An Hour In The Company Of Kyle Bass

Tyler Durden's picture




 

Last year's AmeriCatalyst interview with Kyle Bass provided much more color than the normal 30-second soundbites that we are subjected to when serious hedge fund managers are exposed to mainstream media. This year, Bass was the keynote speaker and in the following speech (followed by Q&A), the fund manager provides 60 minutes of eloquence on the end of the grand experiment and its consequences. From Money Printing and Central Bank Balance sheets to Japan and the psychology of the current situation - which in many cases trumps the quantitative data - the question remains, "when will this unravel" as opposed to "if?"; Bass provides his fact-based heresy against the orthodoxy of economic thought "On The Financial Nature Of Things" extending well beyond his recent note. Must watch (there's no football or X-Factor on tonight).

Make sure to stay tuned to the last 2 minutes when Kyle succinctly sums up our society...

Clip not embeddable - click image for jump to YouTube.

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Wed, 12/19/2012 - 22:29 | 3081326 DoChenRollingBearing
DoChenRollingBearing's picture

Must see, I saw it the other night.  It's worth it.

+ 1, Tyler!

Thu, 12/20/2012 - 00:06 | 3081571 sitenine
sitenine's picture

DoChen or Tylers or anyone please, would you happen to know where to lay hands on his slide deck? Still an absolutely amazing presentation without them though.

Thu, 12/20/2012 - 00:16 | 3081599 seek
seek's picture

Yeah, that's the only issue, he keeps refering to the slides and they never pan to them!

Thu, 12/20/2012 - 02:06 | 3081754 DoChenRollingBearing
DoChenRollingBearing's picture

I THINK I saw this at Ann Barnhardt's site (barnhardt.biz), no slides there either, sorry.

Tue, 12/25/2012 - 11:17 | 3094605 GetZeeGold
GetZeeGold's picture

 

 

Ann just needs to break out of her shell a tad. She's such a timid girl.

Wed, 12/19/2012 - 22:29 | 3081328 Anne Ominous
Anne Ominous's picture

I like how he says 'shit' and 'fuck'.

Wed, 12/19/2012 - 22:36 | 3081343 JackT
JackT's picture

Bass doesn't pull any punches

Thu, 12/20/2012 - 00:19 | 3081600 Freddie
Freddie's picture

When Bob Pisani interviewed Kyle at his office in Texas - Kyle has a cammo'ed sniper rifle on his wall or mantle.

http://video.cnbc.com/gallery/?video=3000078074

I think it was am M-24 or maybe a better sniper rifle.  I never saw that on any office mantle.

Guns and gold - bitchez!

F Hollywood, F TV, F Tarantino and all the media scum who want to disarm you!  Boycott their sh*t.

Thu, 12/20/2012 - 00:30 | 3081612 Max in St Moritz
Max in St Moritz's picture

 

 

another barnyard libertarian

guns, trucks, knives, big foot and drop top camaros - bitchezzz!

f 'n A !!!

Thu, 12/20/2012 - 06:20 | 3081921 Rick Blaine
Rick Blaine's picture

Yes...he is.

A damn rich one too.

He also probably knows that "Bigfoot" is one word.

 

Thu, 12/20/2012 - 01:11 | 3081690 ZeroAvatar
ZeroAvatar's picture

Or, in BASS' case, "NICKELS, BITCHEZ!

Tue, 12/25/2012 - 11:21 | 3094554 GetZeeGold
GetZeeGold's picture

 

 

The Fed is watching him like a hawk....if he melts even one of those suckers....he's gone.

Tue, 12/25/2012 - 12:17 | 3094674 Haole
Haole's picture

So the U of Texas bought over a billion in gold and as a fuduciary Kyle feels secure that all that gold, sitting in the fucking "COMEX system" of all places according to him, is not only theirs but there in the first place?  Holy fuck... As long as it's all IOUs to the university and not his own personal counterparty risk, it's all good?  Wow, thanks for the video Freddie.

Tue, 12/25/2012 - 12:24 | 3094693 edb5s
edb5s's picture

I am not sure where you got this from, but in another interview of Bass (it may have been Americatalyst last year) he spoke about taking delivery of the gold he buys.

 

Edit: here it is - http://www.youtube.com/watch?v=UQTa66gCggY

Tue, 12/25/2012 - 14:01 | 3094860 Haole
Haole's picture

He says it in the video clip Freddie posted.

He may take delivery of his own but he expressly says that the U of T gold is stored and insured in the COMEX system through a "deal" with HSBC only "it's just ours".  Uh...k

I don't know about what Kyle does with his personal finances/gold/etc. but am I the only one who sees a problem with the U of T actually holding over a billion in gold, particularly from a "fuduciary's" standpoint?

Tue, 12/25/2012 - 12:16 | 3094680 edb5s
edb5s's picture

I would love to see the full view of the "dollar" behind him.  Looks to have a picture of Lenin on it with Hank Paulson's signature.

