• Tag Archives Kyle Bass
  • 5 Things We’ve Learned Since China Entered the World Money Basket

    Beginning in October of last year, China’s renminbi was added to the International Monetary Fund’s currency basket known as the Special Drawing Rights, or SDR.
    The IMF, founded after Bretton Woods, established the SDR to be its own international reserve asset – what many have identified as world money.
    Prior to Chinese inclusion, the elite currency basket was calculated with the U. S dollar, Euro, Japanese yen and British pound sterling. While China joining the SDR may have been largely status-driven at the time, the yuan and the Chinese economy have become open to heightened concern.
    Significant worries over debt, wasted investments and threats of sweeping deflation left macroeconomists seeing a Chinese financial crisis on the horizon. Financial commentators ranging from hedge fund manager Kyle Bass to economist Jim Rickards highlight that the Chinese economy is on a dangerous course.
    So what does that mean for China and its inclusion with the SDR’s world money basket?
    Here’s five things we’ve learned from the Chinese entrance into world money:
    1. October 2017 is Crucial
    This October, the 19th National Congress of the Communist Party of China will be held. Thousands of lawmakers will gather in Beijing for the Congress. The Chinese Communist Party (CCP) does hold ultimate power, but certain influencers are beginning to rise.

    This post was published at Wall Street Examiner on June 26, 2017.


  • JUNE 16/DEPT OF JUSTICE SHENANIGANS/NY FED LOWERS ESTIMATE OF 2ND QUARTER GDP TO 1.8%/GOLD RISES $1.80 BUT SILVER LOSES 5 CENTS/ FOR THE 12TH CONSECUTIVE DAY, THE AMOUNT OF SILVER STANDING AT THE…

    GOLD: $1254.00 UP $1.80
    Silver: $16.64 DOWN 5 cent(s)
    Closing access prices:
    Gold $1253.40
    silver: $16.67
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME) SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1260.95 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1252.61
    PREMIUM FIRST FIX: $8.34

    This post was published at Harvey Organ Blog on June 16, 2017.


  • Hayman’s Kyle Bass Sees Signs of Credit Crisis in China

    Kyle Bass, Hayman Capital Management’s chief investment officer and managing partner, comments on the outlook for China’s economy during an interview with Bloomberg‘s Erik Schatzker at the Milken Institute Global Conference.

    This post was published at bloomberg


  • The Economy Is Rolling Over Which Will Result In A Catastrophe – Episode 1271a

    The following video was published by X22Report on May 4, 2017
    Jobless claims crash to multi year lows, and if we look back in time every time jobless claims fall like this we entered a recession. Apple says manufacturing is coming back to the US, but its not what you think. Core factory order tumble and industrial production collapses. Kyle Bass warns that we are in big trouble, the system is going to crash, China is crashing now and it’s only a matter of time before the entire system rolls over and collapses


  • S&P Futures Jump Ahead Of GOP Healthcare Vote, Ignore China Commodity Crash

    S&P futures rose on hopes a successful Republican healthcare vote on Thursday will unlock the Trump fiscal agenda, while European shares jumped to a 20 month high on signs Macron is poised to win Sunday’s French election coupled with reassuring corporate results, including strong earnings from HSBC, even as Chinese and Australian stocks fell as commodities, and iron ore futures particularly, tumbled. Oil also declined while the Bloomberg Dollar spot index fell 0.1% in London morning trading, after gaining 0.4% Wednesday. It weakened against all but two of its Group of 10 peers.
    As reported overnight, Iron ore traded in China plunged limit down (-8%) in the afternoon session, with Rubber also limit down (7% lower), and steel rebar, coke, coking coal tumbling over 6% on concerns a crackdown on Wealth Management Products and shadow banking in general – in addition to the worst service sector PMI print in nearly a year – could result in a hard-landing for the Chinese economy (something both PIMCO and Kyle Bass warned about in the past 24 hours). Of note: the drop in iron ore prices was the biggest so far this year.
    Concerns about a crackdown of credit in China also dragged 10-yr treasury futures lower, down 0.44% at the close, while the 21st Century Business Herald reported that Chinese borrowing costs in April surged with the average coupon rate up near 200bp.

