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Must Watch Kyle Bass Interview: "I Don't Know How I Can Be Long Stocks"
The one must watch interview of the week (if not of the year) features Hayman Capital's Kyle Bass. Bass, who correctly called the subprime implosion (and profited handsomely from it) as a iconoclast contrarian to conventional wisdom, tells David Faber that "given my outlook on the world, I don't know how I can be long stocks." Frequent readers of Zero Hedge will notice many comparable themes touched upon in Bass' interview with issues covered on Zero Hedge: the inevitable restructuring of untenable sovereign debt, the nearly $5 trillion in new global debt that needs to be issued just to plug near-term deficits, the joke that was the European stress test and the ongoing insolvency of the European banking system which is times bigger than its US equivalent, the imminent downward revision of Q2 GDP to sub 1%, the Fed's conflicted position as a political authority whose sole purpose now is not to keep inflation and unemployment low, but merely to keep interest rates as low as possible, as even the slightest shift to higher short-end rates will be seen as a black swan, indicative the Fed is losing control over the economy, and ultimately the futility of Keynesian theory band-aiding of a world caught in a toxic debt death spiral. In short, Bass sees no way the world can get out of its current state absent a huge reset. We agree completely, and needless to say, we are confident Bass will be proven 100% correct, to the chagrin of all the permabullish lemmings who day after day refuse to accept the unpleasant reality. The only caveat: when Bass is eventually proven right, all bets on profiting from this realistic worldview will be off, as the existing financial system will no longer exist.
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CNBC:
Criminal Network of Bank CEO's
Mr. Bass, job well done.
Thanks for posting the vids, ZeroHedge.
anyone else sense that mr. bass was very self controlled when answering moronic questions by moronic interviewers? i would love to be the fly on the wall during his business meetings!!!!! just keep my little fly trap shut and listen.
GREAT Interview. Here is the $60,000.00 question. Kyle was asked by the cheerleaders if he meant that the US would eventually restructure and Kyle quickly replied; "much further down the road". What does this mean? I never hear any of the people I believe,(like Kyle) put any estimated time frame on this eventual collapse. Are we at a point of no return? I kind of think so. Personally, I feel that the can has been kicked off the edge of a cliff and it's just suspended in air kinda like Wiley Coyote on the Roadrunner cartoon. The question is when does it start its free fall? 1 month, 6 months, 1 year, 5 years, 10 years?
When we start paying 400-500 billion /yr in interest ---3/5 years?
The IMF just published a report that said to solve our fiscal crisis will require a 14% of GDP adjustment. In other words any combination of revenue or spending cuts amounting to 14%( that's 2 trillion) per year for the next 30+ years. Anybody care to suggest how this is accomplished? Current Data:
yr 2010: 692 Billion Discretionary nonDefense
705 Billion Defense
2,057 Billion Entitlments
188 Billion Interest
Total 3,643 Billion Outlays and Total Revenue of 2,213 Billion
One more fun fact: the defense budget in 2010 dollars in the year 2000 was 377 Billion
ALSO FROM MATTERHORN MGMT----
The US consumer price index was stable for 200 years until the early 1900s. From 1971 to 2010 CPI went up by almost 500%. The reason for this is uncontrolled credit creation and money printing. Total US debt went from $9 trillion in 1971 to $59 trillion today and this excludes unfunded liabilities of anywhere from $70 to $110 trillion. US nominal GDP went from $1.1 trillion to $14.5 trillion between 1971 and 2010. So it has taken an increase in borrowings of $50 trillion to produce an increase in annual GDP of $13 trillion over a 40 year period. Without this massive increase in debt, the US would probably have had negative growth for most of the last 39 years.
Total US debt to GDP is now 380% and is likely to escalate substantially.
Quash the debts with Hyperinflation,that is the only way,the trick is how do you create a big enough smoke screen to get away with it ............F****n Joke ..........
that was the best interview on cnbc this decade ..
Debt free and downscale - I wonder at what point a dad making $170k and mom making $80k decide that mom's net income isn't worth the hassle? Once the kids are out of skool/college, I'm pulling the plug. I can keep the business and trading going and when I reach a certain income level for the year I will stop the nusiness and just trade. Some form of sheltered income is a big plus, although note that WA State is beginning to tax out of state investors on a "GROSS" basis.
