By Dan Ferris in the S&A Digest:

After covering his automotive short sales in late 2008 and early 2009, Kynikos Associates founder Jim Chanos is jumping back in. In a recent CNBC interview, the short-selling guru said the automotive sector – here and in Europe – is in trouble. The sector has historically lost money, and it's currently dealing with a massive, worldwide overcapacity and legacy costs. While he wouldn't give specific picks, Chanos said he wouldn't "be long" Fiat or Ford.

Chanos also believes a massive bubble is forming in China. He thinks China is misstating its GDP numbers by "underdepreciating a shaky capital base." Just last night, Chinese authorities talked about increasing loan volume by another $1.2 trillion. On the topic of credit excesses, not valuation excesses, signaling inflation... Chanos says there's "no bigger credit excess than China right now."

Chanos is shorting China through the Hong Kong-listed "H shares." He also sees short "opportunities in all commodities producers." If, as Chanos predicts, China is fudging its numbers, its forecasted commodity demands will be much lower than expected. He's shorting copper, cement, and iron-ore producers worldwide.

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