Shares of dow component nike rallying today after the company said it expected sales growth to be in the high Single Digits over the next five years the Company Holding its investor day investors are liking it so far so far. And mark parker will be joining us in a rare and exclusive interview to discuss more about his plans for growing revenue for the sportswear giant. Its the best performer in the dow components today President Trump said earlier this afternoon the u. S. Desperately needs tax cuts well talk about that and more, Congress Secretary wilbur ross will be here post nine joining us exclusively coming up in a little bit good lineup of guests. We have a good lineup today. Lets get to the top story. The market selloff continuing today. The major averages off the low right now but the dow was on track for the worst day since early september. Lets bring bob in here look whats driving the move lower today. Hello william finally volume and volatility and we should have it because were getting some Interest Rate pressure so we have very good durable goods report u. S. Economy strong. Some vague discussions and reports that maybe miss pl taylor would have the insight track to be the fed chairman the market is most worried about the prospects for overly aggressive fed thats the biggest threat to the markets. So we had a little blip, the overall market dropped a little bit particularly momentum names, even banks, banks normally move up when yields move up, not today though, look at the big names out there. Goldman sachs goes down. This is a little unusual, these have been big momentum names theyve been all strong recently in fact a number have been hitting highs. Then we have the earnings picture. Now look what happened to boeing, its down 3 you might think, my heavens, but they didnt have a terrible Earnings Report in fact the numbers were good. Boeing has been an absolute mons they are year. One of the great momentum place of all time. Its up about 60 on the year. When you get a little blip, oh, it doesnt matter what the Earnings Report says, folks, were going to lighten up because we have huge profits in boeing in fact if you look at the big momentum name that we have seen recently, all of them are down a little bit today because the momentum guys simply come in and say, okay, lets lighten up. So you look at microsoft, you could look at apple. You could look at home depot, broadcom and video all of these names are a bit light today and should be. By the way, guys, there is in fact an etf for this put up that mtum if you can that was just up. You could buy all of these names, theres an etf that tracks all the momentum names. Thats been up over 30 this year thats why momentum has been a big story and thats why on a day like today, you get momentum stocks on downtown side. Back to you. All right bob, thank you. Green light capitals David Einhorn rethinking the Investment Strategy perhaps. Writing what if equity value has nothing to do with current or future derived from a companys ability to be disruptive to provide social change or to advance beneficial technologies, even when doing so, results in current and future Economic LossDavid Einhorn joins us now exclusively with leslie picker, its all yours thank you sarah david, i want to start right at the heart of this letter here. Are you saying that Value Investing no longer works in in these markets . Im actually saying the exact opposite of the way the letter is being interpreted the letter is actually a defensive Value Investing. What were saying is is that the value of a company has to do with the current and future profits discounted back at an appropriate rate and then when a tone of irony, we are saying hypothetically what would it take for that theory to be wrong and advancing the way that we think some investors are investing today and we think ultimately this is a temporary phenomenon time to time when Value Investing gets out of focus, people question, hey, is this ever going to work again the last time it happened was around 1999 when everybody was talking about eyeballs its like the new paradigm for investing. And that didnt end very well. I think right now were seeing similar investors questioning the viability of Value Investing, and theyre looking at other possible ways to explain the strange behavior of certain stocks i think over time, this is going to revert and Value Investing which historically has been a terrific strategy is due at some point for a significant recovery so you say its a temporary phenomenon, do you have any sense on what could shift it more towards traditional Value Investors market a traditional Value Investors market what and when could change the phenomenon youre seeing today i dont know the answer to that i dont know what will change it i dont know when well change it i look back to march of 2000 when the nasdaq bubbled up at the top and there was no particular reason i can see why it had the top right then, why it had to reverse, i know the tone of the market changes it changes from time to time, it does it without warning, its not particularly predictable but over long period of times historically, value does tend to win out, and after a long period where it has it has been a challenge for Value Investors, i think its actually probably pretty good time to be involved in that strategy in recent letters, you highlighted this bubble basket of shorts, amazon, netflix, tesla just to name a few how big is this basket of shorts and how how has the size of that changed over time we put the bubble basket in place in about 2014 for the first three years, 2014, 15, and 16, we basically broke even on it. We have losses in the bubble basket its not particularly large. I think it gets a disproportionate amount of attention because i like to write about it i find the companies and the behaviors