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Kyle Bass Sums It All Up: "Proceed With Caution"

Tyler Durden's picture


From fears of Argentinian devaluations (and a 26-year-old running policy) to Japan's structural collapse; from Europe's false hope to China's bubbles; and from the Fed taper to the US hydrocarbon revolution, Hayman Capital's Kyle Bass provides a broad-based presentation of global risks and opportunities in the clip below. The Q&A is where Bass comes alive and is well worth the price of admission for a hedge fund manager unafraid to discuss the possibility that the status quo is unsustainable. Bass sums it all up perfectly succinctly, "proceed with caution."


Kyle Bass Presentation clip here (embed unavailable - click image for video) - make sure to watch through the Q&A...

As Bass recently noted, there is no safe-haven in Japan...

"The interesting thing in this selloff in the marketplace and in tech ... and this huge selloff in Japanese equities, is that the Japanese bond market hasn't gone anywhere," Bass said.


"Yields haven't collapsed, which is fascinating. So their bonds are acting pretty terribly in the environment of their equity market. So we'll see what happens."

Full Hayman Capital Presentation:




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Sun, 05/04/2014 - 20:31 | 4727034 TammanyBrawl
TammanyBrawl's picture

Hey, Kyle. Good to see you out of the bunker. Can I boorow some gold?

Sun, 05/04/2014 - 20:48 | 4727062 DoChenRollingBearing
DoChenRollingBearing's picture

Mmm, gold.  Yes, if the world is headed for "Argentina" gold is a good idea.  Argentina has also become a hotbed of Bitcoin use because of their .gov irresponsability.  Bitcoin is very useful when there are capital controls (as there are in Argentina, BTC sells at a very high premium there)

Info from a transaction I captured at for over $1,000,000 is at my article as well as how to use two different BTC mixing services (gives you more anonymity when using BTC).

YMMV when using mixing services!

Fun With Bitcoin for Beginners: Part Seven"

Sun, 05/04/2014 - 20:54 | 4727081 Tao 4 the Show
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"Proceed with caution".

Kurzweil was right that the singularity is near, he just didn't recognize which singularity. The one we are nearing is the discontinuity between "Proceed with caution", quasi-normal, life and markets as usual, and total unknowable break down.

That breakdown could be war, economic collapse, currency belly up, solar-flare-grid-goes-down, etc, etc, etc.

Life on the edge of a singularity. Wild times. Making people and societies crazy, which only feeds back to the tension of the transition.

Sun, 05/04/2014 - 21:01 | 4727100 kaiserhoff
kaiserhoff's picture

Look at the risk/reward. If everything comes up sunnyside, you only lose 3-4 percent each year in negative real interest rates.

If something bad happens, you can lose everything in a few micro seconds.

So the reward is...?   and the caution is...?

Sun, 05/04/2014 - 21:06 | 4727108 Tao 4 the Show
Tao 4 the Show's picture

Excellent point, and spoken from the "sweet spot" of a balanced mind. On either side are first the wealthy with unbridled greed for moar, and on the other those who are desperately trying the multiply "not enough". Let go the greed and fear, and one comes rather easily to your point.

Sun, 05/04/2014 - 21:43 | 4727154 kaiserhoff
kaiserhoff's picture

I like Bass, but he isn't really analyzing the market, but what the Fed will do to the market, which is so wrong on so many levels.  What we should look at is what the Fed will be forced to do eventually, which is raise rates to defend the currency..., but I've been saying that for four years, so consider the source;)

Sun, 05/04/2014 - 21:55 | 4727187 maskone909
maskone909's picture

The dollar is eaither putting in a giant floor at 79 or we are about to waterfall like a motherfucker. Has kyle ever plugged in ww3 as a variable? Yes he has. And he has placed his bets on USD's and usa domestic energy superiority. I just dont see the USA walking away unscathed in this. Especially if japan has a bond crisis/currency crisis

Sun, 05/04/2014 - 22:22 | 4727244 Tao 4 the Show
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Some very interesting questions arise: 1. With war or without, it appears that one or more alternative payment systems will appear. How does that affect valuations? 2. Do 1's and 0's in virtual moneydom continue to have meaning in wartime? etc

Mon, 05/05/2014 - 01:48 | 4727525 rocker
rocker's picture

First, let me say Thank You to Zero for the terrific Speech with Kyle. He had much more content than the PDF overview exposed.

Second, let's all hope Bambi doesn't push Putin into a altercation with us, (the U.S.), for it will be at our loss. All pain, no gain.

That beiing said, I think Yellen will Blink. The Dollar will get stronger, as everybody will want it, the FED will cross over the meaningful taper effect.

The part which will be strang is CPI will continue higher because it lags the devaluation of the dollar that continues as long

as we still do have some form of tapering. Then look out above, rates will climb. That's the part the FED can not stop. Good Luck All. 

