Canyon Is Putting On $1B CMBX Short, Co-Chairman Friedman Says

The video features a discussion between Erik Schatzker and Josh Friedman on the use of CMBX as a hedge in the mortgage market, particularly in downturns. They explore the risks in the commercial real estate market, drawing comparisons with the residential mortgage market before the financial crisis. Despite some similarities, Friedman argues that the commercial market is not as precarious. Canyon Partners is adopting a cautious approach, reducing exposure and increasing cash positions, in response to global economic signals and market fragility.

What is the primary reason for using CMBX triple B minus layers as a hedge?

• To increase profits in a booming market

• To provide a hedge with optionality in a downturn

• To diversify the investment portfolio

• To reduce operational costs

How does Josh Friedman view the comparison between commercial real estate and residential mortgages before the financial crisis?

• He believes they are exactly the same

• He thinks the comparison is an overstatement

• He believes commercial real estate is more stable

• He sees no risk in commercial real estate

What is a significant factor affecting the commercial real estate market today?

• Stable interest rates

• Oversupply and stretched valuations

• Increased demand for retail space

• High loan-to-value ratios

What is one of the structural issues mentioned in the commercial real estate market?

• High demand for new construction

• Deteriorating collateral quality

• Stable rental income

• Low interest rates

What is Canyon Partners' approach to the current financial market conditions?

• Reducing total exposures and adding hedges

• Ignoring global economic signals

• Increasing long exposure

• Focusing solely on equities

What percentage of Canyon Partners' assets is currently held in cash?

• Exactly 25%

• Over 20%

• About 15%

• Less than 10%

How does Josh Friedman suggest expressing caution in the financial markets?

• By ignoring market signals

• By lowering total exposures and focusing on event-oriented situations

• By maintaining a flat cash position

• By increasing exposure to high-risk assets