    This post was published at Zero Hedge on May 4, 2017.


  • Chinese Commodities Crash Limit-Down As Wealth Management Product Issuance Collapses

    It seems Kyle Bass’ warning was extremely timely. The deleveraging of China’s $4 trillion shadow banking system just accelerated massively as Bank Wealth Product Issuance crashes 15% month-over-month. With stocks and bonds already plunging, commodities joined the ugliness tonight with Dalian Iron Ore limit down (8%) at the open (not helped by tumbling auto demand).
    As Bloomberg reports, China April Bank Wealth Product Issuance Falls 15% M/m
    Number of wealth management products issued by banks fell to 10,038 from 11,823 in March, 21st Century Business Herald reports, citing citing Wind Info data. The decline came after regulator tightens regulation on macro-prudential assessment and interbank business. Among top ten banks by wealth product sales, nine sold less than previous month (with the Agricultural Bank coillapsing 48%) only Minsheng Bank issued more.

    This post was published at Zero Hedge on May 4, 2017.


  • Kyle Bass Warns “All Hell Is About To Break Loose” In China

    China’s credit system expanded “too recklessly and too quickly,” and “it’s beginning to unravel,” warns Hayman Capital’s Kyle Bass.
    Crucially, Bass notes that ballooning assets in Chinese wealth management products are another sign of a looming credit crisis in the nation.
    “Some of the longer-term assets aren’t doing very well,” Bass said on Bloomberg TV from the annual Milken Institute Global Conference in Beverly Hills, California. “As soon as liabilities have problems – meaning the depositors decide to not roll their holdings – all hell breaks loose.” The wealth management products, or WMPs, have swelled to $4 trillion in assets in the last few years, he said., on a $34 trillion banking system…
    “think about this – in the US, our asset-liability mismatch at the peak of our subprime greatness was around 2%! … China’s mismatch is more than 10% of the system.” Must Watch simplification of the next stage of the credit cycle in China…

    This post was published at Zero Hedge on May 3, 2017.


  • In Rare Twitter Appearance, Kyle Bass Slams Chinese Capital Lockdown

    The Chinese have made it next to impossible for multi-national corporations to remove money from China. Many have been unable to since NOV.
    — Kyle Bass (@Jkylebass) April 9, 2017

    Hayman Capital’s Kyle Bass has traditionally been media shy when it comes to public appearances or statements on Twitter, and in fact has rarely if ever Tweeted since joining the platform in February 2015. The changed that last night.
    The hedge fund manager, who over the past 18 months has obsessed with China’s financial system, and specifically the precarious state of its banks, betting on a collapse in the Chinese Yuan on expectations of ongoing capital outflows and/or a financial crisis, referenced a South China Morning Post article discussing the strict lockdowns implemented by Beijing on capital flight, saying “The Chinese have made it next to impossible for multi-national corporations to remove money from China. Many have been unable to since NOV.”
    In his most recent interview with Bloomberg’s Erik Shatzker, Bass said that China has ‘recklessly built a system that’s going to need to restructure and that just so happens to be metastasizing right when Trump becomes elected. This is a fire that’s been smoldering and it’s now starting to burn, and Trump is just more gasoline.” As he put it later “in lifecycles, what Trump is going to do, he is going to speed everything up.” It remains to be seen if that statement, which was spot on for the most part since Trump’s election, will need to be revised in the aftermath of Trump’s recent meeting with Xi Jinping, especially with Reuters reporting that China’s media “cheered” the meeting between the two heads of state.

    This post was published at Zero Hedge on Apr 9, 2017.