Mon, 05/05/2014 - 07:27 | 4727717 VAD
VAD's picture

Why do rates need to climb?  The Fed can just keep printing moar! and keep yields low forever.  I know eventually the shit hits the fan, but the catalyst for it will be whatever the banksters want it to be.

Mon, 05/05/2014 - 09:13 | 4727983 marathonman
marathonman's picture

The Fed will do either of two things - they will keep buying US government bonds out of created money or they will stop.  If they keep going they will eventually devalue the currency so that the US government can meet all its promises by paying them all back in worthless FRN's.  If they stop buying bonds then they'll precipitate a big recession/depression that will crater the economy and destroy government income.  There's an outside chance of the economy actually growing without the bond market supports but I don't know of any cases where the strategy has worked.

Mises was right.  There's no way to keep the boom going from credit expansion.  Eventually you have the hangover or the currency destruction.  Welcome to tomorrow.

Mon, 05/05/2014 - 02:21 | 4727554 SAT 800
SAT 800's picture

Oh, I'm sure your opinion is much more fact based than his; and your team of full time professional data analysts is better than his. On the other hand, maybe you're just another ignorant citizen with a keyboard.

Mon, 05/05/2014 - 00:04 | 4727425 TheReplacement
TheReplacement's picture

It is wrong that doing just that is the only way to do it nowadays.  Kyle Bass is just doing his job and he's doing it honestly.  The Fed is the market.

Mon, 05/05/2014 - 02:24 | 4727556 SAT 800
SAT 800's picture

Well you better write to him right away and explain to him what all the mistakes are that he's making. You people are literally insane. Where did you get the idea that your completely useless opinion is worth typing? Where does this amazing egotism come from?

Mon, 05/05/2014 - 12:02 | 4728542 Mi Naem
Mi Naem's picture


Mon, 05/05/2014 - 12:02 | 4728546 Mi Naem
Mi Naem's picture

Q: "Where does this amazing egotism come from?"

A: The example that you provide. 

Mon, 05/05/2014 - 07:39 | 4727737 VAD
VAD's picture

I don't think the Fed would defend the dollar.  They have no particular allegiance to it beyond their ability to manipulate it for their own purposes.  When it's no longer useful to them, they'll hyperinflate it and move on the the next phony currency...SDR's or Ameros or unicorn farts.   Currency is nothing more than a wealth transfer tool to them.  In the meantime, they most likely want to keep the proletariat fat, dumb, and distracted so no real rebellion can ever take place. 

Sun, 05/04/2014 - 22:25 | 4727252 TruthTalker
TruthTalker's picture

Considering the government can turn off internet access whenever they choose it is not the place I would ever choose to put my money.  I believe if you do not hold it in your hand you do not own it - whether it is paper stocks or bitcoin - after Mt. Gox people would be insane to put their money in bitcoin - maybe a very small portion but to put significant wealth in bitcoin is crazy - Gold/Silver have been around for 5000 years - bitcoin is aroung for 5 - really people - I get wanting to store your money out of fiat currency and central bankers control - but bitcoin is not where you want to be.

Mon, 05/05/2014 - 00:25 | 4727446 DoChenRollingBearing
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I have a lot more of my money in gold than BTC.  If I lose all the BTC from various wallets, it really does not matter.  And for that to happen, losing some BTC would be the least of our problems...

Mon, 05/05/2014 - 02:26 | 4727559 SAT 800
SAT 800's picture

getting desperate to feed the page click god; are we?

Mon, 05/05/2014 - 20:22 | 4730329 XitSam
Sun, 05/04/2014 - 20:54 | 4727086 So Close
So Close's picture

Love me some Kyle Bass.  Straight talk.

Sun, 05/04/2014 - 22:37 | 4727277 Escrava Isaura
Escrava Isaura's picture

So Close,


Stop the propaganda. Kyle doesn't talk straight. He’s a policy/insider propagandist.

But, still fooling all of you.

By the way, the comments are pretty weak. Back to Ukraine… or something else.

Sun, 05/04/2014 - 22:47 | 4727293 fonzannoon
fonzannoon's picture

He certainly has started to talk like an insider. We have flung shit at everyone on here the last few years and now even the zh golden boy is suspect.

Sun, 05/04/2014 - 23:40 | 4727386 fonestar
fonestar's picture

There's always fonestar.

Mon, 05/05/2014 - 00:27 | 4727448 DoChenRollingBearing
DoChenRollingBearing's picture

Far as I am concerned, fonestar, you are a valuable PAL here at ZH.

"Non illegitimi carborundum"

Mon, 05/05/2014 - 01:16 | 4727503 dirtscratcher
dirtscratcher's picture

fonestar, you are a dweeb of the highest magnitude but for some reason that I can't figure out , I occasionally enjoy your pitiful contributions. Between fonestar induced eyerolls, you sometimes make me smile.

Mon, 05/05/2014 - 02:10 | 4727544 fonestar
fonestar's picture

Thank-you for choosing fonestar.