"...although note that WA State is beginning to tax out of state investors on a "GROSS" basis."
I would pay careful attention to this trend - it will continue at all levels: state, federal, municipal, etc. The notion of "sheltered income" for individuals will soon be history as government nationalizes/seizes more or all savings and income instruments. Unfortunately, this undermines dependence/planning around sheltered income, capital gains income, and even retirement/pension income.
Roberts piece yesterday made this point painfully clear...
Man, they are so uncomfortable with this guy. How can they spin this thing? "...You're a real downer at dinner." That's the best they can come up with?
"and now back to our regular programming... the market is UP UP UP today!" Free rose-colored glasses with every subscription!
Funny, the "other" guy who predicted the subprime crisis, Paulson, is buying shit financials like mortgage insurers.
Shows you who did their own research and who relied on their analysts.
Actually, wasn't that Pellegrini who hasn't been with Paulson for a while now?
Yep, you are right.
I like this guy! Smart! Can't believe he made it on cnbc! Shit. That's a forward looking indicator.
Seen on a coffee cup of the homeless man around the corner begging change: "I read zerohedge and now I have zeromoney"
Is Faber just pretending t be that stupid?
Wow! Will anyone listen?
WTF
"The banker’s traditional imperative to maintain fidelity and trust – to “keep faith,” as Higginson put it – was forgotten. And it is in America’s public debt that the debris of its financial system’s broken promises are collected, just as Italy’s massive public debt reflects its past national prodigality.
The figures for the US are staggering. Public debt includes not only the federal government’s current $13.2 trillion, but another $3 trillion owed by America’s states, counties, and cities. In addition, there is the $3.9 trillion in debt owed by America’s government-backed housing-finance agencies (Fannie Mae, Freddie Mac, and others), which currently underwrite more than 90% of all US mortgages. As a result, America’s public debt has reached roughly 140% of GDP."
http://www.project-syndicate.org/commentary/margiocco1/English
ALSO, final point. why are all you bears parading around KYLE BASS when his alter ego JOhn Paulson is going LONG all types of stocks including financials?
paulson knows how to flip when the data changes. Bass doesn't. he is a real permabear who is worried about mortgages still when the world has moved ON from it
Your comment is spot on and not surprisingly you get junked by the clueless perma bears around here. Feels like most people here have zero clue about trading markets from both a bullish and bearish bias and rather just sit on their hands and pray the world falls apart tomrrow.
At least Leo when he posts bullish comment seems to understand how finance works. You sir, are as dumb as a box of rocks. Good luck with that
what's funny is i understand how finance works probably 5 times as much as you do. What you don't understand is trading, sentiment, etc
blogs like this guarantee folks stay out of stocks, thus limiting more and more downside on a daily basis. i called this blog last 2 days as well as on the yahoo SDS and SPY boards...and said the incessant negativity was guaranteeing a tradable bottom.
fast forwards a day and we surged today. we will see if it holds..but you prove the point...when all the permabears have scared everyone out past and present, the stronger hands are holding now
Read my posts recently, I believe in renting equities long and short. I have just been trying to get you to articulate why you are a bull in finance terms. You cannot seem to do it. Hence the box of rocks comment.
Dismal, how much was your account up today?
probably a dismal amount
stocks are cheap IF we can muster 1-3% growth and not fall back into depression
double dip priced in. bears have no case. they try and value SP500 companies like they have 90% exposure to US. not true. more like 40-50%
One day doesn't make you a star. I was also up today, but am not running around saying that I'm a hero because the market moved in my direction. Come on, don't be a muppet. At least you are now saying 'IF we can muster 1-3% growth' etc. I choose to differ with that assumption.
Happy trading
In that case i'd suggest you stick to the yahoo boards and whatever other incest you frequent.
Wow. "5 times as much"!
