Bass's Hayman Capital Up +24.8% in 2016, Warns of 'Tectonic Shift' in Global Markets Jan 4 2017 | 8:52pm ET Kyle Bass’s Hayman Capital reversed first-half losses in its flagship fund to end last year with a gain of 24.83% due to prescient calls on currencies and bond market developments. The return compares with a roughly 9.5% gain for the S&P 500 in 2016. Bass reportedly shorted currencies including the yen, euro and yuan while also selling the sovereign bonds of the U.S., Japan and several European nations, according to an investor letter. His timing was good; global bond prices plummeted in the final two months of last year, while the U.S. dollar has soared. Bass’s fund was down approximately 10% at the end of 2016’s second quarter, according toTheWall Street Journal, and his AUM had fallen from $2.3 billion in 2014 to around $770 million in June 2016. In the investor letter, Bass also warned of more volatility ahead, saying global markets are at the start of a “tectonic shift” from deflationary expectations to inflationary ones. Complicating matters is the tremendous leverage in place across global economies, which was workable as long as interest rates were low but could become problematic as they rise. “As we enter 2017, we believe enormous macro imbalances are just beginning to unwind,” Bass writes in the letter, which was first seen byYahoo Finance. “We hold a nuanced view…that contemplates higher global inflation, tepid real economic growth and severe imbalances in select Asian financial systems and currency markets.” “The enormity of the apparent disequilibrium is breathtaking, making today a tremendous time to invest,” Bass added. Bass’s Hayman China Opportunities Fund, which launched in July, has reportedly gained nearly 6% since inception as the Chinese currency has weakened. Bass has been bearish on the Chinese banking system for some time, writing in February 2016 that the sector was “the world’s largest macro imbalance.” Bass founded Hayman in 2005 after stints at Bear Stearns and Legg Mason. He rose to prominence for correctly predicting the 2008 subprime crisis, and his macro fund has returned 436.75% since inception (16.7% annualized), according toWall Street Journaldata. In addition to his macro plays, Bass has gained notoriety since 2015 for a “short activist” effort challenging the patents on range of blockbuster drugs owned by various healthcare and biotech companies.
Dalio said the same. We're moving from financial oppression to liberation. Trump will force other economies to compete in the new global tax-reg paradigm of his creation, otherwise suffer massive capital flight to America. This is all very bullish. There's gunna be a big correction sooner then later. Yellen may try to screw it up by raising quickly.
Inflation in the US leads to capital flight to the US? What universe does this line of "thought" come from?