 Good day, fellow investors. Ray Dalio, the hedge fund manager of Bridgewater, the largest hedge fund in the world with 160-80 billion in assets under management, has increased his bet against Italian banks from 1.1 billion to 3-4 billion according to the latest news. So, 3-4 billion on 1.60-1.80 is already something very, very significant when it is a short bet and when it is such a short concentrated bet on 1.0 billion bank in Teza, San Paolo. So, I want to see in this video what is he betting against, why is he doing that? As we know, Ray Dalio is all about risk and risk allocation, so perhaps he sees much more risk in other parts of the market that he doesn't see that much risk in attacking, short attacking an Italian poor bank. We'll look at the bank, what are the indicators there and we'll look at what Ray Dalio is doing. So, the CEO of Teza San Paolo says how things are doing very good, the Italian economy is doing great, the northern part of Italy is much better than Germany, it's the south, that's the problem. But everything is doing great, everything is going great and the bank has never been so stable, so things will do extremely, extremely well. Now, my grandfather Italian, my father Italian, I'm half Italian so I'm allowed to say that. My grandfather would say In other words, in English to translate, never trust an Italian because if he hasn't screwed anybody that day, he screws himself to tell somebody, oh, I screwed you. So, apart from the jokes, we have the CEO of the bank who is extremely optimistic, extremely positive, he has to be, it's his job, so no harm feelings there. Be even more positive, Italy is the most beautiful country in the world, that's correct. But the economy isn't in that shape and your bank isn't in that of a good shape. Let's see. So, first, with an Italian bank, with an Italian financial institution, the key is the dividend, you have to always pay a dividend even if your situation isn't that good. Nevertheless, there everybody's happy there, net fees have been increasing 6%, gross income higher, net income higher, excess capital, everything looks extremely, extremely well. All stakeholders are benefiting, they have increased the new lending 47 billion euros in new lending, paying taxes and committed to paying more and more dividends. However, this is a very, very interesting chart. The CEO is saying everywhere how he has lowered the non-performing loans by 11 billion euros, but that has been from 64.5 billion to 53 billion, so the bank still has 13.7% of non-performing loans. 13.7% of loans that are not performing in this environment where the economy is extremely good, where interest rates are at historical lows, for me it's a crazy number and I get Ray Dalio's position. He simply says this can go on for a year, for two years, if you're Ray Dalio, you call Goldman and JP Morgan and say I want to bet 2 billion against Italian banks, make me a deal and they make you such a deal if you're Ray Dalio. So this is the key. 13% non-performing loans in an environment of zero interest rates. What happens when interest rates go higher? Non-performing loans go higher, then nobody wants to lend to Intesa-San Paolo and Intesa-San Paolo needs money, let's see. But before that, let me show you here something very interesting. The CEO is telling and everybody is telling how there was a decrease in non-performing loans since the 30th of September 2015. Why don't you show me a chart that shows how those loans have been going up and down in the last 5-10 years? Don't just tell me from when the loans have been declining, which is probably because the ECB is buying everything and interest rates are very, very low. Nevertheless, the loans have declined just a little bit in the last 9 months, so there is plenty more of bad loans in such a bank. And this is very important, the strong funding capability. So they need to fund 22 billion, 15 billion, 17 billion issue bonds in order to keep the bank stable. And this is the key I think Ray Dalio is watching. If interest rates go higher, non-performing loans in Italy, they will simply stop paying. Why would they pay for the second home, third home, investment in Rome or something like that when they don't need to? So those prices will go down, interest rates go up, Intesa-San Paolo gets into trouble and then some Germans are going to say enough, we are not going to save those banks anymore. And then Intesa-San Paolo has no liquidity and then all hell breaks loose. So that's a scenario and this is why Ray Dalio is betting on this scenario. 14% if that starts going up, loses of credibility, the bank can't get any more money, people run at the bank as they will do in Italy to get their money out and pata boom, pata track, Grazie Arrivederci. Ray Dalio makes a huge chunk of money. If that doesn't happen, ok, he will lose 3 billion, that's 2-3% of his portfolio, but he must be long some other things that will cover for that as he has an all-weather portfolio. Going back to the bank, let's see what's their portfolio, mostly residential mortgage, a lot of small and medium enterprises, which is very very risky, especially as Europe has been doing very well in the last 5 years. What happens when there will be less tourists? What happens when there will be less spending from Italians? What happens if the unemployment rate goes up? Doom and gloom for this bank, very very stretched, even if the indicators look very good and even if the Italian macroeconomic outlook according to the bank looks extremely well. However, there is now the elections coming up soon, it will be very interesting who will win and how will they, they will probably all collaborate with ECB because that's free money and you never reject free money. Nevertheless, I just wanted to show Ray Dalio's position, I will be digging deeper into how to short those Italian banks, are other banks perhaps more exposed, are better bets and it's not that easy because there is not such an option system like it is in the US, but I will be digging so keep following, subscribe as there will be plenty more and plenty more of bad stocks too short with low risk like Ray Dalio is doing. Looking forward to your comments and I'll see you in the next video.