Mon, 05/05/2014 - 20:23 | 4730332 XitSam
XitSam's picture

You say that like it's a good thing.

Mon, 05/05/2014 - 02:17 | 4727551 SAT 800
SAT 800's picture

Now that you've proved that even the terminally ignorant and marginally retarded can "fling shit"; what are you going to do for an encore?

Mon, 05/05/2014 - 06:31 | 4727664 fonzannoon
fonzannoon's picture

I'm really sorry about this whole thing with the SAT's. I could understand that by getting an 800 you spend most of your life being called a retard. I willl choose a different word going forward so as not to offend you.

Mon, 05/05/2014 - 08:22 | 4727819 Georgia_Boy
Georgia_Boy's picture


Mon, 05/05/2014 - 07:34 | 4727729 Greenskeeper_Carl
Greenskeeper_Carl's picture

I'm not gonna fling any shit on him. Every now and then we gotta take off the tin foil hat for a little while. EVERYONE can't be in on it. EVERYONE cant be out to get us. So he may be sounding more mainstream, so what. Every time him or Nigel farange talk half the people on here seem to post just to call them sellouts. I think Kyle has earned a little bit of leeway.

Mon, 05/05/2014 - 07:46 | 4727749 tarsubil
tarsubil's picture

First, the university trust that he was a board member of sold physical gold. Then he talked about how smart Icahn is and refused to say Herbalife is a ponzi. Maybe he got upgraded to a five namer or something and has gone along to not get wiped out. What's the point anyway? They can make anyone's life miserable and there is no reward for talking to the little people.

Mon, 05/05/2014 - 02:15 | 4727550 SAT 800
SAT 800's picture

You're a professional international investor with a terrific track record who can explain things in simple language ? Don't be shy tell us what the straight talk is. As if you knew anything but how to type. What a joke.

Mon, 05/05/2014 - 02:09 | 4727543 SAT 800
SAT 800's picture

Now this is a good reason to check on Zero Hedge; every once in awhile they have an article by someone who actually knows what they're talking about. This is a particularly good presentation.

Sun, 05/04/2014 - 20:34 | 4727040 Caracalla
Caracalla's picture

According to one analyst, all is well with the U.S. economy.  Here is what he said:

Much of the optimism stems from the lousy winter and how it affected big-ticket purchases. While not all of that will be recovered in the following quarters, companies are predicting a fair amount will, said Randy Frederick, managing director of trading and derivatives at Charles Schwab.

“Probably half the things people didn’t do was because of the weather, so there’s a lot of pent up demand,” Frederick said.

How's them apples!  I say, sell in May and go away is the smart play

Sun, 05/04/2014 - 20:41 | 4727050 TammanyBrawl
TammanyBrawl's picture

And probably the other half of the things people didn't do is because they spent all their money on food due to inflation, didn't have anything left for fuel to heat their homes (currently in foreclosure) and froze to death.

Contrarian bullish!

Sun, 05/04/2014 - 20:42 | 4727053 kaiserhoff
kaiserhoff's picture

Or their jobs have been cut to 25 hours thanks to Obozo.

Sun, 05/04/2014 - 20:41 | 4727051 kaiserhoff
kaiserhoff's picture

Bass thinks QE is working, and we can never "afford", his term, to end it.

I've been drunk, but I've never been that drunk.

Sun, 05/04/2014 - 21:45 | 4727163 Lmo Mutton
Lmo Mutton's picture

Bass is managing the money of the 1%.

Trust me, QE is working.

Sun, 05/04/2014 - 20:46 | 4727058 mrpxsytin
mrpxsytin's picture

Move to Western Australia before things gets really bad and your own governments stop you from travelling. Due to its immense abundance of natural resources, Australia weathered the previous Great Depression in much better shape than Europe and the USA. Hope to see you soon!

Sun, 05/04/2014 - 20:51 | 4727079 kaiserhoff
kaiserhoff's picture

Why not Eastern Australia where the Sheilas are?

Serious question.  Few of us know your country.  What are the regional differences?

Sun, 05/04/2014 - 20:59 | 4727095 TammanyBrawl
TammanyBrawl's picture

Got more action in Perth than I ever did in Brisbane. No kidding- they're total whores. (No offense. I mean that in the most respectful way.)

Sun, 05/04/2014 - 21:05 | 4727106 kaiserhoff
kaiserhoff's picture

Thanks.  I'll have to study my Foster's;)

Mon, 05/05/2014 - 02:13 | 4727547 SAT 800
SAT 800's picture

Surfers' Paradise; just south of Brisbane. plenty of whores. Also mind-bendingly beautiful Beach; also, also, also; just go there.

Sun, 05/04/2014 - 21:05 | 4727107 mrpxsytin
mrpxsytin's picture

There are plenty of women in Western Australia. We are currently experiencing a baby boom over here. Once you know what makes women (particularly western women) feel secure enough to have babies you know that this place has a lot going for it. 

