• Tag Archives Kyle Bass
  • Kyle Bass: “Today’s Market Resembles The 1987 Debacle On Steroids”

    The US stock market celebrated the 30th anniversary of Black Monday with the 2017 version of a rocky trading day: Stocks sold off early, with S&P 500 futures recording their steepest post-midnight drop of the year. But the dip was reflexively and aggressively bought, and stocks even poked back into the green seconds before the close as algos mistook a repetitive Politico headline about Jay Powell’s chances of becoming the next Fed chair for news – leaving us with yet another record close.
    Of course, the historical juxtaposition of the 1987 crash with today’s unnaturally placid markets practically forced even the most bullish of traders to question how much longer the present market paradigm – where markets listlessly drift through a seemingly interminable series of record highs while trading volume and volatility remain suppressed – can possibly last.


    This post was published at Zero Hedge on Oct 20, 2017.


  • Kyle Bass Sounds Off On “Worthless” Puerto Rican Debt, The Crypto “Gold Rush”, And Guns

    With the dollar’s recent post-Fed bout of appreciation providing some much-needed relief for Haymarket Capital’s P&L, its founder Kyle Bass sat for an interview on Friday with Bloomberg’s Erik Schatzker. During the 20 minute discussion, Bass expounded on the importance of holding gold, his cautiously optimistic view on digital currencies, the misguided notion that holders of Puerto Rican debt will someday be made whole – oh, and Bass’s next big call: Long Greece – particularly the stocks and debt of Greek banks.
    ***
    A few weeks ago, Bloomberg view published a Bass-penned editorial in which the hedge fund founder and CIO called on the IMF to stop bullying Greece – publicizing the fact that he is now effectively long Greece. Greek government bonds have performed reasonably well so far this year: They’re up about 16%.

    This post was published at Zero Hedge on Oct 7, 2017.


  • Kyle Bass: China’s $40 Trillion Banking System Has “Largest Imbalances I’ve Ever Seen”

    Kyle Bass’s Hayman Capital has been having a rough year thanks to its widely publicized bet against China’s currency, which has more than reversed its 2016 decline – its largest annual drop since 1994 – as the People’s Bank of China has cracked down on potentially destabilizing capital outflows.
    However, Bass – unlike a handful of other former China bears who’ve been forced to scale back, or even reverse, their positions – has said that he is standing by his belief that China’s corporate sector is massively overleveraged, and overdue for a collapse that could destabilize the global economy. Chinese banks, according to Bass, have more than $40 trillion in assets held against $2 trillion in equity.

    This post was published at Zero Hedge on Sep 17, 2017.


  • “It’s Not Worth Fighting” – Hedge Funds Are Dumping Their China Shorts

    Pretty soon, China bears will be as rare as the Giant Panda.
    At least that’s what Bloomberg suggested in a story about how Chinese markets have continued to defy proclamations that country’s economy would soon collapse in an avalanche of bad debt, exposing rampant corporate fraud. Or that a rash of outflows and the pressure of short sellers would force a massive yuan devaluation. Or that the exposure of rampant fraud and abuse in its corporate sector would tank local markets, which rely heavily on shady investment products.
    We’ve repeatedly noted when fund managers who once loudly touted their China-related positions either moderated, or changed their minds completely. Just last week, Corriente Advisors’ Mark Hart announced the end of a seven-year options position that would’ve seen a massive payoff if the yuan dropped 50%. As we noted, he’d spent $240 million rolling over the options.
    Before that, Kyle Bass, during an appearance on Adventures in Finance, said that while he was 100% certain his thesis will ultimately prove correct, calling the timing has obviously proven difficult.
    Bass, in his interview, cited shady retail investment products that have been used to backstop $40 trillion in debt with only $2 trillion in equity as a looming sign of a collapse. (We’ve also noted other questionable financing deals like the use of collateralized commodity transactions, which we discuss in greater detail in ‘Did China’s Bronze Swan Just Arrive? Copper Inventories Crash Most In History’).

