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Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry"

Tyler Durden's picture




 

While Kyle Bass is usually the smartest man in the room, among this crowd he is Einstein as he carefuly explains - while sitting politely during status quo interruptions - the real state of the world "the unintended consequence of QE has been to widen the income gap," what is behind the Potemkin Village of the stock markets, how The Fed is "backed into a corner" of raising rates against their will, and why bond yields (at the long-end) will drop further. Currency wars are net positive, as Greg Ip suggests, and will not end well, as he concludes in one section, "why haven't all the Yen left Japan already?"

"How many rich people do you know today that are poorer than they were at the peak in 06/07 (apart from Dick Fuld), I don't think I know any.. QE has been distributive to the rich... but now that the world has started this policy it is unable to end it...

 

the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn..."

 

"2015 will be +/-0% return in the equity markets"

 

[Re: crowded trades and liquidity] - where are the liquidity worries at the moment? Equities would be the toughest to exit.. it's like a 5-lane highway going in and goat trail coming out... Brazil is great example"

What Tomorrow Will Bring...

 

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Sat, 03/28/2015 - 19:23 | 5938012 Moe Hamhead
Moe Hamhead's picture

What, me worry!

Sat, 03/28/2015 - 19:25 | 5938015 TeamDepends
TeamDepends's picture

The problem is, the tools were allowed out of the toolbox.

Sat, 03/28/2015 - 19:31 | 5938039 A Lunatic
A Lunatic's picture

Tools using tools........

Sat, 03/28/2015 - 20:08 | 5938138 Keyser
Keyser's picture

A fool with a tool is still a fool... 

 

Sat, 03/28/2015 - 20:19 | 5938166 A Lunatic
A Lunatic's picture

Fools with tools being used on the tool-less fools.....? This is so confusing....

Sat, 03/28/2015 - 21:22 | 5938276 SWRichmond
SWRichmond's picture
Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry"

Screw you, sellout, begging for more free money to boost your phoney returns and keep you and your buddies rich.

Screw you.

Sat, 03/28/2015 - 23:20 | 5938492 Sizzurp
Sizzurp's picture

Actually his returns have not been great because he isn't really on-board with what the Fed has been doing.

Sun, 03/29/2015 - 01:51 | 5938694 Laowei Gweilo
Laowei Gweilo's picture

it's not because that though... it's because he's just not that smart at picking equities...

i mean, this guy is still long tons of very stereotypical stocks... he bought financial companies, mortgage-related companies, oil and gas, food... i mean, stocks that everyone was making money on by blindly throwing darts at a SP500 board

and yet he still managed to make horrible equity decisions... his MTG long was an absolute fail, losts tens of millions when it broke capital requirements and then he sold it all off for pennies, and within a year it was up nearly 1000%... same thing with MHR but vice versa... you can go through his filings and find quite a few large examples like this

 

the guy is toted as a prophet here but he's actually a horrible stock picker

 

his only real claim to fame is getting one single major macro trend right, and consider how wrong he's been since, and how bad he's been at picking equities... maybe he's still a genius and will be right again, or maybe he was just lucky

 

either way, the guy probably SHOULD be right based on any sort of classic stock ideals but that's a huge difference from actually BEING right, and if you look at his calls -- not only calling macro trends but actually being long equities, too -- and he's been aboslutely horrible since he got 2009 right

Sun, 03/29/2015 - 09:05 | 5938921 Sizzurp
Sizzurp's picture

Shoulda just mindlessly bought SPY, DVY, BRKB. Those things have basically been a straight line upward for 6 years while we have all been bitching about the Fed, and various other doom topics about impending financial catastrophes.  Missing out on those moves has been the real catastrophe.

Sun, 03/29/2015 - 09:08 | 5938929 GetZeeGold
GetZeeGold's picture

 

 

 

Could you borrow me a nickel Kyle?

Sun, 03/29/2015 - 14:20 | 5939449 Manthong
Manthong's picture

“A fool with a tool is still a fool...”

