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Steve Eisman, the hedge fund manager known for betting against the US housing market before the crash of 2008, is sounding the alarm on the Canadian market.
In an interview with the Financial Times, Eisman said: "I'm calling for a simple normalization of credit that has not occurred for 20 years." He did not indicate the size of his positions or the names of the banks he was targeting.
Eisman, a central figure in the book "The Big Short" and the movie that followed, joined a group of investors betting against the Canadian economy hoping that bank stocks would be affected if the real estate market was deteriorating. Eisman also said that he was missing two British banks in the hope that Britain will separate from the European Union without getting out.
Eisman was keen to point out to the FT that the current situation was not as cataclysmic as in 2008. "This is not" The Big Short: Canada "- I do not ask not a collapse of the real estate market, "he said.
Short sellers have targeted banks such as TD Bank and Royal Bank of Canada over the last few months, with real estate prices now exceeding wages in Canada after years of low interest rates. and lax rules on foreign ownership, the FT said.
Today, the Canadian economy is starting to weaken, with Eisman taking a stand following the recent collapse of the housing sector after years of strong growth. Luxury home sales fell in key markets like Vancouver and Toronto in early 2019, according to data from Sotheby's International Realty Canada.
Bets against Canadian banks have risen 19% since the beginning of the year to reach positions worth $ 12.3 billion, said the FT, quoting the firm S3 Partners.
TD Bank, in Toronto, is the main target of short sellers who have seen the bets on its stock reach $ 3 billion since January, an increase of 17%. Similarly, CIBC bets increased 26% to $ 2.3 billion and short positions on the Bank of Montreal increased 37% to $ 1.3 billion. declared S3 Partners to the FT.
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