Eastern Australia is good too, but it runs along socialist lines. The Eastern states place heavy taxes on Western Australia because it is where most of Australia's mining exports come from. So you could move to the East and live the socialist dream, or you could come to the west and make a life for yourself through hard work. Just don't go to South Australia. I am there right now on business and I have soon realised it was a waste of time because there is no business here. 

The Chinese have seen the potential here, and are coming in droves. I'm not racist so I think this is great. I just want to see hard working people sharing in this abundance and developing the country. The local populace has become incredibly complacent and are wasting this massive potential. 

Sun, 05/04/2014 - 22:26 | 4727253 james.connolly
james.connolly's picture

This is really funny, you go to SE-ASIA and almost all the guy's hunting for whores that they later make into wives are AUSSIES, ... if women were so plentiful in AUSTRAILIA, then why are the vast majority of AUSSIE men hunting for whores in BANGKOK? or PI, Bali, ... ... Indonesia?

I too spent a lot of time in AUSSIE, .. and let me tell you down there the women have the power and pick the men, but the PROBLEM and here is the BIG problem, outside of Melbourne and SYDNEY, and Brisbane they're COYOTE-UGLY, this has to do with the fact that AUSSIE women were never told about sunscreen or brushing their teeth, .. after all its a fucking penal colony like the USA.


So the 'miners' and all the guys with money and holiday go to SE-ASIA and pick up a woman who knows how to take a bath, who brushes her teeth, and stays out of the sun so her skin is beautiful, .. once an AUSSIE man has had a taste of a SE-ASIAN woman they never go back.

Yep, back in the day when they're young and we were young sure at the BIG DARWIN MIL bases during VIETNAM war, sure there were lots of cute horny AUSSIE women, trouble is when they get to be 22 years old they look 80 years old.


Mon, 05/05/2014 - 00:02 | 4727420 Flux
Flux's picture

Hm ...

I was in Australia back in ... oh ... early 1990s. I didn't know better, and got stuck in the touristy areas, and I think I spent most of my time in "Surfer's Paradise".

I remember then the girls were out of this world. Just amazing. Lithe, tanned sun goddesses. I have nice memories of that time. I remember going to California shortly thereafter, and was appalled by the fat, fake bleach blonde, silicon-injected look.

Flash forward 20 years...

A friend decided to go to med school in Australia (yes, I found it odd as well), and before he left I told him he was in for a treat. The girls were bombshells there.

He recently emailed me. Said they were all fat and snotty.

It really brought me down. I can confirm, however, that when I was travelling Asia, there were a lot of Aussie guys in the whore houses. Friendly guys, but as a whole, somewhat akin to your stereotypical redneck in Wonderland.

Go figure.

Mon, 05/05/2014 - 00:15 | 4727436 Flux
Flux's picture

You know what's odd though?

I returned to Canada about ... eh ... seven years ago. I think at that time Obama was running for president. And there was this chick "Obama Girl" always on youtube. And I remember looking at her and saying:


That was the first response. She just seemed large and chunky, and all the fake tanning and gloss wasn't going to change that.

I looked at the exact same clip now:

And she actually seemed kind of hot.

Fuck me.

The question:

As you age, do your standards slip? Or is this just a result of being stuck in the West for too many years?

Mon, 05/05/2014 - 02:35 | 4727563 james.connolly
james.connolly's picture

I was a young man in the 1960's training in the USA SOCAL, and I would frequent the beaches Huntington, and Venice, ... and I'll tell you I thought them the hottest fucking women on earth, maybe it was because you got to see all in a BIKINI.

Then in the 1980's I went back to Venice (LA county) and to Huntington (Orange County); what I saw was fat COKE whores, beached whales; METH whores, bad teeth, and I don't remember any of that back in the 1960's.

The possible is that when I was young I was only looking at the tit's and ass :) When you get older you look at the WHOLE fucking package.

When I was in Austrailia too, it was in the early 90's, and like I said above,... there were a few that wanted to fuck, but I couldn't bring myself to play their fucking game, I do remember meeting a few gorgeous women that wore a hot, and took care, they might have been in their 30's; but 99% of the gal's I saw over 24 looked BAD,... like 80 year blue-hairs in MIAMI with too much fucking sun.


Like I said above, ... why is the majority of whore-mongers in SE-ASIA? AUSTRAILIAN MEN? I talk to them all the time when I go on extended 'walkabouts' around SE-ASIA, why you not fuck an AUSSIE and they give me a look like they want to KILL, The SE-ASIA women, fuck, they're sweet, they're well trained,... An aussie woman as a rule is just Crocodile Dundee in a dress, you can have that shit.

Ok, SYDNEY is different lots of stunners there, but they take care of themselves,... Then there is Kings Cross where I swear has more lady-boys than all of SE-ASIA,... nasty shit

That's the deal with AUSTRAILIA it was a prison colony, and a lot of men fucked men in dresses there were no woman around the prisons, or the mines.