Maybe more like a three-year-old with a lit acetylene torch ..

in a wooden roadside convenience store shack..
filled full of fireworks..
that is also a gas station..
taking on a load from a tanker truck
all sitting next to a natural gas pipeline valve station
and a rocket propellant manufacturing and storage facility.  

What could go wrong?

 

 

Sun, 03/29/2015 - 15:02 | 5939650 tarabel
tarabel's picture

 

 

At least he hasn't started smoking yet. That would be really bad for his health.

Sun, 03/29/2015 - 11:24 | 5939140 rbg81
rbg81's picture

He made a big bet against the JPY a few years ago and was losing $$.  However, in the last two years the USD has strenghtened considerably against the JPY.  So, not sure how he is doing now.

Sun, 03/29/2015 - 08:52 | 5938902 Bendromeda Strain
Bendromeda Strain's picture

SWR - I always read what you have to say with interest and also detect a marked shift in Bass' narrative, almost as if he regrets giving advice to the peons back at Barefoot '09. The Bass who ordered nickels and told his Grammy to buy gold seems to be replaced with just another barker bemoaning the state of play while strategizing all the while. I get it, he runs OPM, but he used to seem genuinely concerned for the masses, whereas now not so much.

Sat, 03/28/2015 - 21:58 | 5938341 one_hundred
one_hundred's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com

Sat, 03/28/2015 - 22:20 | 5938394 venturen
venturen's picture

do you have to  be on all 4's?

Sat, 03/28/2015 - 23:18 | 5938487 willwork4food
willwork4food's picture

Part time? Can I still hump for the man in the day? God I love ZH!

Sun, 03/29/2015 - 10:58 | 5939095 Remington IV
Remington IV's picture

degenerate

Sat, 03/28/2015 - 19:28 | 5938024 OldPhart
OldPhart's picture

First question clues you in that this is starting from a bullshit premis.

"Will Central Bank policies diverge...?"

Collapse isn't the same as diverge.

Sat, 03/28/2015 - 19:46 | 5938056 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Divergence of central bank policy refers to how some central banks are increasingly stepping on the gass pedal with programs as "quantitative easing" (e.g.: the ECB), at a time when other central banks are attempting to take their foot off of the pedal (i.e.: the Fed). The resulting "divergence in policies" is likely to cause volatility in the markets, because it signifies that the major central banks of the world no longer act in a unified and coordinated fashion.

Sat, 03/28/2015 - 19:47 | 5938083 TeamDepends
TeamDepends's picture

Thanks to you leftists, the last free-market dodo bird flew the coop in a panic and he's scared to death....

Sat, 03/28/2015 - 20:00 | 5938100 HardlyZero
HardlyZero's picture

Yes.  It is rigged now for an exogenous trigger.  The "No Exit" strategy is setup.

Sun, 03/29/2015 - 13:05 | 5939325 fattail
fattail's picture

That is not a divergence of policies.  That is the same policy.  Someone has to ease so the other can tighten or threaten to tighten so that the flow of money has somewhere to go besides physical, income producing assets.  

The hose is just being trained on different parts of the same fire.  Same people doing the hosing.  Same house being burned.

Sat, 03/28/2015 - 19:38 | 5938062 OldPhart
OldPhart's picture

I hope I survive long enough to see the true economic history of the period from 1982 to the end of this slow motion collapse to see exactly how bad it really is/was.  In my opinion, once the real, non-manipulated, numbers are presented, the last six and until the end of this depression, will rival or exceed those of the Great Depression.

 

Sat, 03/28/2015 - 20:12 | 5938147 ZhedgeReader
ZhedgeReader's picture

Indeed my friend . . . only worse than '29.  The next intervention may well be outright equity index purchases that will keep the party going a bit longer (like Japan). 

Sat, 03/28/2015 - 21:15 | 5938270 onewayticket2
onewayticket2's picture

A socialist takeover. Owning the companies is owing the means of production. 'Fair' pricing imposed...atlas shrugged, anyone?