Wed, 12/19/2012 - 22:38 | 3081356 fonzannoon
fonzannoon's picture

How can Europe's banks be overlevered and undercapitalized and not have blown up yet?

Thu, 12/20/2012 - 01:13 | 3081691 ZeroAvatar
ZeroAvatar's picture

Ever hear of 'outright monetary transactions'?

Wed, 12/19/2012 - 22:43 | 3081365 eigenvalue
eigenvalue's picture

2 problems with Kyle's thesis

1. He mentioned few people want to assume the debt of their extended families. Ergo, Germany won't assume the debt of the PIIGS. 

But when somebody assumes the debt of his extended families, he spends his own money. When Merkel assumes the debt of the PIIGS, she spends other people's (German taxpapers') money.

2. He mentioned Japan's current account is gonna see continous deficit. Japan will need external financing to absorb new JGB issuances. Therefore JGB yields will rise.

But what if the BOJ prints to absorb all the new issuances. The Fed did it in the 1940s. Inflation was rampant but the treasury yield didn't go up. 

Wed, 12/19/2012 - 22:51 | 3081391 EARLPEARL
EARLPEARL's picture

JAPAN HAS BEEN PRINTING FOR 20 YEARS....WHAT CANT GO ON FOREVER WILL NOT....BUT WHEN? THATS WHY IT IS THE WIDOW MAKER....DIFFERENCE NOW THE POLITICIANS ARE PLANNING TO TAKE OVER THE BOJ

Wed, 12/19/2012 - 23:01 | 3081411 eigenvalue
eigenvalue's picture

Yeah, "when" is all that matters. By and by, I think it makes perfect sense to short bunds and oats. But Paulson shorted bunds this year and got burnt.

Thu, 12/20/2012 - 01:24 | 3081708 Snidley Whipsnae
Snidley Whipsnae's picture

It's not only Paulson that got burned shorting soverign bonds... there are mountains of bodies that thought they had the timing down... but didn't.

Thu, 12/20/2012 - 12:53 | 3083075 dmger14
dmger14's picture

I think Merkel will have problems staying in power if she spend German taxpayers' money much longer.  On the Japan situation, nobody but the BOJ would buy bonds if they are printing.  I could see velocity and inflation through loss of confidence if the BOJ was the only player.

Wed, 12/19/2012 - 22:45 | 3081371 bobthecat
bobthecat's picture

A Hour in the company of Kyle Bass*

Wed, 12/19/2012 - 22:57 | 3081401 fonzannoon
fonzannoon's picture

It's funny how Kyle talks about optomism bias and pattern recognition. His example of things that are repetitive..."Japan is self funding". He seems to miss his own optomism bias. You could use the same example for "don't fight the fed". He is a little too self assured that Japan and Europe are the real problems and the US is not. He might be missing his own point.

Wed, 12/19/2012 - 23:00 | 3081410 chump666
chump666's picture

He is a safe haven DXY bull.

Same with Hendry...I think.

Wed, 12/19/2012 - 23:11 | 3081424 fonzannoon
fonzannoon's picture

His own math, logic and facts makes the dollar anything but a safe haven. I think it is the boyscout in him that makes him a DXY bull.

He is talking about Japan and money printing and buying their own bonds and denouncing monetizing defecits at the same time......THATS NOT THE FED?

Wed, 12/19/2012 - 23:37 | 3081498 MachoMan
MachoMan's picture

He will be judged on his trades, not his lectures...  for anyone that has the ability to talk their book, you can presume he or she is always doing so...  He, like everyone else, tends to speak in generalities...  the devil is in the details.

Thu, 12/20/2012 - 00:35 | 3081621 chump666
chump666's picture

Hence you can still bet against Japan if they continue on that path, through the JPY short.  Overall the 'safe haven' of Japan status could collapse before the US.  They are in a worst shape at this point in time.  It's a strange paradox, as I mentioned on here about safe haven trades a day of or so back, the DYX could be bid as the last gasp trade before the reset.

Thu, 12/20/2012 - 01:19 | 3081701 ZeroAvatar
ZeroAvatar's picture

It could be, but, with China so anxious to take over Reserve Currency status, I have a feeling they will exploit the current economic chaos in some as of yet unknown fashion.

 

Black Swan, Chinese style.  The hammer's gonna drop somewhere, soon.  I can just feel it.

 

Probably when US invades Iran, that'll be the trigger for China. 

Tue, 12/25/2012 - 12:22 | 3094691 kentmills
kentmills's picture

+ 1

Wed, 12/19/2012 - 23:07 | 3081425 fonzannoon
fonzannoon's picture

dupe sorry

Thu, 12/20/2012 - 00:02 | 3081565 eatthebanksters
eatthebanksters's picture

Hendry and Bass are two of the best...hard to argue with those boys.

Wed, 12/19/2012 - 23:09 | 3081434 eigenvalue
eigenvalue's picture

And he mentioned the average house price slump was about 6 years if I remember correctly. Therefore, he believed that the housing market had bit the bottom. This sounds very much like Bernanke's "We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit."

