DAVID EINHORN: Long Greece, Short France

David Einhorn just finished presenting at the annual Robin Hood Investor Conference, and he recommended a Europe trade — long Greece, short France.

Einhorn recommended going long Greek banks, Alpha Bank an
d Piraeus Bank using warrants, our source says. 

Last week investors in Greece got absolutely demolished. The Athens Stock Exchange fell 7.3% before staging a big rally on Friday. Bank stocks were the brightest spot that day, gaining 6.4%.
There were two main reasons why Greece got clobbered, both were political. First, the market got uneasy about the rising popularity of Syriza, an anti-austerity radical political party. Second, the country’s Prime Minister, Antonis Samaras, said he wanted to end the Greek bailout early without taking over $8 billion more dollars available.

France was no picnic last week either. The country has a serious demand issue — as in there isn’t enough. Unemployment is high. Deflation is at 0.4% with core inflation at 0. It’s got a big debt problem, and the country’s economy simply isn’t growing.

The CEO of UK retailer John Lewis recently said the country was “finished.”
To change all of this, France would have to implement serious reform. Greece, on the other hand, needs to stay the bailout course to stabilize, at least relatively. 

It isn’t hard to see why the latter may be more likely than the former.