Sat, 03/28/2015 - 23:36 | 5938524 willwork4food
willwork4food's picture

I doubt they will ride that horse into town. A black (fake flag) swan event like a solar emp flare wiping out the grid for a few months is right down their alley. Martial law, asset confiscation (for the children) and FEMA camps.

Sun, 03/29/2015 - 07:26 | 5938846 FEDbuster
FEDbuster's picture

WW3 is more likely (if it has not started already?).

Sun, 03/29/2015 - 12:05 | 5939185 HardlyZero
HardlyZero's picture

At some point, assuming there are voting and elections, TPTB will arrange for a Greek Syriza style party to win, in the end, and set the trigger and pull-out the stops.

With the higher risk perceptions maybe the time is Now.

It could be worse, and I hope we get through the Reset quickly and minimal losses...a random outcome.

I hope nothing gets totally out of control and major wars break out.

 

Sat, 03/28/2015 - 21:45 | 5938311 hampsterwheel
hampsterwheel's picture

Kyle's a smart guy ...so why does he knowingly use fake unemployment numbers ...he is constantly spouting Government statistics as if he uses them as gospel - unless he is playing a game for the audience and doing something diferent in private...

Sun, 03/29/2015 - 01:27 | 5938667 ThirteenthFloor
ThirteenthFloor's picture

Not showing your cards is an advantage. Kyle knows the real numbers, his forecast on Argentina, was spot on, they refused Vulture fund usury, and signed export deal with Russia. I bet he's decent at poker too.

Sun, 03/29/2015 - 01:31 | 5938673 TheReplacement
TheReplacement's picture

Nice try.  I have my own beef with Bass but your's is bs.  He qualifies that and also talks about 10% permanent unemployment.  Like I said, nice try.

 

 

Sat, 03/28/2015 - 19:28 | 5938026 Elliptico
Elliptico's picture

Bullish!

Sat, 03/28/2015 - 19:29 | 5938029 kaiserhoff
kaiserhoff's picture

 [Re: crowded trades and liquidity] - where are the liquidity worries at the moment? Equities would be the toughest to exit.. it's like a 5-lane highway going in and goat trail coming out... Brazil is great example"

Equities?  Jesus H Christ on a pogo stick.  How about bonds and real estate, commodities, almost anything.

House of cards, Dude.

Sat, 03/28/2015 - 21:46 | 5938314 Fred Hayek
Fred Hayek's picture

If we count the precious metals among the commodities then an investor will have no trouble exiting some commodities. He'd be insane to do so but he'll be able to if he wants.

Sat, 03/28/2015 - 19:32 | 5938041 Tinky
Tinky's picture

"In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

"Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil."

– from the essay by Frédéric Bastiat in 1850, "That Which Is Seen and That Which Is Unseen"

Sat, 03/28/2015 - 19:32 | 5938045 badrhino
badrhino's picture

Main Bass comments are at 3:00, 6:00, 7:00, 12:20, 17:50 (money quote), 23:40, 29:00 (response to a question), 31:45 (response to a question), and 38:20.

Sun, 03/29/2015 - 00:33 | 5938620 Clowns on Acid
Clowns on Acid's picture

How are things at the watch factory Mr Millimeter ?

Sat, 03/28/2015 - 19:37 | 5938059 HowardBeale
Sat, 03/28/2015 - 19:47 | 5938060 Somethingrottei...
Somethingrotteindenmark's picture

We're in a Depression?

We're in a Recession?

Sat, 03/28/2015 - 20:00 | 5938110 Charles Nelson ...
Charles Nelson Reilly's picture

it's a recession in a depression.... but according to Marketwatch everything is just dandy we all need to go out and spend.

Sat, 03/28/2015 - 23:13 | 5938473 ThroxxOfVron
ThroxxOfVron's picture

"it's a recession in a depression... "

You've heard of a 'dead cat bounce'?

The various CBs have done everything they can to get their dead cats into orbit: shot the cat out of a fucking cannon, glued it to the space shuttle, mounted to the nose of Soviet rockets...

When these cats finally comes back down there are going to be a hella deep new cat-shaped canyons in places where major cities used to be...

