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Top investor Kyle Bass warns the Fed could crash the stock market this year — and predicts oil prices will surge this summer

Markets Insider
Markets Insider
 2022-01-14
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Kyle Bass. Reuters

Veteran investor Kyle Bass warned stocks could crash this year, predicted an oil-price surge within months, and blasted buyers of Chinese equities as irresponsible, in a CNBC interview this week.

Federal Reserve officials, under pressure to curb soaring inflation, are widely expected to hike interest rates and trim the central bank's bond holdings in the coming months.

"There's no way the stock market goes up this year, and it probably goes down pretty aggressively, if they stick to that plan," Bass said.

The Hayman Capital Management boss added that raising short-term interest rates by just 100 or 125 basis points could spark a 25% drop in the stock market. That scale of decline would likely spook the Fed and lead to it scrapping its plans for further tightening, he said.

Bass predicted that West Texas Intermediate, the benchmark US oil price, would jump from $83 a barrel to $100 in the first half of this year. He suggested the global economy's reopening would reignite energy demand, and the recent shift of capital spending from hydrocarbons to clean energy would result in supply constraints.

"Buckle your seatbelts," he said, adding that he doesn't expect hydrocarbon demand to fall over the next 20 years, as a global transition to renewable energy will take 40 or 50 years.

Finally, Bass cautioned against gambling on Chinese stocks rallying this year. "People who are betting on a bounce, that's a fool's game," he said.

The hedge fund manager highlighted the risk of accounting fraud due to a lack of financial audits in China, and the prospect of further regulatory crackdowns on Chinese companies.

"People investing in Chinese equities are breaching their fiduciary duties to their investors," he said.

Comments / 98

Kurt Angst
01-14

Overall demand is starting to fall, retail sales are down. This is what needs to happen to curb inflation. They do not need to raise interest rates that is all an excuse to make you pay more. You see how long gas prices were down, NOT. Stop Buying...... Then the economy won't seem so strong.

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Jethro Da Oil Man
01-15

Inflation rate is created by the country's debt and nobody is better than creating more debt without any good explanation then Biden and the democrats. There was just over 23 million government employees when Biden showed up in office and in less than a year we are approaching 24.5 million government employees including the White House staff members which president Trump narrowed it down to 193 and currently Biden has 619 doing the same work except now they are handlers changing Bidens diapers, dressing him etc.

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Jerry Smith
01-14

This just shows me that the federal reserve is a joke and the stock market is artificially to high. The Fed should of raised rates back when Obama was still president.

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