    This post was published at Zero Hedge on Sep 12, 2017.


  • Bitcoin’s Biggest Bull Isn’t ‘Long Crypto’, He’s ‘Short Government’

    Six years ago, Kyle Bass provided a crucial context for the debt-laden world of ever-increasing sovereign debt:
    “Buying gold is just buying a put against the idiocy of the political cycle. It’s That Simple”
    And now, as interest in Bitcoin surges, Arthur Hayes, a former CitiGroup trader who runs BitMEX – a Hong Kong-based crypto exchange – asks an interesting question – In the coming war between digital currencies, which side will your money be on?
    As CoinDesk reports, Hayes thinks blockchain is lighting a fuse that will ignite open combat between “true cryptocurrencies” (like bitcoin) and a new “digital fiat” controlled by central banks.
    These two parallel currency systems are the inevitable outcome of his core investing thesis:
    “A digital society needs digital cash.”

    This post was published at Zero Hedge on Sep 12, 2017.


  • Kyle Bass: “China’s Credit System Is Reaching A Boiling Point”

    Fresh on the heels of the biggest-ever two-week drop in onshore dollar-yuan, noted China bear Kyle Bass gave an interview where he addressed one of the most exasperating aspects of the short-selling business, and an issue that he is no doubt grappling with at this very moment: What to do when confidence in your investing thesis is undermined by uncooperative markets.
    It’s been about three years since Bass first announced a massive bet against the Chinese yuan, a position that he has been forced to justify to his increasingly nervous investors, as the Chinese currency’s more than 6% surge since May – and its nearly 8% climb against the dollar so far this year – has more than reversed the currency’s largest one-year decline since 1994.
    To be sure, he’s still willing to explain how ballooning assets in shady Chinese wealth management products, which have swollen to more than $40 trillion in aggregate, are destined to collapse in a cascade of bad debt, taking the country’s banking system down in the process.

    This post was published at Zero Hedge on Sep 10, 2017.


  • China Capitulation: Corriente Advisors’ Mark Hart Ends 7-Year Bet On A “Massive Yuan Devaluation”

    China bears like Kyle Bass claimed victory last year after bets that the Chinese yuan would weaken paid off handsomely – particularly if they were supercharged by leverage. Hopefully, for their sake, yuan decided to lock in those gains early this year. Because since January, China’s currency has whipsawed higher, reversing most of its 2016 depreciation as the US dollar has endured a period of broad weakness, and Chinese policy makers have turned their attention to managing the currency’s valuation against a basket of currencies.
    But Mark Hart, who, like Bass is a Texas-based fund manager, and who built his bear case against China on the theory that the PBOC would opt for a series of one-off devaluations in the yuan, instead of allowing it to gradually depreciate, which would be tantamount to a policy error.
    ***
    Here’s more from a post on Hart’s outlook that we published last year:
    ‘Hart believes that the Chinese crawling devaluation is an error as it carries with its the latent threat of much more devaluation in the future, thus encouraging even more outflows, which in turn forces China to sell even more reserves, which destabilizes the economy even further, forcing even more devaluation and so on.
    Instead, a one-off devaluation would allow policy makers to ‘draw a line in the sand’ at a more appropriate level for the yuan, easing pressure on China’s foreign-exchange reserves and removing an incentive for capital outflows, according to Hart, who’s been betting against the currency since at least 2011. He adds that China should devalue before its $3.3 trillion hoard of reserves shrinks much further, he said, because the country can still convince markets it’s acting from a position of strength.’
    According to Hart, while a devaluation this year would be ‘jarring’ and may initially accelerate capital outflows, it would ultimately put China in a stronger position. He said the country could explain the move by saying it would put the yuan at a level more reflective of market forces and allow the currency to catch up with declines in international peers.

    This post was published at Zero Hedge on Sep 7, 2017.


  • 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.


  • 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