Danny Moses, the investor best known for profiting from the 2008 financial crisis, is positioning for a potential downturn in US credit markets as signs of stress begin to emerge across parts of the economy.
According to Bloomberg, Moses has established a new bearish trade targeting lower-rated corporate debt, arguing that investors are being inadequately compensated for growing default and refinancing risks despite a backdrop of slowing growth and elevated interest rates.
The founder of Moses Ventures believes credit spreads remain too tight relative to underlying risks, reflecting continued investor demand for yield and confidence in a soft economic landing. However, he argues that weakening corporate fundamentals could trigger a repricing if economic conditions deteriorate.
Moses rose to prominence after correctly betting against subprime mortgages ahead of the global financial crisis, a trade later chronicled in The Big Short. While he is not forecasting a repeat of 2008, he believes current market pricing leaves little margin for error should defaults begin to rise.
The position highlights a growing divide among hedge fund managers, with some continuing to favour credit and risk assets while others see an increasingly attractive opportunity in downside protection following a prolonged period of market resilience.