WOMEN in Austrailia tend to be the BOSS, American men will not put up with shit, I think that's why so many aussie men come to SE-ASIA for wives.


Mon, 05/05/2014 - 16:17 | 4727569 Lore
Lore's picture

Western women are like western currencies: inflated and debased. 

Seriously, standards for both genders are ruined.  I miss clean skin and clean hair.  Horses get better grooming.  Remember the pant suit?  The only women I see dressing up and looking sophisticated nowadays are from other parts of the world.  Locals wrap themselves in pieces of tents and awning.  Their implicit message is FUCK YOU.  They eat garbage, and it shows.  It's the same with young men.  Look at American movies from the 50s, and everybody was clean cut and stood up straight and dressed to impress.  They were well spoken and employable.  Now we have a generation of stubbly Marxist bums bitching that their lives suck because their parents were "unsustainable," and they wonder why nobody will hire them for the jobs that are available?  And they wonder why they can't find better partners? It doesn't take a lot of money to clean up and look sharp.  Even the men in soup lines during the Depression wore ties and had dignity. Being a victim and dressing like an unemployed circus clown is a lifestyle choice. 

This Bass presentation is disappointing.  Either somebody got to him, or he's come unhinged from spending too much time around FAs.  Those energy numbers are fantasyland.  And the jobs numbers that Yellen is targeting: Is he kidding?  Is this all some kind of weird inside joke?  How about the driving concerns behind recent world events?  Hello Kyle! Calling Kyle! Wake up, Mr. Bass! 

Mon, 05/05/2014 - 02:41 | 4727557 james.connolly
james.connolly's picture

I spent a year in Murwillumbah, not an hour from Surfer's Paradise,... I still stand by what I said, that sure they were all fuckable under 20, if they would fuck you, but over 22, and they looked like +80 year old sea hag's.

I would frequently get into a conversation,.. "Why don't you brush teeth", ... "Why not use sun tan lotion, or wear a hat", the answer I got was always the same "The government never told us to brush our teeth, or put on sun-screen".

Fucking pathetic,

80% of the people around 'Surfers' are on the dole, 10's of 1,000's of kids live in the WOODS, called "FERAL", which means they live like dog's, but the GUBMINT gives them money, so they carry on....


What I remember best about 'surfers' was +80 year old guy's surfing everyday, that my friends was inspirational, in the USA guy's over +50 just fucking DIE in front of the TV, ... but I really think that some AUSSIES KNOW how to live well on the DOLE.




Lastly, all that stuff south of BRISBANE, and hell yes its BEAUTIFUL, but its all retirement shit, as just about everybody in OZ is on the DOLE, otherwise they're working SYDNEY, MELBOURNE,DARWIN,PERTH,,...

Most guys I meet in SE-ASIA come from the MINES which is interior, they make ton's of money,... and probaby on R&R its better to go to BALI, than to SYDNEY; Bring back a LBFM and enjoy life near the mines :)


Mon, 05/05/2014 - 05:36 | 4727631 foxenburg
foxenburg's picture

@flux. the takeaway from your comment is that, as we all know, the USA leads the way in most things by 20 years, for good or bad.

Sun, 05/04/2014 - 22:50 | 4727303 GooseShtepping Moron
GooseShtepping Moron's picture

What is your deal with this push to populate Western Australia? Are you getting kickbacks or something?

Sun, 05/04/2014 - 23:32 | 4727374 BringOnTheAsteroid
BringOnTheAsteroid's picture

The chinks are done fucking up their own environment, time to start really fucking up Australia's.

Sun, 05/04/2014 - 20:48 | 4727065 fonzannoon
fonzannoon's picture

Kyle says "the next few years the dollar is going to be pretty strong".  Makes sense when you look at what is going on in treasuries.

"One reason for the rebound is that pension plans, which oversee $16.3 trillion, are shifting into longer-term Treasuries to lock-in last year’s stock gains by matching assets with their future liabilities as funding deficits narrow."

"In the next 12 months alone, buying from private pensions will create $150 billion in demand for longer-maturity Treasuries, based on Bank of Nova Scotia’s estimates. That compares with the $40 billion in all maturities of U.S. government debt that the plans bought last year."

Overseas investors own $5.9 trillion, or 48.5 percent of the market for U.S. Treasuries, more than double the amount they held in January 2008, according to the Fed.

Foreigners have increased holdings of Treasuries every year since at least 2000. China, the biggest foreign creditor to the U.S., held $1.27 trillion in Treasuries as of Feb. 28, approaching the record$1.32 trillion the country owned at the end of November. Japan, the second-largest, had $1.2trillion of U.S. government debt, an all-time high.

Central banks are choosing to park their currency reserves in Treasuries because they offer higher returns relative to other nations, according to Jake Lowery, a manager at ING U.S. Investment Management, which oversees $200 billion.

