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Steve Eisman: beware Canada's property bubble
Steve Eisman, managing director of Neuberger Berman, is worried about Canada's housing bubble; gloomy on Deutsche Bank; and sceptical of cryptocurrencies.
Digital currencies have boomed for two reasons, neither of them sound foundations for future investment: speculation and money laundering. So says Steve Eisman, the Neuberger Berman money manager famous for betting against US subprime mortgages before the 2008 financial crisis, reports The Wall Street Journal. "What value does cryptocurrency actually add? No one's been able to answer that question for me," he told the audience at the annual CFA Institute conference in Hong Kong.
Yet despite his scepticism about cryptocurrencies, he's not as worried about the global economy as he was prior to 2008. "I see risks but I don't see systemic risks," he said. Although he is still short-selling US bank Wells Fargo (a position he has had for several months), overall, he says, "I can honestly say the financial system in the US is safe". Instead, his main concern is Canadian property. "There's a housing bubble in Canada, which is starting to break." As a result, he is shorting several Canadian financial stocks.
Eisman is also gloomy about prospects for German bank Deutsche Bank, which has seen its shares slump by almost 34% in the past year. The German lender is "a problem bank", he tells Bloomberg. It has "profitability issues", which make it likely that it will have to raise capital next year, reckons Eisman. The new CEO, Christian Sewing, is slimming down its corporate finance business in the US and Asia, and will review its global equities business, notes Bloomberg. The measures will lead to a "significant reduction" in the workforce this year.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Alice grew up in Stockholm and studied at the University of the Arts London, where she gained a first-class BA in Journalism. She has written for several publications in Stockholm and London, and joined MoneyWeek in 2017.
Alice is now Consumer Editor at The Sun and covers everything from energy bills to Social Security.
