Steve Eisman, who predicted the collapse of subprime mortgages before the 2008 financial crisis, is betting that Turkey’s economic troubles will also be a drag on two major European banks, Spain’s Banco Bilbao Vizcaya Argentaria SA and Italy’s UniCredit SpA.
Steve Eisman Shorting BBVA, UniCredit On Turkey Exposure
Does anything that's happening in the credit markets concern you because I've got a chart here that shows high yield has been outperforming the broader credit market investment grade. Now this access has been actually inverted so it might confuse you but it's just to show that riskier debt is outperforming it's a different picture to what we're seeing in equity markets. Does this say anything about where we are in the cycle and concern you at all.
It doesn't concern me in the sense that I don't see any of my usual metrics and I look at that are showing there flashing red or yellow.
So for example credit quality which is what you focus on enormously is probably the best in anyone's lifetime and there's no sign of any deterioration anywhere.
There isn't even signed titration anymore and subprime auto. So it's something that I'm particularly concerned about. And I know everybody likes to call the next disaster. I'd be happy to call it for you but I don't see it.
I know I understand but you don't see any big risks in the same way as back in 2007 but there must still be some pockets of risk where you see opportunity.
What are they. Well this turkey which obviously body knows about. And this is not necessarily a systemic problem. But you know there are two banks in Europe that have fairly large exposures to Turkey. Those are BBVA and UniCredit. So I'm short those two.