Pedestrians carrying an umbrellas pass in front of the Grand Hyatt New York hotel in New York, U.S. (Photographer: Mark Abramson/Bloomberg)

Kyle Bass Says Mild U.S. Recession Most Likely in Middle of 2020

(Bloomberg) -- Kyle Bass, founder of Hayman Capital Management, said the U.S. most likely will enter a mild recession by the middle of 2020 as the bounce from fiscal stimulus wanes.

The hedge fund manager said it’s unlikely that Democrats, who control the House, will let the Trump administration further stimulate the economy. And the Federal Reserve, which was late in the cycle on raising interest rates, won’t be much help either.

“So when we get into even a small recession I don’t think we have the arrows in the quiver,” Bass said Monday in a Bloomberg TV interview with Scarlet Fu.

He added that the U.S. stock market will be lower at the end of the year than it is today.

Hayman’s chief investment officer, who has long focused on China and its debt woes, said there is an 80-to-85 percent chance that the U.S. will strike a trade deal with the country.

Bass and Daniel Babich, in a column Monday for Bloomberg Opinion, wrote that President Donald Trump has more leverage over China, with its struggling economy, than any U.S. administration in history.

The duo urged Trump’s team to push during trade negotiations for a major overhaul of the relationship with China and not settle for just requiring it to buy more American goods. Bass and Babich said China needs to end its “long-standing policy of bulk economic espionage and theft” and its favored treatment of state-linked national champions.

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