Planes Trains and Automobiles:
"Woah. It's like going on a date with a Chatty Cathy doll. I expect you have a little string on your chest, you know, that I pull out and have to snap back. Except I wouldn't pull it out and snap it back - you would. Agh! Agh! Agh! Agh! And by the way, you know, when you're telling these little stories? Here's a good idea - have a POINT. It makes it SO much more interesting for the listener!"
Lose your 5k and move along sonny...
Dude, don't stop posting. This and your comments on tail events above are awesome.
just askin what is a tail event? just read something and now can't find it.
Come to my place and I'll chase you around and then show you what a tail event is woman.
Kyle should look at the Nikkei chart of the last 20 years and carefully look if there's never an opportunity to be long stocks, even if just for renting.There were plenty of powerful 50% rallies along the way. Why pass on trying to pick up some of that?
Anybody who is trading rather than blinding himself on one eye is ALWAYS looking to be long some stocks and short others.
Did I see 35% long on US mortgages?
i have a Warning to Lance Bass---------- How can anyone hold US Treasuries??? that is the real BUBBLE. and watch is burst and people flock to equities for return
mark this post
"the market can stay irrational longer than you can stay solvent."--You know who
Just like many of us bailed after the first part of the 09 melt up, right ?????
Wow, you better hope not.
If the US treasury market blows up, then so does the whole world. People won't be flocking to equites they will be screaming "incoming".
Btw, if you are such a rock star long trader, what they hell are you doing spending on all your time on this site? Cause self reporting one days gains, is sort of like self reporting an 8 inch cock. Both reek of desperation.
ROFLOL!!!
thankx lizzy36!!!
If stating the obvious can get you a Directorship at Bear Sterns then we are in deeper trouble. All he said was a rehash of 2010.
Former Assistant Treasurie Secretary, creator of the raw Reaganomics, Dr. Paul Craig Roberts, today:
http://www.youtube.com/user/fairinfowar#p/u/14/eOemUwj6DM4
Klass has that Einhorn calmness about him. Klass is a sharp cat.
Jews think alike. Who would have thought?
You could see Kyles nervousness about telling the truth and the partial terror from the presenters ............ interesting times ahead .......
You guys keep saying faber is so smart... He brings up a point and Bass just ignores his bullshit and starts staing the facts/truth & lays it out... faber isn't even a staright man in this interview.
I think Faber must have junked you. Because you are entiltled to you opinion.
And here's mine: Kyle Bass is the rare investor: logical and patient with prudent risk control. I know there are lots of people on this site that can appreciate his successful credit long hedged with cheap tail-risk insurance.
The investing world is full of slugs who look back and think:
The internet bubble was obvious,
The credit bubble was obvious, etc. etc. etc.
Meanwhile they pile on every stupid trend of the day:
Central banks can print our way out of this mess!
The economy is doing great; i heard it on CNBC just today.
Junk me too...please, and then go back to Yahoo chat you "retard", (Hangover pronunciation).
Faber is a fucking moron.
Bass " Japan will have to look externally to fund debt and will ahev to pay up 100 to 200 bps...and a 100 bp increase in rates for Japan eats up 25% of revenues...
Now does Faber follow up on that? Fuck no - he changes course...
Simply a 200 bp increase in IR costs eats 50% of revenues - Thats at CURRENT debt levels! and faber does not follow up...
"downer at dinner" I'd have dinner with him anytime, or anyone who is "real" for that matter.
Bass + inf
mancrush on Kyle
The chart on the video "Europe Vs US Stress Test" is all mixed up and backwards---
That was the best comedy of the year. Isn't US debt to GDP 53 percent. Best line in the movie.
He sounds like the smartest man I've ever heard.
You have been at war with Islam for 1400 years. Or, more precisely, Islam has been at war with the rest of the world that long.
History is easy. It is written down. Read it.
Now who's history would that be?
that was supposed to be a reply to a particular post and somehow ended up in general delivery....my bad.
I agree wholeheartedly ... short everything but Gold
Tyler, I want to Profit With Cramer but the adsense link does not work...
That's because you have inadvertently shortened the true name of the link, which should read: "Profligate Lying and Losing With Cramer".
Ten bucks says Kyle Bass shows up dead in a few weeks under suspicious circumstances.