Sun, 03/29/2015 - 01:34 | 5938682 TheReplacement
TheReplacement's picture

Nicely written.  Really good stuff.

Sun, 03/29/2015 - 11:25 | 5939141 ultramaroon
ultramaroon's picture

Yep, that made me laugh, too. Kinda like Looney Tunes used to make me laugh. It's gallows humor at the expense of the poor kitty. Or the Coyote being mashed flat by a 20 ton block of lead or creating a mile-deep crater after falling off the Grand Canyon. Too bad that's emblematic of where we're all going to end up.

Sat, 03/28/2015 - 19:44 | 5938061 Somethingrottei...
Somethingrotteindenmark's picture

Next Recession ? We're in a full blown Depression right now, what makes him think the economy is going to be getting better and go into recession? Oh I forgot 80% are in a Depression with no real pay increases since 2007, and the 20 percent he's a part of might slip into a recession. CEO pay up 6000% since 2007. Slave pay down 20% since 2007. Every thing I buy costs more and I'm getting squeezed like a pretzel. This Sucks and Voting is useless with corruption on both sides.

Sat, 03/28/2015 - 20:02 | 5938118 El Hosel
El Hosel's picture

Kyle Bass is in the club too, whether he likes it or not...... You can't see the recession from his seat.

Sat, 03/28/2015 - 20:14 | 5938153 cornfritter
cornfritter's picture

He can see it, and he's very sharp.  Let's see if he has the moral fiber to find a more honorable profession. 

Sat, 03/28/2015 - 19:46 | 5938074 Jack Burton
Jack Burton's picture

" the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn"

Well, that may be so, but isn't the essence of capitalisim "self correction"? At this point, unless we allow a severe recession to wash out the bad assets, the ill investment and just plain stupid capital allocations, WHEN, if ever do we recover and begin again on solid ground.

All the jack asses have been saved by the Fed, over and over again, the Fed prints money and flood everything with liquidity to save all the bad investment. If we don't have recessions to correct, then we stay on the wrong path for ever. Do you know how that looks? It looks like the "USSR" "2015 Greece" "the EU" and worse of all "The QE Market Bubble in Equities in US Stock Markets".

Sat, 03/28/2015 - 20:01 | 5938114 cornfritter
cornfritter's picture

competition is a fact of nature - they can try to control it, and meet with some success, but things get more dangerous the more they loot... they have largely destroyed competition (witness the specimens that constitute nearly every corporate ladder).  These discussions are basically the "science of false weights and measures" - words that, in a moral world, would not actually go together.  When competition does finally break out, it is likely to be violent.  The only miniscule competition left is for fewer and fewer scraps under the table.

Sat, 03/28/2015 - 22:44 | 5938433 Nick Jihad
Nick Jihad's picture

"When, if ever do we recover and begin again on solid ground?"  In the Latin-American scenario, never. Just an endless cycle of populist/socialist politics, currency devaluation, economic stagnation and capital flight.   

Sun, 03/29/2015 - 09:33 | 5938966 DanDaley
DanDaley's picture

Capitalism without bankruptcy is like religion without hell.

Sun, 03/29/2015 - 11:12 | 5939118 Winston Churchill
Winston Churchill's picture

Like Judaism you mean ?

Sat, 03/28/2015 - 19:50 | 5938088 captainkid
captainkid's picture

these people r crazy! sell everything buy bullets and food.

Sat, 03/28/2015 - 19:52 | 5938094 davidalan1
davidalan1's picture

I swear Im NOT gay, however I would DO kyle...there, i said it..

Sat, 03/28/2015 - 20:01 | 5938112 Charles Nelson ...
Charles Nelson Reilly's picture

thats some weird shit hoss... just sayin

Sun, 03/29/2015 - 10:43 | 5939070 sessinpo
sessinpo's picture

I'd do anyone that asks for it.

Only question is do they prefer a 9mm or 308 cartridge. Those are the bullets I have most stocked besides 22lr.