Sun, 05/04/2014 - 20:54 | 4727085 kaiserhoff
kaiserhoff's picture

But fonz, you can get three percent in Greece;)

Sun, 05/04/2014 - 21:11 | 4727113 fonzannoon
fonzannoon's picture

Man it must be crazy for the gold crowd who pledged their allegiance to Kyler Bass listen to this. I mean holy USD in every way. 

I'm 25 mins in and after describing everything wrong in the world he is pitching Argentenian bonds.

Sun, 05/04/2014 - 21:23 | 4727131 Charles Nelson ...
Charles Nelson Reilly's picture

I think there is a very real possibility that the usd and gold both rise together. The fed cannot live with a stronger dollar.

Sun, 05/04/2014 - 21:48 | 4727173 kaiserhoff
kaiserhoff's picture

Much as I hate fiat, as much as everyone here hates fiat, hell yes.

Wages are collapsing, real estate is a sick joke, the productive sector is in a depression, the dollar is in demand mostly because all other paper is going to shit even faster.   What a brave new world we live in.  Gawdhelpus.

Sun, 05/04/2014 - 22:13 | 4727218 NoDebt
NoDebt's picture

Hold on, Kaiser.  Gonna throw you another curve ball here.  Fiat still buys you quite a bit of "regular guy" stuff these days.  But in the asset world, where liquidity is plentiful, it buys you precious little (in the way or returns). 

It's a similar dochotomy to the real world where the bottom end is cash-starved and the high end is just dripping with nearly-free money.

When the Fed (or PBC) turns on the tap, there's plenty of water near the spigot.  Trouble is, the drain is WAY on the other side of the bathtub and there's PLENTY of things in between the two blocking the flow.

Where others see no connection between the "paper" economy and the "real" economy, I see near-perfect correlation.  You just have to look at it from the proper perspective.  That perspective is born from unsustainable debt and endless money creation to paper that fact over.

In other news...

"One reason for the rebound is that pension plans, which oversee $16.3 trillion, are shifting into longer-term Treasuries to lock-in last year’s stock gains by matching assets with their future liabilities as funding deficits narrow."

Stop it, Fonz, you're making me blush.  It's almost like you read what I wrote you or something.

Sun, 05/04/2014 - 22:24 | 4727245 fonzannoon
fonzannoon's picture

yeah that article was interesting nodebt. it backed up what u said and even pointed out that they were buying because regulations were forcing them to as well.Meanwhile Dodd/Frank is forcing banks to massively up their UST holdings at the same time... then Kyle points out that the unemployment rate will be 5.5% in July and Yellen will be hiking rates and blowing the world sky high along with the Canadian housing market and Japan/China there is not a lot of time to buy Argentenian bonds.

Mon, 05/05/2014 - 03:15 | 4727580 Lore
Lore's picture

@ Fonzannoon et al.,

What is this shit about demand for treasuries, when two weeks went by last month without a single bid, and the Fed has to launder the shit through Belgium through a "virtual customer" because nobody in the real world wants their fucking lemonade?  Since when did Belgium become the world's greatest dollar bull? What makes you think the Chinese aren't continuing to dishoard incrementally through their proxies?  Where are all those hundreds of tons of bullion disappearing to, if the dollar is strong and everything is kewl?  Why do you think America is invading and occupying everybody, and the first thing they "liberate" is the local gold hoard?

I don't buy any of this shit. It just smells too much like shit.

Tue, 05/06/2014 - 21:29 | 4734453 Dudeskis
Dudeskis's picture

Exactly how I described it to a friend. Global financial Hunger Games are here. Everyone will print til their last breath and foreign capital outflows will crown the most fit tribute(nation) their life.

Mon, 05/05/2014 - 00:01 | 4727419 FutureShock
FutureShock's picture

His main point was less dollars overseas because we are producing more domestic oil and THAT will continue and we will import less oil meaning less dollars iin circulation overseas..

Sun, 05/04/2014 - 20:51 | 4727073 Spungo
Spungo's picture

I know Kyle Bass is wrong because Mike Norman thinks Kyle Bass is wrong.

Sun, 05/04/2014 - 20:52 | 4727076 ebworthen
ebworthen's picture

When at the Casino leave most of your cash in the room, don't drink too much, and bring condoms.

The house will be doing their best to get you drunk, take your money, and they don't give a damn about your health.

Sun, 05/04/2014 - 21:11 | 4727118 Yen Cross
Yen Cross's picture

   I liked Kyle's emerging markets investment analogy... "Getting into emerging markets is like taking a 10 lane highway, and getting out is like a goat trail."

Sun, 05/04/2014 - 21:35 | 4727141 fonzannoon
fonzannoon's picture

The collective groan that must be happening by ZH'ers who actually listen to this vid must be amazing. Every problem in the world can be answered by owning USD, and if you want to take some risk, grab some Argentenian bonds.

Sun, 05/04/2014 - 21:41 | 4727148 Yen Cross
Yen Cross's picture

  Yea, I'm not so sure on the long usd thing either Fonz. He does make a lot of sense regarding the Japan situation though.

