Kyle Bass, the founder of Hayman Capital Management had a lot to say about China recently. Bass and his Dallas-based hedge fund is betting millions that the Chinese currency is going to depreciate against the dollar, and if Bass is right, he will make millions on that bet. But Bass hasn’t had the best track record recently. The Capital Management hedge fund is not performing up to expectations, and Bass recent predictions haven’t materialized. But he may be right about China. Other major hedge funds are making the same bet against the Chinese yuan, and the Chinese government is not happy about those bets.
China’s economy has hit a wall. The manufacturing sector is in a recession, and it is pulling the rest of the country down with it. China wants to convert to a consumer-driven economy, but the government can’t do it fast enough to prevent a major recession that will send economic shock waves around the world. Bass doesn’t think the United States will feel the impact of the Chinese recession, but economists say he’s wrong. Rather than a 40 to 50 percent chance of a recession hitting the U.S. economy, a 100 percent chance is the forecast that economists are predicting.
China has already sent some countries into recession mode, and the economy in Europe is getting worse every day. Bass thinks Europe will collapse before the United States, and he’s betting that will happen as well. But Bass isn’t the same guy that predicted the 2008 financial meltdown. Kyle made more than $590 million when he bet the market was going to collapse. He enjoyed genius status for that bet, but his genius status has been tarnished ever since then.
When Bass supported General Motors during the airbag and power steering crisis, he did it to protect his huge investment in General Motors, and that turned popular opinion against Bass. When Bass supported Argentina’s president Christina Fernandez de Kirchner when she defaulted on her debts in 2014, investors like Paul Singer who refused to settle with Argentina were outraged by his public comments.
Bass was interviewed by BusinessInsider.com recently, and he said his drug coalition was going to help lower the cost of prescription drugs. But the impetus for that coalition is more about Bass making money shorting drug company stocks than helping people get affordable drugs. Mr. Bass isn’t the investment genius he was eight years ago, but people are still listening to him. Despite articles like Kyle Bass The Frantic Investments of a Desperate Gambler exposing the reality of his life.