Daily Market Update

Big Short’s Eisman Is Shorting U.K. Banks on Brexit

Big Short’s Eisman Is Shorting U.K. Banks on Brexit

– Eisman says U.K. is one of the biggest risks globally
– He is betting against two UK banks in the lead up to Brexit
– Eisman may short 50 other UK firms if “Trotskyite” Corbyn becomes UK PM
– Eisman is famous for betting against the US housing market ahead of the 2008 subprime-mortgage crisis

by Business Insider UK

 

The hedge-fund manager famous for betting against the US housing market ahead of the 2008 crash is shorting a pair of British bank stocks in anticipation that the UK falls out of the European Union without securing a Brexit deal.

“I’m shorting two stocks in the UK,” he told a conference in Dubai over the weekend, as reported by Bloomberg. He wouldn’t name the companies.

He reportedly told the conference that while he expects the UK to secure a deal with Brussels, he then expects that deal to be rejected in the UK parliament, ultimately forcing Britain out of the bloc without a deal.

Bloomberg notes that Metro Bank, and CYBG, the parent company of Clydesdale Bank and Yorkshire Bank, are the two most shorted UK financial stocks.

Some 6.6% of Metro Bank’s stock is currently being shorted, data from Castellain Capital’s Short Interest Tracker showed on Monday morning.

Eisman said that while he is currently shorting just two UK stocks, that number could rise as high as 50 if Labour Party leader Jeremy Corbyn were to become prime minister, because he believes Corbyn’s policies would be detrimental to the UK economy.

“I’ve got a screen of about 50, and I might short all 50 if I think Jeremy Corbyn is going to be prime minister,” he said.

“Corbyn’s a Trotskyite. Now I know my Trotskyites well and I know you don’t want to be invested in the UK if a Trotskyite is prime minister,” he added.

Eisman was the main character in “The Big Short,” the nonfiction book by Michael Lewis about the 2008 subprime-mortgage bubble in the US. Steve Carell played Eisman in the 2015 film adaptation.

Since gaining notoriety beyond the financial sphere after the book’s publication, Eisman has been a vocal market commentator, and in the last couple of years in particular has warned frequently about the health of European banks, particularly those in Italy, and Germany’s biggest lender Deutsche Bank.

“Deutsche Bank is a problem bank,” he said in an interview in May.

A short seller makes money by borrowing a company’s shares and selling them, with the aim of buying them back at a lower price and returning them, pocketing the difference.

Full Business Insider article here

 

News and Commentary

 

Goldman Says the Return of Fear Is a Good Thing for Gold (Bloomberg.com)

Stocks Drop, Yuan Slides as Trade Optimism Dims: Markets Wrap (Bloomberg.com)

Asian shares fall on trade, Fed rate hike fears, pound hits 2-week top (Reuters.com)

Gold prices hold steady amid easing dollar (Reuters.com)

Russia’s gold reserves smash Soviet-era (1941) record as part of de-dollarization drive (RT.com)

China’s new gold appetite (SCMP.com)

Families feel the pinch as cost of living rises to over €50,000 a year (IrishTimes.com)


Source: Bloomberg

The 60/40 portfolio allocation keeps burning investors, so why do they still use it? (MarketWatch.com)

Here’s what the bear market in home construction stocks is trying to tell us (MarketWatch.com)

The Heart of the Matter – S&P May Lose 2/3’s of Value – Hussman (HussManFunds.com)

Epsilon Theory: A False Sense of Stability (EpsilonTheory.com)

Gold Market Manipulation Update from New Orleans Investment Conference (Gata.org)

East trusts in physical gold while West prefers ‘mindless optimism’ (RT.com)

 

Gold Prices (LBMA AM)

02 Nov: USD 1,235.50, GBP 948.00 & EUR 1,079.83 per ounce
01 Nov: USD 1,223.25, GBP 950.47 & EUR 1,075.85 per ounce
31 Oct: USD 1,217.70, GBP 955.77 & EUR 1,074.25 per ounce
30 Oct: USD 1,220.00, GBP 956.36 & EUR 1,074.33 per ounce
29 Oct: USD 1,230.75, GBP 958.88 & EUR 1,078.38 per ounce
26 Oct: USD 1,236.05, GBP 964.98 & EUR 1,087.23 per ounce

Silver Prices (LBMA)

02 Nov: USD 14.82, GBP 11.38 & EUR 12.95 per ounce
01 Nov: USD 14.45, GBP 11.19 & EUR 12.68 per ounce
31 Oct: USD 14.34, GBP 11.23 & EUR 12.64 per ounce
30 Oct: USD 14.43, GBP 11.32 & EUR 12.71 per ounce
29 Oct: USD 14.65, GBP 11.42 & EUR 12.86 per ounce
26 Oct: USD 14.69, GBP 11.48 & EUR 12.94 per ounce


Recent Market Updates

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– Palladium Surges To All Time Record High On Russian Supply Concerns
– Happy Birthday GoldCore
– “IMF Warning Highlights Gold’s Importance As A Diversification and Happy Birthday GoldCore”
– End Of The Financial World?

Mark O'Byrne
Executive Director

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