Sat, 03/28/2015 - 20:02 | 5938115 A Lunatic
A Lunatic's picture

I think you may be looking for the Woodinbutt Gathering rather than the Buttonwood Gathering.....

Sat, 03/28/2015 - 21:49 | 5938322 dtwn
dtwn's picture

Yup, total man-crush here as well, no homo.

Sun, 03/29/2015 - 07:19 | 5938843 Moe Hamhead
Moe Hamhead's picture

You guys (?) are disgusting!

Sun, 03/29/2015 - 07:27 | 5938847 FranSix
FranSix's picture

Break open the bro' bible.

Sat, 03/28/2015 - 19:54 | 5938096 disabledvet
disabledvet's picture

Mark my words...the Federal Government will have to subsidize diesel fuel prices to keep them from falling to under a dollar a gallon.  And the Federal Government will in fact do this I might add.

 

Gasoline prices will not be subsidized and only a total idiot is taxing it right now.  I maintain my ten cent a gallon free market price point on gasoline.

 

Batteries have already displaced fuel.  Insoafar as the USA is concerned the age of the internal combustion engine for transportation purposes is now over save for ships and railroads.

Sat, 03/28/2015 - 19:58 | 5938106 El Hosel
El Hosel's picture

" the tools in the toolbox are not there to avert a severe downturn"...  Yeah, and the tools in charge of the tools are all on the take.

Sat, 03/28/2015 - 21:41 | 5938306 gregga777
gregga777's picture

A battery is not a primary energy source. One must extract energy from a primary energy source, convert it to electricity, step the voltage up at transformer stations for distribution on the power grids transmission lines, step down the voltage with transformers in one or more power substations, distribute the electricity to its final destination at the load equipment voltage of either 115 VAC 60 Hz or 208 VAC 60 Hz or 240 VAC 60 Hz 3-phase. The load equipment, possibly part of the cars OEM, converts that to the correct DC voltage to charge the battery.

Through all of those conversions and transformations there are energy losses that can be quite substantial. Because even if you aren't charging there is still electricity at the outlet, and even though no current is being drawn to charge a battery there are magnetization losses in transformers, losses in transmission lines, and generally very large losses converting the primary energy source to electricity.

Also, without liquid transportation fuels certain types of transport become useless, many other vital activities required to manufacture an electric car become next to impossible, not to mention the double impact of immobile farm machinery and no ammonia-based fertilizer derived from natural gas.

Sat, 03/28/2015 - 20:01 | 5938111 Kirk2NCC1701
Kirk2NCC1701's picture

I watched it to check out Rebecca. .. nice party balloons, good fun for a naughty weekend.  Nudge,  nudge, ;-)  ;-)  Seriously though...

Most of if seemed obvious to someone who's been reading (getting educated on ZH), but a few comments were illuminating.  E.g. Greece and IMF...

Greece seems a pretext for EU and IMF banksters to launder their fiat and unbacked cheques/checks.  This is not unlike a drug lord accepting efficiency losses, just to launder their ill-gotten gains.

Sat, 03/28/2015 - 20:04 | 5938126 A Lunatic
A Lunatic's picture

I would like an opportunity to look for answers under that skirt......

Sun, 03/29/2015 - 09:05 | 5938923 spinone
spinone's picture

I bet she was a looker back in the day.

Sat, 03/28/2015 - 20:15 | 5938155 nbsharma
nbsharma's picture

Thx for sharing. Always looking to hear from Kyle.

Impressed with Rebecca Patterson.

Not so much with Ashwin.

Sat, 03/28/2015 - 20:43 | 5938159 q99x2
q99x2's picture

Ugh.

Sat, 03/28/2015 - 20:18 | 5938162 ebworthen
ebworthen's picture

I like Mr. Nickles (Bass), but isn't it people like him that in part keep this ponzi going?

Get out of the casino Kyle!

Sat, 03/28/2015 - 20:23 | 5938174 ISEEIT
ISEEIT's picture

What poses the single greatest threat to humanity at present?

 

A.) Government?

 

B.) Global Warming?

