That was short-selling giant Jim Chanos, founder of Kynikos Associates, speaking to CNBC on Monday, warning that investors are not properly factoring in a bear-market impact on corporate profitability.
Chanos is famed for shorting Enron and then scoring a $100 million win by shorting Wirecard before its collapse.
Ahead of the Federal Reserve’s...
“I’ve been on the Street [since] 1980 [and] not one bear market has ever traded above nine times to 14 times the previous peak earnings.”
That was short-selling giant Jim Chanos, founder of Kynikos Associates, speaking to CNBC on Monday, warning that investors are not properly factoring in a bear-market impact on corporate profitability.
Chanos is famed for shorting Enron and then scoring a $100 million win by shorting Wirecard before its collapse.
Ahead of the Federal Reserve’s interest-rate decision on Wednesday, Chanos said that, over the coming six or seven months, the market is expecting corporate profits to increase by 12%, the Fed to ease by the end of the year and the U.S. inflation rate to come down to 2%. “That’s pretty much nirvana, if you’re a bull,” he said. “They’re wrong all the time, but people are pricing in a pretty nice Goldilocks scenario.”
He doubts that the bulls’ dream will come true.
“If you think [S&P 500] earnings are peaking now at $200, that’s a long way down,” he said. “That’s 1,800 to 2,800 [on the S&P]. We are not anywhere near that.”
In his hedge fund, Chanos said, he was until recently net-long, but the fund’s positioning swings back and forth between net-short and net-long.
“I think we’ve gone back down to zero, plus or minus, and in our short-only funds we’re 60% to 80% — just depends on the individual names,” he said. “We try not to take a lot of [systemic] risk.”
Regarding companies and sectors in which he has short positions, Chanos said that he’s been short New York offices “for a couple of years now,” specifically SL Green Realty Corp. SLG .
“I just don’t get people buying any kind of commercial real estate that doesn’t see good demand at this point,” he added. “I just don’t want to buy New York office buildings right now.”
SL Green was trading 6% higher in the last week but 45% down in the last 12 months.
Chanos also has short positions in AMC AMC , Tesla TSLA and Coinbase COIN .
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