Soros Returns To Trading With "Big, Bearish" Bets On Economic Turmoil

Tyler Durden's picture

One month ago, we were stunned to report that none other than billionaire Carl Icahn had taken the net exposure of his hedge fund, Icahn Enterprises, from a modest net 25% short - his recent negative bias on the market was hardly a secret - to a practically apocalyptic, 149% net short which is about as close to betting on a market crash as one could get. 

 

Then last month, billionaire trader Stanley Druckenmiller warned that “the bull market is exhausting itself” and in a presentation titled "The Endgame", he explained why he too is dumping equities and buying gold.

It turns out Icahn and Druck weren't the only iconic traders betting on a market crash.

In a stunning one-two revelation, the WSJ reports that after a nearly decade-long hiatus, not only has George Soros returned to trading, "lured by opportunities to profit from what he sees as coming economic troubles", but that he has personally directed "a series of big, bearish investments", meant to profit from the coming economic turmoil .

The last time Soros became closely involved in his firm’s trading: 2007, "when he became worried about housing and placed bearish wagers." Over the next two years the bets netted more than $1 billion of gains.

According to the WSJ's Greg Zuckerman, Soros Fund Management, which manages $30 billion for Mr. Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. Investors view gold as a haven during times of turmoil.

The move is rather shocking for the 85 year old, who earned fame with a bet against the British pound in 1992, a trade that led to $1 billon of profits. In recent years the billionaire has focused on public policy and philanthropy. He is also a large contributor to the super PAC backing presumptive Democratic nominee Hillary Clinton and has donated to other groups supporting Democrats.

It appears he was also bored.

While Soros has always closely monitored his firm’s investments, as he got older he would delegate more and more, with many of his proteges moving on to start their own hedge funds, Trump's fundraiser Steven Mnuchin being just one example. As a result, in recent years, he hasn’t done as much investing of his own. That however has now changed and as the WSJ notes, recently Soros has been spending more time in the office directing trades. He has also been in more frequent contact with the executives, the people said.

According to the WSJ, Soros is stepping into a void at his firm. Last year, Scott Bessent, who served as Soros’s top investor and has a background in macro investing, or anticipating macroeconomic moves around the globe, left the firm to start his own hedge fund. Soros has invested $2 billion with Mr. Bessent’s firm, Key Square Group. Later in 2015, Mr. Soros tapped Ted Burdick as his chief investment officer. Mr. Burdick has a background in distressed debt, arbitrage and other types of trading, rather than macro investing, Mr. Soros’s lifelong specialty.

Which is why Soros felt comfortable stepping back in, and - as it turns out - it was to begin building a major bearish position. "Soros’s recent hands-on approach reflects a gloomier outlook than many. His worldview darkened over the past six months as economic and political issues in China, Europe and elsewhere have become more intractable. While the U.S. stock market has inched back toward records after troubles early this year and Chinese markets have stabilized, Mr. Soros said he remains skeptical of the Chinese economy, which is slowing."

While we documented Soro's pessimism about China earlier in the year, it appears to have only gotten worse, and as Soros said, "the fallout from any unwinding of Chinese investments likely will have global implications."

“China continues to suffer from capital flight and has been depleting its foreign currency reserves while other Asian countries have been accumulating foreign currency,” Soros said in an email. “China is facing internal conflict within its political leadership, and over the coming year this will complicate its ability to deal with financial issues.”

China will hardly be amused, and will promptly seek to muzzle any media outlets reporting Soros' renewed pessimism toward China's "recovery." It will hardly help its situation.

It's not just China. Soros also argues that there remains a good chance the European Union will collapse under the weight of the migration crisis, continuing challenges in Greece and a potential exit by the United Kingdom from the EU. “If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable,” he said. Still, Mr. Soros said recent strength in the British pound is a sign that a vote to exit the EU is less likely. “I’m confident that as we get closer to the Brexit vote, the ‘remain’ camp is getting stronger,” Mr. Soros said. “Markets are not always right, but in this case I agree with them.”

Finally, there is the US. Soros also adopted bearish derivative positions that serve as wagers against U.S. stocks. It isn’t clear when those positions were placed and at what levels during the first quarter, but the S&P 500 index has climbed 3% since the beginning of the second period, suggesting Mr. Soros could be facing losses on some of those moves. Unless, of course, the puts are longer-dated and the market does in fact proceed to crash.

Overall, the Soros fund is up a bit this year, in line with most macro hedge funds, according to people close to the matter. The investments by the firm were previously disclosed in filings, but it wasn’t clear how involved Mr. Soros was in the decisions spurring the moves.

* * *

The WSJ concludes by pointing out that the last time Soros became closely involved in his firm’s trading: 2007, when he became worried about housing and placed bearish wagers over two years that netted more than $1 billion of gains. And now, a very bearish Soros is back again.