Wed, 12/19/2012 - 23:46 | 3081515 kito
kito's picture

Big +1 fonz....you are absolutely right....he is BLIND TO THE SEVERITY OF THIS COUNTRY'S PROBLEMS........

Wed, 12/19/2012 - 23:51 | 3081520 fonzannoon
fonzannoon's picture

@Kito and Vast-dom, in the last 2 mins he calmly seems to say the US will QE itself into hyperinflation at some point. I can buy his food and shale argument to a point. He looses me with his housing thesis.

who knows anymore. Crazy.

Thu, 12/20/2012 - 00:21 | 3081559 vast-dom
vast-dom's picture

fonz: he waffled a bit, and was vague on conclusions for US and i believe is not appreciating some vital variables. but i like KB a lot, which doesn't mean he won't be potentially extremely wrong. 

 

i do not agree with his shale outlook either. adjusted for price over time factoring in global supplies, it will not be the godsend that too many people believe it'll be...

Thu, 12/20/2012 - 01:45 | 3081728 infinity8
infinity8's picture

Well, he can't give it ALL away, can he? I think he "appreciates" plenty. And I like him.

*edit: I don't agree on shale either.

Thu, 12/20/2012 - 00:25 | 3081610 Freddie
Freddie's picture

Maybe he does not want to be "heart attacked" by Dear mullah and his NWO goons.  Yeah Kyle is in Texas but no one is safe from our beloved Islamic.  

Maybe it is not too safe to talk about the U.S..  The guy has a mega bug out compound in Texas with lots of land, bunkers, food, precious metals, water and guns.  Lots of guns.

Thu, 12/20/2012 - 02:33 | 3081774 resurger
resurger's picture

He's saying that US will be ranked 3rd, thats after Japan and Europe

They should run for a gold medal imho.

Thu, 12/20/2012 - 06:19 | 3081913 falak pema
falak pema's picture

rich's man analysis in the race to the bottom.

What I hear in this presentation is that the great structural reset, according to his number crunching, is imminent (2/3 years). That the root cause is the Banking sector imbalance added to the sovereign debt pile and the runaway ratio between debt interest payment and government tax earnings; especially if thru past banks non restructuring that debt gets MORE socialised in coming years (French example) and that interest rates on bonds go up as the rates are too low and this is unsustainable. 

Which means ALL of first world, irrespective of ORDER, aka Jap/Euro/UK/USA will lose big as their debts are unsustainable. Lots of pain. (Not that this is NEWS to us who read TD/ZH!)

But guess what? Those who are NOT in debt, will come out on top, unless there is social unrest and War in their lands.

So who are the winners in this race: stable non first world countries with current account surpluses : Brazil, Venezuela, CHile, some arab nations if their political structures allow it, Turkey, Russia (?), CHina (?), India (?). And amongst the first world : Germany, USa, Canada, Australia.

Now we know. Where to invest; if we have anything left! 

Crazy world drowning in debt and now entering red zone of BIG social unrest. 

What this analysis does not address, as part of this structural reset, is a move in IMF, and thru bilateral deals amongst major players, to move away from USD reserve currency status and the IMPACT of that on financial markets...(unless I missed something).

Now that may reflect his home grown optimism biais. But it is an element that would/could be major game changer in the financial restructuring of the sovereign nations of tomorrow's world. 

 

Thu, 12/20/2012 - 13:44 | 3083295 ajax
ajax's picture

 

@fonannoon

 

Great post but you forgot to mention: Kyle Bass has a television in his clothes closet !!


Wed, 12/19/2012 - 22:58 | 3081403 chump666
chump666's picture

He is so right.

The big issues are civil unrest/strife, his points about Greece and the 'big' riots is correct, the media and market blow off another predictable reminder that the market is just underwritten by the QE environment. And now we are at the denial Rome-is-falling-to-sh*t stage, and so the markets have NOT priced in major civil unrest throughout the world.

Wed, 12/19/2012 - 23:15 | 3081449 icanhasbailout
icanhasbailout's picture

I personally would prefer 30 minutes with Lauren Lyster

Wed, 12/19/2012 - 23:46 | 3081517 ImReady
ImReady's picture

I doubt you could last that long. 

Thu, 12/20/2012 - 00:01 | 3081564 Assetman
Assetman's picture

I'm sure he is willing to die trying...

Thu, 12/20/2012 - 01:05 | 3081673 chump666
chump666's picture

lol

Thu, 12/20/2012 - 01:04 | 3081672 chump666
chump666's picture

hahahahahaha

that was gold...

 

Thu, 12/20/2012 - 02:03 | 3081752 FoeHammer
FoeHammer's picture

@ImReady...Oh man. Too funny +1

Thu, 12/20/2012 - 03:18 | 3081815 IridiumRebel
IridiumRebel's picture

Think of baseball....ooh!....or Ben Bernanke! That'll get ya to 30 minutes....probably 60!

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