  China HSBC Manufacturing PMI coming up here in 10 minutes. Hopefully we'll get some movement in these sideways f/x markets this week.

Sun, 05/04/2014 - 22:00 | 4727186 james.connolly
james.connolly's picture

Fonz, that's why smart guy's are buying HKD that is tied to the USD, and kept in ASIA, the night before the USD collapses those HKD's go from being tied to USD to tied to CNY.

The USD will continue to have support as long as the BUSH-TRIBE can continue to KILL, but their day's of killing could end very quickly.

Somebody could get sick of the shit, and take out Halliburton, SERCO, the Texas Ranches, and all the BUSH Condo's in LONDON, TEL-AVIV, and Sydney, and over-night the BUSH-TRIBE would be kaput.

I agree the USA is the #1 killer on earth the WORLD love's POWER that said the PTB (BUSH-TRIBE) are psycho-pathic assholes and it would be too fucking easy to suitcase NUKE a 1/2 dozen locations an put them out of business.


Lastly Kyle Bass is an HW-BUSH cock sucker, so of course he's a true believer, fuck he lives at KoolAide Ranch.

But the true-belivers are right, until they are dead wrong.

BASS & BUSH are siamese twins that share the same texas asshole, ... me thinks they're is some incest; at any rate sure as fuck he's a believer that MURDER, INC will prevail.

Sun, 05/04/2014 - 22:20 | 4727238 BandGap
BandGap's picture

Just a gentle nudge is all.This was taped in February, before the Ukraine shit. War would reset everything, blue water navies notwithstanding.

Going to be an interesting summer.

Sun, 05/04/2014 - 21:46 | 4727164 Ignorance is bliss
Ignorance is bliss's picture

I like Argentinian blonds too.

Sun, 05/04/2014 - 21:51 | 4727176 kaiserhoff
kaiserhoff's picture

Misread it the first time.

I thought you were short on wall paper;)

Mon, 05/05/2014 - 05:22 | 4727625 foxenburg
foxenburg's picture

to be serious, i have never bought a bond (or a blonde) . how would one go about buying a few thousand dollars worth of argentina bonds as bass recommends?

Sun, 05/04/2014 - 21:47 | 4727171 Berspankme
Berspankme's picture

Seems the most optimistic Bass has been in a while. Different tone from the guy who was buying pallets of nickels a couple of years ago.

Back to the bunker

Sun, 05/04/2014 - 22:22 | 4727243 BandGap
BandGap's picture

Hasn't sold any nickels, either. Or gold.

I wouldn't expect his tone to change now that we are in the home stretch.

Mon, 05/05/2014 - 03:32 | 4727593 CrashisOptimistic
CrashisOptimistic's picture

My 2 cents

1) People for some reason want to have a guru.  When he starts making noises inconsistent with what you thought he said before . . . you decide you didn't understand him before.

2) Gurus at hedge funds make money persuading people to entrust money with them.  They can make big bets and lose somewhat with impunity, because their skill set is persuasion, not judgment.  The worship of the Big Short was silly.  That guy probably bet a different direction a different time, lost his clients money, and then hit up his contacts again and raised more money.  The skill set is persuasion.  Not investing.  Investing skill is somewhat unimportant.

3) Waving your hands over your head about what the Fed is forced to do to defend a falling dollar is just silly.  The Fed need do nothing at all.  The other CBs would be the entities who would not want a falling dollar.  So imagining a falling dollar is going to force rates up just doesn't play.  The BOJ doesn't try to move US interest rates, but it may try to change the USD value.

4) As for a magical explanation that rates are falling because pension funds are buying . . . okay, when?  Why is now a different pension environment than 4 or 6 months ago?

5) Oil is $100.  It is dragging everything down.  Rates fall when growth is poor. 



Sun, 05/04/2014 - 21:55 | 4727188 QQQBall
QQQBall's picture

Great talk

Sun, 05/04/2014 - 22:11 | 4727219 crzyhun
crzyhun's picture

Self preservation in the midst of Big Brother? Hmm...

Sun, 05/04/2014 - 22:47 | 4727294 FreedomGuy
FreedomGuy's picture

I have listened to other Kyle Bass videos. One of the best is his explanation of the crash and how and why he avoided it. He actually admits a bit of luck as timing is everything.

I personally think the guy is a financial genius, dispassionate and a straight shooter. That is not to say that he cannot be wrong. Forecasting economic things is very similar to forecasting the weather. You know summer is warmer and winter is colder but you cannot predict the weather on any given day more than 24hrs in advance. We know why and even where hurricanes form yet we cannot tell when, how many or how severe they will be.

Bass is a top of the line forecaster, I believe.

Sun, 05/04/2014 - 23:37 | 4727382 DOGGONE
DOGGONE's picture

PLEASE get your heads out into the light ... Look & see:

Sun, 05/04/2014 - 23:54 | 4727413 Snidley Whipsnae
Snidley Whipsnae's picture

I don't know if Kyle is a good forecaster or not. 

