Carson Block

Block explicitly states his fund has put spreads on HYG and LQD ETFs to play the thesis that credit spreads will widen. He believes AI-driven job displacement will cause a severe economic/market crisis. This will lead to outflows from passive funds, reversing the flow-driven market multiples and causing credit spreads to widen significantly. SHORT via put spreads because the anticipated crisis will crush the value of corporate debt ETFs. He prefers this over shorting equities due to cheaper volatility and a potential liquidity mismatch during a crisis that could exaggerate ETF downside. The AI job displacement thesis is wrong or its market impact is significantly delayed beyond the option expiry.

Block explicitly states his fund has put spreads on HYG and LQD ETFs to play the thesis that credit spreads will widen. He believes AI-driven job displacement will cause a severe economic/market crisis. This will lead to outflows from passive funds, reversing the flow-driven market multiples and causing credit spreads to widen significantly. SHORT via put spreads because the anticipated crisis will crush the value of corporate debt ETFs. He prefers this over shorting equities due to cheaper volatility and a potential liquidity mismatch during a crisis that could exaggerate ETF downside. The AI job displacement thesis is wrong or its market impact is significantly delayed beyond the option expiry.