Kyle Bass: Fundamental Strategist
The game of Chess requires that winners be several moves ahead of losers at all times. Financial markets are very similar to games of Chess in this regard, and Kyle Bass has recently emerged as a kind of international Chess Master.
According to Wiki, Bass is an Argentine who hit the scene in 2007 when he successfully predicted that sub-prime lending in America would lead to an economic collapse. Bass smacked that nail on the head and everybody started watching him. His next big prediction had to do with Japan; and again he was right about an economic implosion. As a hedge fund manager, this gave many of his clients confidence; though statistically his fund performance seems to diminish with his increasing media appearances. However this has not stopped Bass from making further predictions.
Currently he’s got his sights aimed at China. Bass believes China has been making wagers that, as a country, it cannot cash. They’ve lent in greater amounts than their GDP actually supports, and the pendulum is about to swing the other way. Kyle Bass relieves this change will come in the next year or two, and is predicting it now.
There are good reasons to trust Kyle Bass’ predictions. One reason is something he’s noted himself. Countries surrounding China have been “aggressively lending”, as Kyle put it, to China. What will this do? Well, it would put them in a position of power should an economic collapse hit China. Bass is right to note this indicator.
But there is much controversy in Bass’s dealings. Recently he’s been embroiled in negative speculation based on his stock market manipulations regarding the pharmaceutical industry. Bass started an organization called The Coalition For Affordable Drugs. That coalition was successful in diminishing the cost of certain pharmaceuticals, at the expense of a decline in stock value for those pharmaceuticals. A decline in stock value that Bass was able to turn into substantial finances for himself. His winnings on this engineered stock market decline via pharmaceutical companies were noticed by politicians on both sides of the fence in America, and they quickly began a bipartisan scramble to close that loophole up; though Bass’ damage was already done.
Bass also has ties to Cristina Fernandez de Kirchner, a well-known Argentinian socialist who has a reputation for policies many financiers find uncomfortable. Is Kyle ideologically in league with Cristina? Or is their relationship one that comes from the comradeship of mutual home countries? That’s another question which is difficult to answer.
What makes sense is to see whether Bass’s most recent prediction rings true.