  • China’s Banking System Hits $33 Trillion, Overtaking The Eurozone As World’s Largest

    Something historic, if largely unnoticed, took place at the end of 2016: China’s banking system surpassed that of the eurozone, becoming the world’s largest by assets, which according to the FT is a sign of both of the country’s increased influence in world finance and its reliance on debt to drive growth since the global financial crisis. It is also a confirmation that when it comes to interwoven, “Too Big To Fail” financial systems, nothing compares to China and that the onus is on Beijing to keep its banks viable and solvent at all costs.
    Chinese bank assets, frequently discussed here and which are also the basis for Kyle Bass’ bearish stance on China, hit $33 trillion at the end of 2016, versus $31 trillion for the eurozone, $16 trillion for the US and $7 trillion for Japan. The value of China’s banking system is now more than 310% the size of its GDP, compared to “only” 280% for the eurozone and its banks.
    Putting China’s banking dominance in context, 4 of the 5 largest global banks are now Chinese:

    This post was published at Zero Hedge on Mar 6, 2017.


  • Kyle Bass Has Found A “Breathtaking” Opportunity With The “Greatest Risk-Reward Profile Ever Encountered”

    Last February, when Kyle Bass announced the upcoming launch of a dedicated fund to short the Yuan, as part of a bigger macro short unveiled in his report on ‘The $34 Trillion Experiment: China’s Banking System and the World’s Largest Macro Imbalance’, many were skeptical if not outright mocked the Hayman Capital founder.
    One year later, it is those who invested alongside Bass that are laughing, because as Bass writes in his latest letter to investors, “I am pleased to share that the Hayman Capital Master Fund, LP’s estimated net performance for the calendar year of 2016 was 24.83%”, or double the S&P’s return including dividends. Putting this return in a longer context, those who have invested with Hayman since the fund’s inception in 2006, this represents an inception-to-date return of 436.75% and an annualized return of 16.70%.
    Not bad.
    So where is Bass now? As he unveiled in his letter, he is sticking with Asia, which he will cover with a brand new Asia-focused fund, his third, “designed to provide investors with nuanced access to perhaps one of the largest imbalances in financial markets history.”

    This post was published at Zero Hedge on Jan 5, 2017.


  • Kyle Bass warns the clock is ticking for China’s banking system

    Texan hedge fund manager J. Kyle Bass, the founder of Hayman Capital, reiterated his timeline for his big bet against the China’s ‘recklessly built’ banking system.
    ‘Sometime in the next 18 months you’re going to see a real banking crisis in China,’ Bass said on Wednesday at the Vanity Fair New Establishment Summit. ‘Economic reality takes over.’
    Back in February, Bass unveiled his case in an investor letter entitled ‘The $34 Trillion Experiment: China’s Banking System and the World’s Largest Macro Imbalance.’
    Bass, who gained notoriety for correctly betting against the U.S. subprime crisis, wrote that similar to the U.S. banking system, China’s banking system has ‘increasingly pursued excess leverage, regulatory arbitrage, and irresponsible risk taking.’
    He believes that the Chinese banking system losses will be gargantuan. ‘They’re four-times worse than we were at our peak in 2006,’ he said during the panel.

    This post was published at Yahoo


  • Kyle Bass Shares The “Stunning” Thing A Central Banker Once Told Him

    If you ever wanted to get a look inside the mind of Kyle Bass, founder and CIO of Hayman Capital Management, here is your chance. In a wide-ranging discussion with Grant Williams, author of Things that Make You Go Hmm and co-founder of Real Vision TV, he shared his thoughts on position-sizing, China, the appeal of holding gold, central banking, interest rates – and much, much more.
    Predictably, the one topic that got the most attention was China, where as widely known Bass has made his next “career” wager, expecting a substantial devaluation of the currency, a process which had stalled out in recent months but has once again picked up speed.
    Looking at recent data, and specifically something we pointed out two weeks ago, Bass said the country’s $3 trillion corporate bond market is ‘freezing up’ amid rising defaults and canceled debt sales. ‘We’re starting to see the beginning of the Chinese machine literally break down.’

