auto debt subprime

Either I’m An Idiot (Certainly Possible) Or Citi Isn’t Sure Who Steve Eisman Is

I want to preface this by saying that I may just be an idiot here and God knows it wouldn't be the first time.

A couple of days ago, I brought you the latest from the ongoing debate about the state of the US auto market and, more specifically, about the extent to which Wall Street doesn’t want you to get it in your head that subprime auto is the next “big short.”

You can read that here:

In the above linked post, I reminded you that one of the most vocal critics of the auto ABS short is Citi’s Mary Kane. Again, I encourage you to read the entire post for the details and because you can read it for yourself, I’m not going to recount the whole story here.

But suffice to say Mary thinks it’s not a good idea to get trading advice from movies. Here, specifically, is what she said last year:

It seems like too many people have seen the movie “The Big Short” and are starting to think the movie heroes’ short strategy would translate to the ABS market. By the way, the ABS conference did NOT take place at Caesar’s Palace that year as per the film, it was at The Venetian. So, it’s not wise to believe everything you see in a movie and hit films are not the best source for trade ideas.

Got that?

Now for one thing, the premise there is ridiculous. Here’s what I said last week:

See how that works? Because the movie confused Caesar’s Palace with The Venetian, you shouldn’t short subprime auto. Makes sense, right?

But all humor aside, there are very real reasons why you probably shouldn’t try to short auto ABS and in the same post linked above, I excerpted a piece from JPMorgan in which the bank outlines those reasons. My only qualm with JPM’s analysis is that their rationale sounds a whole lot like the reasons Wall Street would have given you in 2007 while telling why you shouldn’t short the housing market.

I also noted the ironic fact that the “hero” from the very movie that Citi says you shouldn’t try to emulate by shorting auto ABS is now out expressing concern about the subprime auto market.

“Banks make mistakes on credit quality and we are in an environment where credit quality has never been this good in anyone’s lifetime, with the one exception of subprime auto,” Steve Eisman, the Neuberger Berman Group fund manager who featured in Michael Lewis’s book “The Big Short,” said in a Bloomberg TV interview late last month.

So that’s the setup. Got it? Good.

Enter Mary Kane again. I want to preface this by saying that I may just be an idiot here.

That is, there may be a big player in the auto ABS space or on Wall Street in general named “Steve Eisen” that I (somehow) have never heard of.

Or, alternatively, the protagonist from the “Big Short” (who, you’ll recall, was a guy called “Mark Baum” and played by Steve Carell in the movie, but who in real life is named Steve Eisman), may have an alternative spelling of his name that i) doesn’t have an “m” in it, and ii) that the sellside prefers to use in their analysis these days.

So those are two caveats up front which I think will exonerate me if I’m wrong here. I’ve fully admitted that I may be the stupid one and God knows it wouldn’t be the first time.

But if neither of those two caveats apply, well then it would certainly appear that Citi’s Mary Kane doesn’t even know who the guy whose take on subprime auto she is refuting actually is. Have a look below at a screengrab from her most recent note:


Now unless I’m the idiot (as described above), then Citi is telling you that you shouldn’t listen to the warnings of a guy whose name they can’t even spell.

Which kinda makes you wonder whether Mary Kane has seriously considered “Eisman’s” arguments at all.

Or maybe she is talking about “Steve Eisen” – who as far as I can tell is a saxophonist…



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