to something that Trump would never, not ever—not if the fate of his pink marble monstrosity on 5th Ave rested on it—do: apologize.

“I think I took it too far,” she told the Boston Globe yesterday. “There are many things I agree with Whitney on, and I wish my tone had been less heated.” She’s taken the post down, while certain president-elect’s tweets trashing everything from a union leader to a beauty queen to a humble magazine remain. All is forgiven.

2) I continue to hold ~60% cash, as I’m finding tons of shorts and no longs. I am highly skeptical of this Trump rally. Trump’s behavior and decisions since election day show clearly that he hasn’t changed a bit (the attention span of a gnat; total disdain for “experts”; reckless behavior; etc.), yet investors appear to have collective amnesia about the nature of the man who takes office in less than five weeks. Doug Kass does a nice job capturing why caution should be in order:


Yell and Roar … and Sell Some More

DEC 9, 2016 | 7:30 AM EST

Stock quotes in this article:


“If wishes were horses then beggars would ride.”

Grandma Koufax

It is that time of the year when we anticipate the holiday season and the New Year.

Markets are often frisky during this period, as my pal Art Cashin reminds us.

2016 is no different than other years, but it does have a twist — The Golden Swan, in the form of President-elect Donald J. Trump.

On top of the optimism associated with Trump’s message of Making America Great Againthrough lower taxes, the repatriation of overseas cash, the elimination of burdensome and expensive regulation and other policies aimed at jump-starting domestic economic growth, the dominant investor today — quant funds such as ones that employ volatility-trending and risk-parity strategies — exaggerates short-term moves.

While markets move on expectations and not facts, here are some of my near- and intermediate-term concerns:

  • A Market Honeymoon: There is a precedent in the Ronald Reagan administration (I will discuss this further on Monday of an election-to-inauguration honeymoonthat fizzles out badly and quickly.

“… it is important to remember that during the three-month period from the time Reagan was elected in November 1980 to his inauguration in January 1981, the market euphoria took the S&P Index 8.5% higher. However, the market fell dramatically from January 1981 through August 1982, declining by 28% from the 1980 election and by 20% from the 1981 inauguration.”

–Kass Diary, “Donald Trump, You’re No Ronald Reagan (Part One)

  • An Untested President: Regardless of one’s political affiliation, it can be argued that, as a leader, Donald Trump is untested. His ability to execute far-reaching, complex and cohesive policy remains in question, particularly in a backdrop of deep-rooted animus between the Republican and Democratic parties.
  • Monetary Easing Is Over: The monetary largesse is no longer a factor or effective in catalyzing growth.
  • The Baton Pass: A baton pass from monetary stimulation to fiscal expansion is likely to be less smooth and will probably be implemented much later than the consensus expects. This applies to both the U.S. and Europe, as it is all now about politics and the ability to successfully coordinate fiscal policy.
  • The Effectiveness and Timing of Fiscal Stimulation: Fiscal policy efforts, such as the monetary expansion since 2009, may fail to trickle down to where they are needed most — the middle class. In other words, fiscal policy may not be as effective in catalyzing growth as anticipated. As an example, this week the CEO ofCisco(CSCO) , which possesses a large overseas cash hoard, was asked what the company would do with a repatriation of its foreign profits. The answer he gave was that half would go to merger activity and the balance to share buybacks — none of which will add new jobs; indeed, the former probably will lead to lower net jobs.
  • Globalization Leaves the Building: Looking inward (isolationism/nationalism) may produce a slowdown in world trade and pressure multinational U.S. companies. In its extreme, it could have adverse military ramifications.
  • Higher Rates: Interest rates are heading higher. While this helps a segment of our markets — e.g., banks, which have an imbalance of rate-sensitive assets over rate-sensitive liabilities — it hurts a broader swath of industry (utilities, telecoms and REITs). A higher risk-free rate of return and cost of capital theoretically reduces the value of equities, produces competition to stocks from fixed-income instruments, likely will moderate buyback activity and could raise the value of our currency, which will diminish the value of our exports and corporate profits.
  • A Stronger
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