    This post was published at Zero Hedge on Jul 1, 2016.


  • ‘Smoldering Bonfire’ Shows Where Kyle Bass May Be Right on China

    Kyle Bass, the U.S. investor known for betting against subprime mortgages, is among famous money managers who expect turmoil in a Chinese banking industry struggling with bad loans. It’s in the least-known corners of the financial system that their predictions could start to come true.
    Dotted across the country from Harbin in the north to the tropical island of Hainan in the south, China’s 134 city commercial banks have multiplied their risks by piling into opaque investment products just as bad loans are rising. Warning signs are flashing at lenders such as China Resources Bank of Zhuhai Co., which posted a 90 percent slump in profit in 2015 after almost tripling loan-loss provisions.
    ‘It’s a smoldering bonfire,’ said Keith Pogson, a senior partner for Asia-Pacific financial services at Ernst & Young LLP. ‘If the wind changes and inflames it rapidly it could burst into flames quite easily.’

    This post was published at bloomberg


  • Gold Daily and Silver Weekly Charts – FOMC Tomorrow – The Gathering Storm

    ‘The combination of power, optimism and abstract thinking makes powerful people more certain. The more cut-off they are from others, the more confident they are that they are right.’
    Margaret Heffernan, Willful Blindness
    “I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on we all know will end poorly at some point in time, I just don’t know when that time is…
    I think that one of the fears that they have is a run on cash. If they told you and I that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.”
    Kyle Bass, Hayman Capital
    Gold showed some strength today despite the long run up from the bottom it experienced for the expiration of the June options on the Comex.

    This post was published at Jesses Crossroads Cafe on 14 JUNE 2016.


  • Kyle Bass Was Right: SocGen Does The Math On China’s Staggering NPL Problem, Issues Dire Warning

    Yesterday, when reporting on the latest development in China’s ongoing under-the-table stealthnationalization-cum-bailout of insolvent enterprises courtesy of a proposed plan to convert bad debt into equity, we noted that while China has already managed to convert over $220 billion of Non-performing loans into equity, concerns – both ours and others’ – remained. As Liao Qiang, director of financial institutions at S&P Global Ratings in Beijing, said coercing banks to become stakeholders in companies that could not pay back loans will further weigh down profits this year. Instead of underpinning stability at banks, the efforts undermine it.
    That said, while many have voiced their pessimism about China’s latest attempt to sweep trillions in NPLs under the rug, there had been no comprehensive analysis of just how big the impact on China’s banks, economy or financial system would be as a result of this latest Chinese strategy.
    Until now.
    In a must read note released by SocGen’s Wei Yao titled “Restructuring China Inc.” the French bank tackles just this topic (and many others). What it finds is disturbing and serves as a confirmation of all recent bearish assessments – most notably that of Kyle Bass – that China’s bad debt problem will end in tears.
    Here is Yao’s summary:

    This post was published at Zero Hedge on 05/23/2016.


  • What Capital Controls? Chinese Buyers Flood US Real Estate Market With $110 Billion

    We’ve chronicled extensively the capital flight taking place out of China and into anything that is perceived to hold value as fears that the yuan will devalue persist (here, here, and here). We’ve have also coveredthe massive debt bubble that has been created during China’s ferocious attempt to prove those who say a hard landing is inevitable wrong. George Soros and Kyle Bass also agree that China will inevitably have to devalue its currency in order to soften a crash landing, certainly not without its consequences.
    We know that Chinese buyers have taken over the Canadian real estate market, and we’ve witnessed themassive amount of corporate M&A being done in the name of preserving shareholder capital. Now we’re able to learn, courtesy of a study done from the Asia Society and Rosen Consulting Group, just how much individual wealth has been poured into the United States real estate market over the past few years.
    According to the study (which excludes most purchases by companies and trusts), Chinese buyers have invested a massive $110 billion into the US real estate market between 2010-2015. The $110 billion is broken out into two parts, commercial and residential real estate, absorbing $17 billion and $93 billion respectively. Furthermore, despite the speculation that China will find a way to clamp down even harder on capital controls, the study estimates that for the second half of this decade the number will likely double to $218 billion.

