Kyle Bass Sees A 10% to 20% Decline In The U.S. Market

Kyle Bass of Hayman Capital Management spoke on CNBC's Fast Money Halftime Report about current headwinds for the market. He thinks that the real issue is the size of the banking system in China.Bass explained that European countries ended up falling like dominoes during the European crisis, because their banking systems became much larger than their GDP, which affected their ability to deal with problems.Bass said that the banking system in China is almost $35 trillion and its GDP is $10 trillion. It has grown 400 percent in 8 years, with non-performing loans being non-existing. He thinks that there is going to be a credit cycle, which is going to bring some losses. If China's banking system loses 10 percent, it is going to lose $3.5 trillion and foreign exchange reserves are currently at $3.3 trillion. The crisis in China is not going to be as bad as the global financial crisis, believes Bass. He thinks that the stocks are not going up, because of the credit cycle in China and he expects to see a 10 to 20 percent decline for the U.S. stocks by the year end.