The second speaker at the Harbor Investment Conference is Andrew Feldstein, CEO of BlueMountain. Boaz Weinstein pitched the London Whale trade last year at the conference. Andrew bet against JPMorgan Chase & Co. (NYSE:JPM) and helped unwind the trade in the end. Ackman considers Weinstein and Feldestein as some of the smartest people in credit.
Feldstein gives quick background of the hedge fund, AUM is $12.5 billion. The hedge fund uses different strategies but key is asymmetric properties.
Andrew talks about the steel industry, and notes that China produces and consumes 46% of the world’s steel. Per capita consumption of steel is also supposed to beat the US shortly. We will have more in depth coverage on this topic soon.
However, the question is what if steel demand gets more volatilty as the past 100 years of data shows it to be extremely volatile asset. There are signs that Chinese steel demand is starting to crack. China only exports 7% of its steel, yet still the world’s largest exporter. On the other hand, Japan exports 67% of its steel but less in total exports.
If Japanese steel demand starts to decline due to demographics and decreasing Chinese demand this could hurt Japanese exporters.
The idea is related to CDS on Japan’s the second largest domestic steel producer
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