Need to Know: There’s no better place to put your money than the U.S., says hedge fund manager Kyle Bass

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We may be roughly 11 sessions from the end of the year, but lately it’s been feeling more like 100.

Stock futures are going south as Sunday’s deadline for additional hefty tariffs on Chinese imports looms. Ahead of that we’ve got the last meetings of the year for the Federal Reserve and European Central Bank, alongside a U.K. general election.

Given Wall Street has survived much of what’s been thrown at it in the past 10 years, it’ll likely muddle through this. “Don’t bet against the U.S.,” is our call of the day, from Kyle Bass, founder and chief investment officer of Hayman Capital Management.

“Where are you going to put your money? In Europe, in China, in South America? There is no better place to put your money than the United States,” Bass told MarketWatch in an interview on Monday. “We have a rule of law, and we have the best economy as well.”

Bass says his firm is always “long [on] U.S. human innovation and where we’re short, we’re short in areas of the world in which we see potential severe dislocations,” though he says those shorts haven’t made money, with even global currency markets fairly benign. He backed out of a bearish offshore Chinese yuan position earlier this year.

“But I think American exceptionalism is here to stay. I think the place to invest in the next 10 to 20 years is America’s youth and America’s entrepreneurs,” said Bass.

The hedge fund manager is famous for making winning bets on subprime loans back in 2007, though his prediction earlier this year that U.S. stocks would end 2019 below where they started has not panned out so far.

Bass said he believed the U.S. was headed for a recession by 2020, but now thinks a downturn could be averted. That’s due to the vast sums of money the Fed spent to keep credit flowing through short-term cash markets, after sudden stress appeared in early September, he says.

What this represents is renewed quantitative easing — expanding the Fed’s balance sheet and printing more money — from the Fed again. Maybe that “will be the grease for the market enough to not have a recession, but our growth is going to slow in 2020,” as China and Europe’s economies are troubled, he said.

Watch for more to come from the Kyle Bass interview with MarketWatch.

The market

Dow YM00, -0.38%, S&P 500 ES00, -0.33%  and Nasdaq NQ00, -0.40%  futures are in the red. European stocks SXXP, -1.06% are down again and Asian markets ADOW, -0.09% finished mixed. Chinese inflation hit an eight-year high, driven by soaring pork prices.

The chart

How much money has flowed out of equity funds this year? About 1.3% of total assets, says this chart tweeted out from the blog SentimenTrader. That’s barely a scratch on the massive outflow of 1988:

ICI, SentimenTrader
The buzz

According to White House adviser Jared Kushner, U.S.-China trade talks are “headed in a good direction,” and apparently China is buying more U.S. soybeans. But here’s what to expect on Sunday if fresh tariffs on $156 billion in Chinese goods kicks in.

California has fined pharmacy healthcare group CVS CVS, -0.49%  a record $3.6 million for failing to recycle.

House Democrats are expected to hit President Donald Trump with two articles of impeachment on Tuesday.

The economy

Confidence among small-business owners jumped in November. We’ll also get revisions to productivity and unit labor costs.

Random reads

Sydney’s famous opera house is barely visible as a dangerous wildfire haze surrounds the city

American couple among those seriously injured by New Zealand volcano eruption

Google searches for “recession” have dwindled. Cold comfort, say some

We all know and love Merriam—Webster’s word of the year

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