    This post was published at Zero Hedge on 05/16/2016.


  • China’s Debt Bomb: No One Really Knows the Payload

    The ramp up in Chinese debt accumulation has been a leading concern of investors for years. The average total debt of emerging market economies is 175% of GDP, and skyrocketing corporate non-financial debt has launched China far beyond that number. The real question is: by how far?
    The answer is disconcerting, because nobody really knows.
    If the Chinese debt bomb is detonated, the impact on markets is anybody’s guess. Kyle Bass says the losses would be 5x that of the subprime mortgage crisis, while Moody’s says the bomb will be safelydisarmed by authorities far before it goes off.
    In today’s chart, we look at various estimates to the size of China’s debt bomb, its payload, and what might spark the fuse.
    China’s Debt Bomb: The Payload
    Mckinsey came out with a widely-publicized estimate of China’s debt at the beginning of 2015. Using figures up to Q2 2014, they estimated that total Chinese debt was 282% of GDP, an increase from 158% in 2007.
    Since then, various trusted organizations have come up with follow-up estimates.

    This post was published at The Burning Platform on 14th May 2016.


  • Greenspan Admits The Fed’s Plan Was Always To Push Stocks Higher

    Former Federal Reserve Chairman Alan Greenspan admitted in an interview with Sara Eisen that quantitative easing did what it was supposed to do, which was to inflate stock prices and drive multiple expansion.
    He was confused as to why things such as corporate earnings, capital spending, and productivity have declined given how much QE was pumped into the system. The answer to the riddle of course, is that QE was never intended to help fix anything fundamentally, it was as Kyle Bass said recently, simply a mechanism to transfer wealth and make the rich richer.

    This post was published at Zero Hedge on 04/18/2016.


  • Bundesbank Defies Elites: Warns That “Plans To Abolish, Criminalize Cash Out Of Line With Freedom”

    With everyone from ivory tower academics to sin-street hookers proclaiming the need for and benefits of a “war on cash” to save the world from criminals and tax-evaders (oh yeah and to stop NIRP-driven savers from hording cash and crushing central planners’ dreams), it is perhaps shocking that Bundesbank board member Carl-Ludwig Thiele warned at an event this week that the attempt to abolish and criminalize cash is out of line with freedom. He said that citizens should continue to decide how and in what form they want to use their money.
    While Kyle Bass warned that
    “I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on we all know will end poorly at some point in time, I just don’t know when that time is.” “I think that one of the fears that they have is a run on cash. If they told you and I that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.“

    This post was published at Zero Hedge on 04/17/2016 –.


  • Kyle Bass On The Resurgence Of Gold And The Looming “Run On Cash”

    Hayman Capital founder Kyle Bass sat down recently for a conversation with Maria Bartiromo and Gary Kaminsky on Wall Street Week. He covered a variety of topics such as NIRP, income inequality, and the U. S. presidential race. As our regular readers know, Kyle correctly predicted the housing crisis, and is now calling for the yuan to be dramatically devalued.
    On the growing use of negative interest rates as a central bank policy tool, he pointed out that while the central planners have their PhD’s and elaborate excel models, the reality is that not all people behave rationally, and thus in the real world those types of policies won’t necessarily work as intended. He also touched on the fact that a concern that should be on the front of everyone’s mind is the fact that if NIRP goes full Shinzo Abe and banks start charging customers for keeping cash at their banks, that there will be a run on cash.
    “I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on we all know will end poorly at some point in time, I just don’t know when that time is.”

    This post was published at Zero Hedge on 04/16/2016.