David Einhorn Short-Selling Green Mountain Coffee Roasters (GMCR)

At the Value Investing Congress in New York City this morning, renowned
hedge fund manager and short-seller David Einhorn slammed Vermont-based
Green Mountain Coffee Roasters (Nasdaq: GMCR). Within
minutes of his +100 slide PowerPoint presentation, shares of the
single-serve coffee maker were sinking, and at mid-day the stock was down
roughly 10 percent.

What the Fed is Waiting For


So, let me start today by offering my apologies if you had difficulty
getting Daily Profit or any of our other letters yesterday. The
Wyatt Investment Research offices in Vermont were inaccessible.
Check out this
incredible photo – tweeted by WPTZ’s Jill Glavan
yesterday.

That’s exit 11 off highway I-89 to Richmond, Vermont. We’re used to
getting around on skis, snowshoes and snowmobiles. But boats? Not so
much.

I’m grateful that none of my staff suffered any major damage or injury,
and I certainly hope Daily Profit readers were spared anything more than
inconvenience.

Now, let’s get back to business.

Austerity and the Economy

The debt deal in Congress is as good as passed. And
yet stocks sold off hard yesterday. And today isn’t shaping up to be much
better. The reason, in my opinion, has to do with government spending cuts,
austerity and what that means for economic growth.

Yesterday, I asked the question “where will new demand come from?” And I
recently received a reader question that hits the same theme…

Who’s Regulating the Regulators?

I’ve spent most of this week railing about Congress’ inability to
realistically deal with 2011 budget and the looming collision between
government spending and the debt ceiling.

The situation is made significantly worse by the threat of a debt rating
downgrade. A debt downgrade would raise borrowing costs by $100 billion a
year as Treasury bond prices fall and interest rates rise. That, in turn,
would make home and auto loans more expensive.

That’s clearly not the best outcome…

Debt Ceiling Chicken

The game of “debt ceiling chicken” continues as
Congress delayed a vote on Speaker Boehner’s latest plan until tomorrow.
Apparently, the GOP doesn’t have the votes to pass it, which would lead to
the adoption of Senate Leader Reid’s plan.

I suppose this is par for the course at this point. But let’s not make the
mistake of thinking that Congress is trying to do what’s right. They are
laying politics to push the agendas of their biggest campaign donors.

For instance, Rep. Eric Cantor has been perhaps the most vocal member about
not raising taxes, or closing loopholes that would result in a net gain in
tax revenues. But yesterday, the Washington Post reported that Cantor has
taken in $2 million in campaign contributions from hedge funds and private
equity firms who don’t want to see their taxes raised by the Obama
administration.