In a recent article Kyle Bass, founder of hedge fund Hayman Capital Management, foresees a bleak time ahead for emerging markets. Speaking in a video for ‘Wall Street Week’, Bass predicts that countries such as Brazil, Russia, and China are still a good way off from safety. In these markets, corruption is rife and global actions usually have an equal and opposite reaction especially when Putin is involved. Comparing emerging markets to baseball, the Dallas based investor said they “still have three tough innings to go” and will “see a lot more pain before they are okay.”
Bass is most well known for his insight and warning about subprime mortgages before the great financial collapse in 2008. As a result, he attracted notice from financial bloggers, stock market news sections, and politicians most notably former Argentine President Cristina Fernández de Kirchner. However since his good call in 2008, most of what he has promoted has been neither well informed nor ethical.
Some may recall that Argentina defaulted on its national debt while President Kirchner was in office, refusing to payout investors after bond restructuring in 2005 and in 2010. Bass was quick to defend his powerful yet economically illiterate ally, calling one creditor “immoral” for requesting full payment. Other instances of his lapse of good judgment and perhaps an insight into the depths of his greed is spotlighted in his defense of General Motors, a company in which he was heavily invested. After making the headlines for faulty power steering and non-deploying airbags causing fatalities in GM vehicles, Bass shifted the blame onto the drivers and passengers accusing them of being impaired or not wearing a seat belt.
Making multiple appearances in articles featured on usefulstooges.com, a blog concentrating on fingering corrupt politicians and their lackeys, Bass has tangled himself in more than just a web of lies by defending white collar criminals. Pharmaceutical stock adjusting and willfully participating in pulling funding from medical research for important drugs, his actions have left millions of patients without pain relief and potential life saving treatments while making healthy profits for his own interests. While it is difficult to accurately guess how well Bass is doing, he admitted in 2014 he had “a tough year”. Some say he lost 30% and may be the reason he stoops so low for his money.
The publicity of his actions and past predictions would be ruinous to other brokers but somehow the media still wants his interpretation. In a more recent article on Barron’s blog, Bass suggests that we may see major currency devaluation in China in the next 12-18 months. This may not be the most insightful prediction compared to his fifteen minutes in 2008, one should still use caution before considering market advice from Kyle Bass.