 

(he-he, ha-ha)

Sat, 03/28/2015 - 20:32 | 5938187 lasvegaspersona
lasvegaspersona's picture

I am always amazed how these experts can ignore corporate buy backs when discussing equities. They seem to be convinced everything is working normally and we are just hitting a rough patch. I see horrible abnormalities, they just see investing challenges.

Sun, 03/29/2015 - 02:07 | 5938707 Wild Theories
Wild Theories's picture

that must be because you are not a professional money manager, horrible abnormalities are just investing challenges.

if you do this for a living, everything is either investing challenges or investing opportunities.

Sat, 03/28/2015 - 20:37 | 5938194 kchrisc
kchrisc's picture

"Kyle Bass Warns "The Fed Is Backed Into A Corner... Equities Are My Biggest Liquidity Worry"

Caught between a guillotine and a firing squad.

The banksters need to repay us.

 

Guillotine the Fed. Audit the heads.

Sat, 03/28/2015 - 20:49 | 5938220 Pol Pot's Plant
Pol Pot's Plant's picture

I think we're seeing the Japanization of the West.

Sun, 03/29/2015 - 09:07 | 5938927 Ignorance is bliss
Ignorance is bliss's picture

It will never happen. The Japanese are a homogeneous Culture. In the U.S. And the rest of the west not so much. There will be ungrateful losers and they are armed. I think we will see the civil unrest in Chicago grow like poison ivy. The more you scratch it the more it spreads.

Sat, 03/28/2015 - 20:52 | 5938225 Atomizer
Atomizer's picture

HFT stock buy back programs until you can't streach the imagination any longer. The laws of math will have prevailed computer tradewinds. 

Sat, 03/28/2015 - 21:01 | 5938242 10mm
10mm's picture

Mumbo Jumbo.

Sat, 03/28/2015 - 21:02 | 5938245 FlacoGee
FlacoGee's picture

I'll take Citadel over Hayman Capital any day of the week.

Clearly no one looks at Kyle's performance...

 

Sat, 03/28/2015 - 21:45 | 5938312 brunoaa
brunoaa's picture

As an ex investor in his fund, I totally agree with you.

Sat, 03/28/2015 - 21:13 | 5938265 q99x2
q99x2's picture

One thing they seemed to agree on is that the Dollar is going up. That sort of means Gold and Silver ain't going anywhere.

Sun, 03/29/2015 - 07:48 | 5938860 Gazooks
Gazooks's picture

when hard necessity prices out-excell $ rise; going nowhere rules all

 

 

pms are essntial to basing value once the smoke clears, ...if it clears

 

Sat, 03/28/2015 - 21:27 | 5938281 Ban KKiller
Ban KKiller's picture

Potemkin villages full of folks wearing the emperors new clothes? Lying liars and the liars behind them. Fuck it, I am too confused. What I am not confused about is what is happening in my city and state. Not good...legislature  was a joke this year. I am Joe's totally surprised, fried brain. 

Sat, 03/28/2015 - 22:08 | 5938369 RadioactiveRant
RadioactiveRant's picture

Rebecca Patterson impressed much. I'm a huge fan but, Kyle Bass looked like a bored child; not sure if he's depressed waiting for Japan to blow but it probably wasn't worth him turning up. Most interesting point, I think, is Ashvins comment that he didn't believe Grexit would happen. I personally can't see any other option in the long term. They can't repay and the appetite to keep bailing them out is waning. Worrying from a man overseeing $2tn.

Sat, 03/28/2015 - 22:51 | 5938446 Nick Jihad
Nick Jihad's picture

Greeks don't want to leave the Euro, and most of Europe doesn't want them to go. The ECB may stop the Greek central bank lending to the Greek government, and this may trigger partial default. But Grexit does not improve on that outcome in any way.

Sat, 03/28/2015 - 22:15 | 5938385 nightshiftsucks
nightshiftsucks's picture

The govt must have set Kyle up with child porn because everything he's spouting is nonsense.

