Hedgeye Podcasts The Best of Hedgeye: Kyle Bass → Recession Risk Rising
Jun 12, 2025
Kyle Bass, the founder of Hayman Capital and a distinguished voice in global macro investing, dives into the economic challenges facing China and their ripple effects on the global stage. He discusses the precarious state of China's finances, highlighting its rising leverage and dependence on imports. Bass warns about the implications of U.S.-China relations and the risks of geopolitical tensions. With recession looming, he stresses the importance of cautious investment strategies, urging listeners to reflect on historical market cycles.
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China's misleading credit impulse
- China's credit expansion largely fuels local government infrastructure and losing SOEs, not small businesses.
- Large rolling one-year loans mask credit stress, creating misleading quarterly spikes.
Trade partners reveal China slowdown
- China's trade partners show deteriorating economic data, contradicting official positive growth claims.
- Export and manufacturing declines in South Korea, Germany, and Japan signal broad regional slowdown.
China's fiscal and current account challenge
- China's current account deficit and massive fiscal deficit limit its ability to stimulate via credit expansion.
- Unlike 2016's surplus context, China now lacks FX reserves needed to fund imports essential for growth.