But, when I listen and watch Kyle I do know that he could sell ice cubes to eskimos.

He is a natural salesman, the complete package, and he is smart.

Mon, 05/05/2014 - 00:59 | 4727490 pitz
pitz's picture

Bass really isn't telling the full picture in terms of the US energy situation, somewhat exxagerating US oil output and imports.    Other than that, he's spot on, especially when it comes to Canadian real estate, and the precarious state of Japan.  But many have gone down that road, with similar predictions, only to have their decapitated heads handed to them on a platter.

Mon, 05/05/2014 - 09:51 | 4728112 Lore
Lore's picture

No mention of a gas shock or retail collapse or anything else negative on the home front. Everybody just BULLEEV in the POWAH of the FED!  THE DAWLA IS STRAWNG. THE DAWLA IS STRAWNG.  Keep saying it and BULLEEV.

Mon, 05/05/2014 - 01:11 | 4727501 Spungo
Spungo's picture

You thought Obama Girl was chunky? I'm sorry to say it, but you might be gay. 

Mon, 05/05/2014 - 01:16 | 4727504 QQQBall
QQQBall's picture

I thought she was signing to MOOchelle?

Mon, 05/05/2014 - 02:42 | 4727567 zebrasquid
zebrasquid's picture

What feel does Bass have about the real economy? While he eats his lobster the masses are loading 6 packs of Kirkland tuna into the trunks of their 15 year old minivans.

A more accurate view of the future is likely viewed looking through their eyes.

Mon, 05/05/2014 - 03:50 | 4727602 q99x2
q99x2's picture

This is the most positive I've heard Bass in years. And, he is looking on investment returns over the long haul.

BTFD BTFD BTFD Everything is fixed. The almighty buck is headed to heaven.

Mon, 05/05/2014 - 05:49 | 4727638 Mario55
Mario55's picture

I do not know if Kyke Bass is a good money manager, but he certainly is a good speaker.

I hope for him he does not end like Hugh Hendry.


Mon, 05/05/2014 - 06:51 | 4727682 AdvancingTime
AdvancingTime's picture

The effect of a lower yen on exports is beginning to wane. When the yen drops faster than the Japaneses stock market rises it will no longer protect the wealth of those invested within its borders. Japan is the most indebted developed country in the world and its future prospects are dim and getting worse.

It is only a matter of time before the yen becomes worthless and as inflation begins to take root it will place upward pressure on Japanese bond yields and raise the cost of government to service its massive debt.It appears domestic investors have already started venturing overseas for higher yielding assets. When this turns in to a tsunami of  money fleeing Japan it will constitute the end of the line for those holding both JGBs and the yen. More on this subject below,


Mon, 05/05/2014 - 07:43 | 4727743 NoDecaf
NoDecaf's picture

All great comments from ZHers, so basically Bass is trying to sell something. We'll know it's something more insidious when, one by one, others start talking up Argentinian bonds beginning with PCR and ending with Gerald Celente...When they get to Celente, then you know it will be panic time.

Mon, 05/05/2014 - 21:03 | 4730441 dragoneyes74
dragoneyes74's picture

Friday may have been a game changer for the dollar, and therefore gold.  If the dollar loses key support levels, gold could have a nice run ahead of it, having two strong impulsive moves off $1270 lately you have to respect.  It needs to close above that swing high of $1331 to get exciting, though.  My main concern about the dollar is what Kyle Bass referred to in the video about the European banks needing to be recapped. If that number is big it could cause the Euro to tumble.  Frankly, I don't care what way it goes, I'm just getting tired of waiting for the EUR/USD, or gold, to make a sustained move with conviction.  I'm in day trading mode until we get some decisive technical levels taken out.  

I don't see why bonds should stop climbing.  If they aren't afraid of the Fed not buying and are more focused on the lack of a real recovery, then the only potential problem could be the dollar selling off if it follows a similar script as the August 2010 - April 2011 trade.  I plan on buying dips unless the ES breaks and holds new highs.  Remember last May's NFP day?  Bonds were thinking stocks would top out and when they broke out above 1600 they started their selloff.  I'm hoping for the reverse this year.  

What I'm hoping for is an obvious stop run reversal in the ES to make a tradable entry.  If the big money long-term players have dramatically de-risked all year, I presume they aren't loading back up at the all-time highs, which puts the market in the small traders' hands.  So the question becomes are enough of the Large Specs confident in the short side to actively be building a short position, or are they happy just to be not as long?  I think that answer will come when the ES breaks to new highs.  Are the big sellers lurking there or not?  If they are it will be fun times again.  Just like April.  If not, I will tip my hat and not fight the tape.  I'm thinking with Yellen testifying it happens this week one way or the other.  The bottom line is my deep thought of the day: if there aren't more sellers than buyers, the price will go up.  May the sellers be with you. 



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