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VladLenin's picture

Most evil man on the planet?

localsavage's picture

They should put that Soros picture in the dictionary next to the word swarthy.

max2205's picture

Isn't he funding euro migration. ... yeah...thought so

Shemp 4 Victory's picture

Soros, die. Die soon. Painfully, if possible, but definitely soon.

The Saint's picture
The Saint (not verified) Shemp 4 Victory Jun 8, 2016 8:54 PM

Just get Alzimers and forget how to put on your pants for the last 10 years of your life, George.

Squid-puppets a-go-go's picture

he might have turned bearish after contemplating this website

http://didthesystemcollapse.com/

 

santafe's picture

How can a man like Soros betting on a Financial CATACLYSM that will be Ugly, Bloody, and Messy. Does he have any conscience?

http://bit.ly/1KogtGi

Boris Alatovkrap's picture

Oh, yes, Soros financial strategy is much interesting, but more important story is how Soros is treat flesh eating virus!

chunga's picture

Sometimes I have daydreams where I snag him in the neck with a squid jig.

J S Bach's picture

The biggest "gain" for humanity will be when this son-of-a-bitch finally breathes its last.

It's disgusting seeing someone profit by the misery of others.

COSMOS's picture

I swear that mofo, Soros, looks just like Satan. He may be the son of Satan on Earth. You know the prophet the people of the 'word' oops sorry meant the 'FED' are waiting for.

mtl4's picture

"Soros also argues that there remains a good chance the European Union will collapse under the weight of the migration crisis"

 

This guy screams douchbag of the highest order (specializes in screwing up economics on macro level):

http://www.breitbart.com/london/2015/11/02/soros-admits-involvement-in-m...

http://www.marketwatch.com/story/george-soros-the-eu-ought-to-borrow-mon...

http://www.express.co.uk/news/world/616541/European-Union-Migrants-Refug...

 

He's taking an old page out of the Rothschild playbook, no surpises from Dracula incarnate.

thesonandheir's picture

So Soros funds NGO's that are politically active in getting migrants into Europe which is responsible for the collapse of the union then bets against it?

 

 

Nice work.

Backin2006's picture

Probably a safe bet given that Soros has a proven track record in starting crises.

froze25's picture

That is typical for Soros, he's a scum bag. He will create the situation that will give him the desired outcome.

ufos8mycow's picture

Well at least he has the brimstone market cornered.

Multi's picture

So the big fishes got tipped off?

Squid Viscous's picture

personally i would use the 8' flying gaff, then cleat him off the port side

VinceFostersGhost's picture

 

 

KROFT: Went out, in fact, and helped in the confiscation of property from the Jews.


SOROS: Yes. That’s right. Yes.


KROFT: I mean, that sounds like an experience that would send lots of people to the psychiatric couch for many, many years. Was it difficult?


SOROS: Not, not at all.  Not at all.


KROFT: No feeling of guilt?


SOROS: No.

 


weburke's picture

buy cvs.

when will hell get soros? he is taking forever.

ThaBigPerm's picture

It appears everything is proceeding as he has Forseen.

John Kich's picture

Trump Got It Right Again. This Is the Undeniable Proof...

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?

https://www.youtube.com/watch?v=K6Vqq2DRfwI

Ms. Erable's picture

I really wish someone would drag Soros into the sunlight an inch at a time so we can watch him combust - slowly and painfully.

wildbad's picture

monday - choas

tuesday - turmoil

wed. torture puppies and ukrainians

thurs. corner currencies

friday no live meat

saturday drink blood with pals

sunday - STRIKE!!!

Tegrat's picture

monday - choas

tuesday - turmoil

wed. torture puppies and ukrainians

thurs. corner currencies

friday no live meat

saturday drink blood with pals

sunday - STRIKE!!!

 

monday next - NEW HIGHS

Lore's picture

Re: "Soros also argues that there remains a good chance the European Union will collapse under the weight of the migration crisis..."  <-- The one HE reportedly facilitated?

Zero Point's picture

Forcing. Best trade EVER.

VinceFostersGhost's picture

 

 

saturday drink blood with pals

 

Just Al Gore......we were a hanging chad away from that crazy bastard!

cinderalle's picture

No how can he have a conscience, does the devil have a conscience

TheSecondLaw's picture

If you are buying gold, like many on ZH, myself included, you are also betting to make money off this CATACLYSM.

Escrava Isaura's picture

There are alternatives to defeat the Soros’s types.

 

Cleaning the Toxic Mess and the Toxic Misinformation

 

While the US and UK’s “magic money tree” are currently controlled by the private banking system, these governments are quite capable of altering this situation.

