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The ‘Big Short’ In Canada: Eisman Ups Bets Against “Big Six” Canadian Banks

The ‘Big Short’ In Canada: Eisman Ups Bets Against “Big Six” Canadian Banks 

Over the last year, Neuberger Berman portfolio manager Steve Eisman – who gained notoriety beyond Wall Street thanks to ‘The Big Short’ and his portrayal by Steve Carrell in the movie adaptation – has taken seemingly every opportunity to talk his book, which apparently consists of concentrated bets against the financial systems of two developed nations: The UK and Canada.

Though UK banks largely bottomed out in October and have managed only a tepid rebound since, their Canadian peers have clawed back much of their losses from late last year. But this hasn’t shaken Eisman’s faith in his bet against Canadian banks, which is effectively a bet against the Canadian housing market (though Eisman doubts the fallout will be anywhere near as intense as the US housing market collapse that minted his reputation).

Eisman

During an interview with the FT that was published on Thursday, Eisman explained that he’s simply betting on a “normalization of credit” in the Canadian economy, where lax lending terms fueled a housing bubble that has been tentatively acknowledged as a systemic risk by the Bank of Canada. For the first time ever, the central bank late last year even started buying mortgage bonds late last year to prop up the sliding Canadian housing market help increase the tradeable float of its benchmark securities

“I’m calling for a simple normalisation of credit that hasn’t happened in 20 years,” Mr Eisman told the FT, while declining to name the banks he is shorting, or the full extent of his positions.

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“The Big Short’s” Steve Eisman Is Shorting UK Banks, Expecting A Hard Brexit

Amid fresh reports that Theresa May may have a “secret” Brexit deal up her sleeve, one that would finally allow her to secure a deal that could win parliamentary approval thanks to a major concession from the European Union, one famous trader isn’t buying it.

Speaking at a conference in Dubai on Sunday, “The Big Short’s” Steve Eisman said that he is shorting two U.K. banks on expectations of a hard Brexit. Eisman said that the U.K. is one of the biggest risks Eisman is watching, and while he declined to name the two banks he is shorting, he said that he expects the U.K. government to agree its exit from the bloc, but that Parliament is likely to reject the deal after that, Bloomberg reported.

“I’m shorting two stocks in the U.K., but 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,” Eisman said. “Corbyn’s a Trotskyite. Now I know my Trotskyites well and I know you don’t want to be invested in the U.K. if a Trotskyite is prime minister.”

While Eisman didn’t hint which banks he’s targeting, Bloomberg notes citing Markit data that Metro Bank and CYBG are the most shorted financials in the FTSE 350 Index. Metro has 7.9% of its outstanding shares shorted, double the ratio at CYBG. Eisman also said that he’s still shorting Tesla, despite the carmaker’s impressive surge since reporting strong results.

British and European negotiators remain locked in talks to break the deadlock over how the UK will exit the EU with just five months left before the deadline. The uncertainty prompted more than 70 business leaders, from lastminute.com founder Martha Lane Fox and former J. Sainsbury Plc chief Justin King, to sign a letter arguing that both the government’s current plans, and a no-deal Brexit, would be bad for companies and jobs.

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