and stocks relating to them to be very, very peculiar and so its kind of fun to talk a lot about it, but its a much bigger part what have ive been speaking about because i think its interesting to people, people know these companies, and theyre interested in what goes on with them compared to the relative importance that they have within any portfolio in terms of how much capital i have backing behind these positions and i like what you said about amazon in your letter from the Third Quarter, you say just because amazon can disrupt somebody elses profit stream, it doesnt mean that amazon earns that profit stream is that something thats fundamentally wrong with amazons Business Model with a lot of these bubble stocks or as you call them bubble basket of bubble shorts . Is it wrong with their Business Model these days i think its a fundamental mistake that investors make. I think theres a view at the moment that if you can disrupt somebody elses profits, youre entitled to those profits. And so therefore youre valuable but i think the bigger question is is, where are your profits . And if youre going to value a Company Based on their profit, sooner or later, they have to actually exist and they have to exist in size and if you look at the value of these companies, its assuming really reason really large profits in the future, and its hard to see where they come from the truth is sometimes when you compete away the profits within an in street, those profits are just gone. And amazon might be just a great example of transferring profits from Corporate America back to the consumer and that might be socially good, but im not sure why thats particularly value to believe amazon shareholders. And of course, uber has that same mantra, uber, amazon have just economies scaled growing, looking at the market as a zero some game. But, either way, your performance does seem to be turning around, you know, beating the s p 500 during the quarter, what do you attribute that to and what does that tell you about your outlook for your performance for the rest of the year yeah, its very hard to figure out what our performance is going to be on a month to month base, but things definitely did improve for us in the latter part of the quarter the improvement seems to be continuing into october which was weeks ago seems to be a pretty good month for us and were hopeful that were going to continue performing its been you think year long portfolio which has outperformed by a little and its been an okay year for the short portfolio which is loss money, but not nearly as much as the market and hopefully this will continue when you look at the market though on the short side, does it make you want to sit out and not put as many short positions into your portfolio . I mean, how do you really be a Long Short Equity Hedge Fund manager in this environment when it seems like the market just only knows one direction these days expect for of course today. Well, look, right now i think, i think were in a market thats rising. When the markets rising, its going to be harder for your shorts the problem is we dont really know which way the market is going. So we try to do as constructive portfolio both good idea of long and short that have favorable risk adjusted returns. And given the dynamic weve had lately of momentum doing so well which tends to be more on our shorts and value doing poorly. We think were doing pretty well relevant to the environment that were in we think that the valuation discrepancies between the loans and shorts is particularly, particularly good right now. So if we do get a reversion in style or tone in the market, we actually think were positioned to do rather well. Youve been right in the past in calling the makings of the financial crisis, putting on a short position of lehman right before that went under do you see any Systemic Risk or anything that might cause a potential reversal what have were seeing with the stock market these days . I dont know. I dont like to make big predictions about which way the stock market is going. I think i read something the other day weve gone about the longest ever without a 3 correction which means theres probably a fair amount of optimism thats given to things. Its hard to know what will change were positioned to do at least okay, no matter what happens. One company that youve been touting is caterpillar, that saw a decent rise yesterday on a nice earnings beat is that something you think will ultimately played out in your favor, i know off short position were negative. We think they built a lot of inventory, we think theyve put a lot of inventory into the channel. We think theyre beginning to have to hire back people, commodities are moving against them and markets are beginning to turn against them as well the company has outperformed expectations this year, but we think the 2018 is shaping up to be a year of potentially sizable earnings disappointment for them and tesla of course is another short youve had for a decent amount of time. And that one seems to be moving more toward your favorite down about 6 in the quarter. Do you think that will continue over the course of the next few months you know, its hard to predict again the particular direction, stock over any particular period of time, but the tesla story, you know, seems to be coming towards a head a little bit the companys under a lot of pressure to perform, to actually manufacture large numbers of cars i think thats actually a skill. And i think that theyre having trouble executing on it. Meanwhile, i think the demand for some of their older cars which are more expensive, i think the market for that is beginning to saturate itself out, theres lots of competition coming within electric at all different price points within the market and finally, you know, tesla customers have benefitted from