Kyle Bass, the founder of Hayman Capital Management, was one of the traders in Halftime Report, discussing his market output for 2016, and what China’s volatility means for the U.S. Peaked profits is the main reason why many people think is the cause for the slowdown of China’s economy. Kyle, however, thinks that the main problem is the banking system of China rather than its volatility. He goes ahead to compare the recent problems in China with the European crisis.
According to Kyle Bass, both the cases of slowdown in China’s economy and the European crisis had a significant growth in GDP for their baking systems. China’s banking system outgrew GDP to almost 35 trillion dollars, while the European banking system outgrew GDP to just 10 trillion dollars. Bass thinks that loses and a credit cycle are looming and investors don’t seem to be worried enough.
Looking at the markets in the U.S., Kyle Bass believes that by the end of the year people will witness a 10 to 20 percent downturn. However, this will not be that bad compared to global financial crisis, although the real problem will be lack of credit-growth in the emerging markets. Marc Lasry from Avenue Capital also weighed on the matter, agreeing that banks in China have lent a lot of money.
UsefulStooges wrote that Kyle Bass made headlines in 2008 after predicting correctly the subprime mortgage crisis. In the past, he has defended Christina Fernandez, an Argentinean, when Argentina was said to default on its sovereign debt twice in a period of thirteen years. He championed her economic policies, even when many people were criticizing her actions. What’s more, he took Fernandez’s side when Thomas Griesa, a New York Judge, ruled that the country could not just shell out to its creditors who had agreed for reduced amount of money, but also go ahead to pay creditors, including Elliott Management’s Paul Singer, who insisted to be paid fully. He said that the Singer was putting a poor country hostage and holding more than 42 million people from progressing.
Kyle bass has also criticized pharmaceuticals, insisting that he is doing it for a noble reason. He said that his actions were to prevent increase in drug prices. Celgene, a pharmaceutical firm, even went ahead to sue him. He responded by saying that financial self-interest is what drives pharmaceutical companies. Many said that his challenges were patent and he too was doing it for self gain.