http://www.fundmymutualfund.com/2009/10/david-einhorns-speech-at-value.html

Apple just obliterated their earnings. This bull market will continue right thru the next few weeks….

I believe the recovery will be a disappointment in 2010 assuming the government stops the stimulus programs, but I have a feeling they could extend the housing credit and even pass a second stimulus plan. If that occurs we could continue with this bull market for quite a while. What happens after the government is done destroying the dollar and pumping liquidity into the system is a whole different story. As of now, we might not be dealing with those problems for a long time. Remember, the markets short-term gyrations have little to do with the real macro situation. Very little has changed since 2007. This will feel like groundhog day if Ben inflates all of these bubbbles again.

The ramifications of that might not be felt until later 2010 or after depending on what occurs. The laws of supply and demand will take hold of the housing markets and commodity markets sooner or later. I fear we have done absolutely nothing to resolve the long-term structural problems we face. But we’ll try to make money in the meantime – even if that means being a bull at points….

looking further out to 2010 and beyond, do you see the market rolling over below the March lows? I just don’t see employment recovering to the extent it needs to in order to support valuations. David Rosenberg has been pounding the table for months now about how the record stimulus, deficits and government largesse has bought us so little in terms of improvement in the macro picture. At some point, you have to figure that the deficit hawks in Congress and the rising public backlash towards bailout nation will put a ceiling on how much further govt life support we can expect. In that case, a double dip would seem likely and it would be a perfect set-up for repeating the fall below the previous lows like in the 30’s and with Japan. Your thoughts?

This whisper number of 1.60 for AAPL after the bell is a great example. They could very easily miss and tank the market tomorrow. The risk/reward on the long side is getting increasingly poor. After earnings season begins to wane we could be setting up for a sizable decline.

Do you sense a waning sense a bullishness and a rising sense of skepticism in this earnings season so far? The ride down and the rally up has always been about the financials, and with GS and BAC disappointing in their own ways, I sense we are on the verge of a significant sentiment shift. Your thoughts?

Exactly. They extorted Congress with the help of the cronies at Treasury and the Fed. If we had made them take their hits, having bond holders swap debt for equity to recapitalize them and instituted a debt for equity swap arrangement for underwater homeowners with provisions to prevent windfall profits (ala John Hussman’s PAR plan), we would have had a period of instability and a big hit to the stock market, no doubt, but we would have a much more stable base from which to build. Much more complicated than that, and a lot of regular folks taking hits too, but there’s no easy way out of this, as much as we wish there were.