government subsidies some Time Next Year theyre going to run out of customers that are eligible. And thats going to put them at a sizable competitive disadvantage to the newer entrants in pan electric vehicles will that benefit one of your longs gm i would hope so gms actually selling half as many electric cars today as tesla. Its such a small part of gm because they sell about 9 million cars a year and tesla sells about 100,000 at this point. Thats of course you want more of an activist on earlier this year. We can expect to see more of you from the future . We are rarely activists our general strategy in buying companies is to buy and hold them for a good period of time and watch them play out. And thats what people should expect for most of our investments. We held gm for, you know, at least two years before we became activists and it was only as a result of conversations that we have that made us think this was a worthwhile thing to do you know, since we have that situation, weve resolved it in terms of, you know, the market has decided what tngs and the shareholders decided what they think. And now we think its just up to gm to perform and execute on their Business Plan and theyre doing a good job i found it interesting in the quarter that you added positions in some kind of more legacy tech company. The Semiconductor Space under a bit of pressure today on some weakness and amds earnings, does that concern you at all for the future of that space i think its very exciting story right now. Because were getting towards the end of how much smaller you can make that. And so the results of that, it is that the cost, the pricing has stopped falling for the product and yet the demand is growing. Its not so much anymore its more about cell phones and servers, the kinds of things that are exciting for them and to require lots and lots of d ram. Yet you have trading around 40 today. Pe of around five. I think this is a pretty interesting situation and were excited to be back involved with it is there anything that you think the market isnt pricing in in terms of the political environment or different trends related to active and passive investing . Are there certain things we should be paying attention to that were not right now the active investing is a typical phenomenon when momentum is going, when value and growth is growing, index funds tend to perform really well. They have the biggest waiting to the value of the company theyre the most underweight whatever the most undervalued thing is when you have a market like this, its harder for value people to perform relative to an index. And capital comes out, people sell their value stocks, redeployed into the momentum stocks and this goes until it doesnt go and weve seen this happen i think three or four times over the course of my career. And when it reverts it tends to revert pretty sharply. I think it will do so. What about the uncertainty related to tax reform. Is that something that youre looking at when modelling different Investment Opportunities right now . I actually think tax reform has a much better chance of passing than the Health Care Package did. And i think that whats interesting for Value Investing is they tend to be profitable. They tend to pay taxes lower Corporate Tax rate should really benefit them and a lot of companies were short, they dont really make any money. And so its harder to see why tax reform will help them so much were hoping tax reform will pass and we, we expect that would actually be positive David Einhorn, founder of green light capital, hope you come back soon thanks so much. Bye leslie good job. Thank you. That was a lot. There was a lot there. There was a lot to pick apart there. Absolutely i thought it was really interesting what he was talking about with this current market being similar to the 90s and early 2000s and obviously hes got a position that would is protect him in the event that we see Value Investing is coming back and this active passive thing is cyclical exactly you had to be patient, and thats what hes having to be right now. Thats for sure. Thanks leslie thanks guy. Lets get to this wednesday with the markets trading lower today, mark travis is with us from Intrepid Capital funds, Jonathan Corpina has been waiting patiently here at post nine we have Rick Santelli checking in from the cme in chicago mark, let me start with you, what do you think about what david was saying here . Market comes and goes in cycles and youre telling people that, you know, youre a little concerned you should be concentrating more on risk than on returns right now what do you think about what David Einhorn said bill, i couldnt agree with him more i think index is value agnostic. And just like gravity, at some point the free cash will the value will be unearthed. Its just a question of patience and so in these periods of low volatility like weve seen money drives towards whats moving and, you know, you take a company like tesla, its going to burn a billion five this year and about a half billion next year and as long as the financing windows open, thats all neat and good. When it closes things can change in a hurry so, you know, i like businesses generally a lot of Free Cash Flow that have, you know, insider ownership of significance and where we can do a discount of free cash and lower asset valuation, get a higher price. Jonathan on the overall market, einhorn stopped short of saying any kind of big prediction he doesnt like to make big predictions on which way the market was headed. He did say the stock market seemed to be pricing in a the love optimism and he is positioned well if there were a change hed like to see this change for a Value Investing comes back in. What causes such a pair dime shift in the market . Is it going to be higher rates theres a combination of things were constantly lo