This week, we speak with Jim Chanos, famed short seller and founder Kynikos Associates. Chanos helped to expose a number of financial frauds, most famously Enron, Baldwin-United, and Drexel Burnham
Chanos explains why his portfolios are long/short — he assumes markets will go higher over time. Kynikos is long the S&P500 & MSCI and selects individual companies to be short against those indices. The firm uses the S&P500 index as its benchmark.
He explains that relations with China have changed: The hardening of US-China relations that existed due to the trade war has now spread — Europe and even the Democrats in the US view China more warily because of Covid-19. The credit story in China continues to be an issue, as their debt growth is a multiple of their growth rate. The ticking debt time bomb is their mortgage, personal and corporate debt within their economy. Chanos states: “Chinese apartment are still the most important asset class in the world in my view.”
The American public won’t be happy with corporate bailouts now that their tax rates have been slashed to 21%. Chanos points out that the Capital/Labor super-cycle has gone through 40-year cycles (1935-75; 1980-2020) He thinks the pendulum has begun to reverse its direction again.
You can stream and download our full conversation, including the podcast extras, on Apple iTunes, Spotify, Overcast, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.
Next week, we speak with Jim Bianco, President and Macro Strategist at Bianco Research.
Jim Chanos Favorite Books
Bubble in the Sun: The Florida Boom of the 1920s and How It Brought on the Great Depression by Christopher Knowlton
The Demon-Haunted World by Carl Sagan
Books mentioned by Barry
The Heretics: Adventures with the Enemies of Science by Will Storr
A World Lit Only by Fire by William Manchester