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Top-performing hedge fund is shorting Canadian banks on all the usual suspects — and something even more worrying

"Canadian banks will be left holding the bag and the ones to suffer from what is likely to be a major economic recession," Tavi Costa, a global macro analyst at Denver-based Crescat, says.Canadian Press/Tijana Martin

A small U.S. hedge fund that was a top performer last year is shorting Canadian banks.

Crescat Capital sees the Canadian economy heading for recession as the housing market buckles. That might be bad enough for the banks but they face an added strain: outside the financial sector, more than 80 per cent of Canadian companies aren’t generating enough cash to support their businesses, the highest in the world, according to Crescat.

“Canadian banks will be left holding the bag and the ones to suffer from what is likely to be a major economic recession,” Tavi Costa, a global macro analyst at Denver-based Crescat, said by phone.

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