 

How to stimulate demand

http://positivemoney.org/2013/03/our-magic-money-tree-fixing-the-financial-crisis/

 

And if you want to understand the current flaws of our monetary system

http://www.amazon.com/New-Paradigm-Macroeconomics-Macroeconomic-Performance/dp/1403920745

 

And the best movie on the subject, forward to a must watch 3 minutes:

https://www.youtube.com/watch?v=p5Ac7ap_MAY#t=32m56s

 

And how it will end. Again, watch these two minutes a few times to really sink in:

https://www.youtube.com/watch?v=p5Ac7ap_MAY#t=1h02m15s

 

GoldIsMoney's picture

Why because he calls suckers suckers and even bets against them? Who would care if the government would have balanced budgets. Who would care if they would not have trillions of debt. And who would care if central banks and the politicial help for socialists won't be there. He would really loose much money, but I'd like to see him win massivlly again against every current regime on the world. It's not the Soros which are the problem, the problem are with those which enjoy oppression as do nearly every politician on  earth. I hope it will hit them (the politicians) hard and with just enough mercy that theve to suffer under the same sufferening as they inflictedu upon non government workers

sessinpo's picture
GoldIsMoney  It's not the Soros which are the problem, the problem are with those which enjoy oppression as do nearly every politician on  earth. I hope it will hit them (the politicians) hard and with just enough mercy that theve to suffer under the same sufferening as they inflictedu upon non government workers. .

 

I disagree to an extent. Soros is a problem because he manipulates and fosters big government. Yes, big corrupt government with parasitic politicians is a problem, but soros isn't really against that. He wants that because those corruptable politicians can be bought  and they also create the environment that soros is profiting from.

 

I too want those politicians to pay for their treachery. But recognize that there will just be another politician to take their place because as the majority of people in this world still haven't learned that all forms of big government eventually become corrupt. That is why after centuries, the dumbass population still looks for political leaders to save them from whatever. It is no different now in the US. We have nearly half that think  trump will save them. Nearly half that think clinton will save them. A small group that want to just stick it to the other side as a protest. And then an even smaller group that realizes its all crap and history is repeating again. No one has figured out how to force people to manage their own lives while peacefully existing with others in a modern society without some government authority to fuck things up. I don't have the answer but I know government isn't it. It will always be the serfs that suffer. The oligarchs most of the politicos end up doing just fine.

GoldIsMoney's picture

You may be right with that. He may be right playing with the elites, anyway if he still bets against them, I'm fully on his side. If government would be not that invasive as it is and if it won't send us all down the way to hell, then even a Soros playing with the government would not be problem. It would not have influence on everyones life. Even if there will be other politician it's just a question on how much influence do they have on everyone's life. The easy anser to this would be: "The less the better". But currently we're running completly against that the motto is "the more the better" now everyone betting against that is welcome to me. Even if it's a Sorros who otherwise plays with the politicians.

The Saint's picture
The Saint (not verified) max2205 Jun 8, 2016 8:50 PM

Also funding the Trump rally protestors/rioters.

khnum's picture

Yep a rainbow coalition summer of 68 is coming

willwork4food's picture

The WSJ is reporting this? Interesting. I might suggest that his position might be the opposite of what is being reported. Would yoiu trust the WSJ today? If we have inflation issues equities will go higher..as will gold and silver.

We are in a recession. The next step in their bag is inflation....a LOT of inflation.

Kaervek's picture

You onto something, boy oh boy.

The Dollar might remain strong against other currencies, as practically everyone is devaluating, but prices for goods and services are already increasing and it's only going to get worse. Enjoy your $20 latte, serfs.

Chauncey Gardener's picture

That Summer of '68 will look like infant daycare in Philly and Cinncinatti, mark my words. Will the MSM allow the whole world to be watching?

Arnold's picture

-

-

Cleveland, The Mistake By the Lake.

American Psycho's picture

the title is incomplete.  Should say, "big bearish bets on economic turmoil... that he is causing."

GRDguy's picture

Yep, just like an arsonist figuring out a way to buy insurance against your house burning down, then setting fire to it.

Kaervek's picture

I don't like him but I'd call it a smart move. His moves are all over the media yet still nobody is giving a shit or buying any physical gold. Keep watching shitty TV shows, everything is awesome. People are going to get what they deserve for their ignorance.

auricle's picture

Great timing. Hillary secures the nomination and the next day they leak Soros bearish bet. All to go after Trump. How will Trump respond?

WorkingClassMan's picture

...if only we could bring pogroms back...

DownWithYogaPants's picture

Porgroms?  Ok so it' not better for us to learn and figure out a way to shut down these shenanigans.  Just resort to violence.  I can see that going well....NOT.

Greater awareness of how banking works in the USA and world is probably one way to start.  It is already happening.  We need to do a better job of sticking together and sticking it to the Lourds of Finance and bring back a sound money system.

Chris Dakota's picture
Chris Dakota (not verified) VladLenin Jun 8, 2016 9:10 PM

There was a reason Pinochet threw communists out of helicopters.

Soros comes to mind...

Anti-kleptocrat's picture

... he needs an involuntary castration with a spoon ... then he would be a psychotic eunich ...