US retail short ‘could be bigger than subprime’
“Retail is the Titanic”
E-commerce disruption in US retail has picked up the pace, with ten companies forced in to bankruptcy already this year, the Financial Times reports, citing Standard & Poor’s.
Some hedge funds are talking up retail as the next “big short,” a reference to bets against the US housing market in the lead up to the 2008 financial crisis.
“We think the magnitude of this short could be bigger than subprime,” Stephen Ketchum, the head of Sound Point Capital, was quoted by the FT as saying. “Go to the Amazon website and type in ‘batteries’. What you see is just the tip of the future iceberg. And retail is the Titanic.”
“This created a bubble, and like housing, that bubble has now burst,” Richard Hayne chief executive of Urban Outfitters said. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”
“There’s a big shakeout in how people consume goods,” an unnamed manager of a large hedge fund said. “It will have a massive economic impact . . . It is already a bad year, and it feels like it has the momentum to become something bigger.”