Or suddenly finds himself subject of a full-bore, body cavity-probing IRS audit.
+1,000,000
He reminds me of Rosenberg. Calm, collected with evidence to support reasoned arguments to support positions. He has a more global outlook however. I sense Rosi keeps his eggs closer to home in golden baskets.
CNBC even allowed this?
One last point. Not having traded bonds I am curious what happens when a bond issuer is unable to repay the loan (bond purchasers).
I also don't understand why Greece is getting money so inexpensively. For example, if my money was on the line and I was lending to a firm in Greece, I would need at least a 10%-14% return annually backed by an asset of equal value before I considered buying the firms bond. Plus, with deflation happening don't we have less credit in the system thereby increasing the present value of money?
I don't get it.
German Savings via the ECB,how long can this madness go on,be selling the Parthenon next ...
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
Comical but this is the list of all country debt to GDP and this is where Faber, or some summer intern likely, got the US figure of 53% "public" debt to GDP..
Points:
1) It shows Zimbabwe, then Japan. I recently bought a 100 trillion dollar Zimbabwe note on e-bay. Bass is short $200 million JGY. I'm long number one, he's short number two ... I'm right there with you baby..
2. This is from a CIA report. Still cranking out that world class propaganda Don Draper style. The US is 47th out of 129. It should be 12th.
3. Bass nearly patted Faber on the head and told him to PSTFU when Faber brought out the 53% figure. Depends on the method but most websites with the all in US figure are 80-90% right now, not 53%.
4. The difference is Social Security mainly. Why include Social Security in that number, daddy ? Because, doesn't everyone recall the promise from the President of the Martian Intergalactic Society that when we needed that money they'll send it down to us in a golden flying saucer...
5. High yield feeding on strange meat right now as spreads artificially wide and new issuance means simply that those who can are building a cash stash. But it is sort of similar to being at a beach just before the Tsunami, the tide goes way out.... and many wonder in to pick up shells...
6. Japan will be just the first domino... but where will investors go ? Gold, silver, Swiss will be the only longs. Everything else will be a short. The idiot insurance firm actuaries cannot compute that. Does not compute, does not compute...
7. Or, the top debtor nations say No Paga to those on the second half of the list like China and Venezuela and Saudi. The ultimate cram down... Yeah baby.
I thought the 53% spoken as truth by Faber, then the added nonesense about the Fed's independence (INSTEAD OF THE FACT THAT OUR ELECTED OFFICIALS ARE OWNED AND RUN ENTIRELY BY THE OWNERS OF THE PRIVATELY HELD FEDERAL RESERVE CORPORATION) is just the kind of propaganda that drives CNBC and what will secure Mr. Faber a renewed contract....
What I am most interested to know is whether Mr Bass owns any gold.
China's State Owned Insurance Companies Ordered to Prop Up the Real Estate Market
Kyle Bass? I thought it was Kyle Gass:
http://www.youtube.com/watch?v=UECltzOaGf4
"We only came to kick some ass."
I am surprised they let him on CNBC. I was even more surprised they didn't edit his comments or try to have Faber or the other guy interrupt him more with false stats and figures.
past peak oil is peak debt......
look at investor's business daily's top 100 pick, then it's easy. for example, look at netflix.
http://covert2.wordpress.com
Methinks the most important thing Kyle said was that we are in for a secular change, one that occurs every one-hundred years or so. Continually rising incomes and standards of living? Nope. Cushy government jobs and pensions? Down the drain. Retirement living? Not on your life. Cheap food and gas relative to income? Time for gardens and bicycles. Travel to foreign lands, cruise ship sailing, visits to far-flung relatives at Christmas and Thanksgiving? Too hard to barter for the costs. The USA as the center of the Universe? Banana time. On the other hand there should be some nice new wars to fight. Paul Krugman and the rest of 'em like him will hang down their heads and cry for the death of Keynesianism and maybe they'll swing in the wind themselves under some big oak tree. And probably some more differences will crop up as the dollar goes to its intrinsic value while gold and silver will be rediscovered as having certain Aristotelian attributes.
Pure poetry!
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