Sun, 03/29/2015 - 00:48 | 5938635 Stumpy4516
Stumpy4516's picture

Yeah, he seemed like a mouthpiece.  Even worse than the other two regarding a couple key issues to TPTB. 

I did not rewatch it but made quick notes the first time.  Seems Kyle said - He does not invest in China because the numbers are manipulated and he does not know what to trust.  (So Kyle trusts the numbers from the US?!!!)  Kyle sees the unemployment as being low and good.  He even said most of the skilled workers were employed.  He said there will be wage growth.  (That just seems like total BS and nothing more than what someone told him to say.)

Kyle could become a regular on CNBC if he keeps this up.

Others comments from the group.

The US is in a low inflation enviroment.

Not a bad time to be in equities.

Deflation has increased.

Bonds are safe.

Equities are cheap to bonds.  (Then bonds must be sky high. Well, we would like to know if equities are cheap or overvalued on their own.)

Should not worry about the market that much but make up goals and buy.

Do not worry so much about exiting equities but plan to hold long term if caught.

The budget deficit is smaller so there is room to increase spending. 

 

My feeling about the financial world is so much different than what I heard that I am not sure what to think.  Am I simply FOS or are these people aware there may be a major event and they are tasked with keeping the US sheep in the market and relaxed?  Because it is so different it seemed like a blantant sleazy  - something.  I will take Kyle with more skepticism in the future.

Sat, 03/28/2015 - 22:42 | 5938429 madbraz
madbraz's picture

Fuck you, kyle bass.  

Sat, 03/28/2015 - 23:35 | 5938522 aicohn
aicohn's picture

Camel jockey pin-head had lots to say spouting gibberish.

Smart guy kept his mouth closed.

Sun, 03/29/2015 - 00:04 | 5938579 Free Wary
Free Wary's picture

If you need liquidity just set the S&P index to 1000, then it'll be easy for you to exit.

Sun, 03/29/2015 - 00:51 | 5938637 Yancey Ward
Yancey Ward's picture

In the next recession, the Fed will start buying equities.  Count on it.

Sun, 03/29/2015 - 09:18 | 5938944 Free Wary
Free Wary's picture

they have been buying equities for a long time, why do you think they are so resistant to any audits?

Sun, 03/29/2015 - 13:34 | 5939394 KingTut
KingTut's picture

They began buying equities when their ANNOUNCEMENT of the taper caused the markets to puke.

How do you prevent a puke on the reality?  Buy the hell out of it.

Sun, 03/29/2015 - 01:10 | 5938654 cheka
cheka's picture

bass is still alive?  figured he would have jumped by now.  his best idea was shorting jap...100 percent ago

Sun, 03/29/2015 - 05:41 | 5938792 brunoaa
brunoaa's picture

He had a few other brilliant ones like Argentina , GM...

Sun, 03/29/2015 - 01:21 | 5938660 stranglesnstraddles
stranglesnstraddles's picture

Can someone please explain what the various pundits mean when they talk about this 'great transfer of wealth' due to the baby boomers retiring? Where and more importantly, to whom will this wealth be transfered to? I assume they are referrinng to pensioner's 401ks and other tax-sheltered assets that will be wiped out when the market corrects.. 

Sun, 03/29/2015 - 03:01 | 5938727 Wild Theories
Wild Theories's picture

Pension funds are already fucked because their mandated returns(8% p.a. mentioned by Kyle), is nigh on unachievable in the current ZIRP environment. Zero or close to zero rates, even if FED lifts token rates over the next few years, will likely continue for many years if not decades to come. Eventually pension funds will either be forced into more risky assets like stocks(what's happening in Japan right now), and run the risk of becoming bagholders if stocks blows up, or won't be able to pay out what they promised.

That's why Bill Gross bailed, PIMCO's internal politics aside, no pension fund will be able to return what pensioners are expecting to retrieve in 10+ years time. Apart from the ZIRP environment, the continued currency debasement also means money in pensions will likely lose value and become negative in real terms a decade or more from now. As long as the present policies are maintained, it's already on track to happening. 

Which leads back to the FED lifting rates. Even though they would never mention it, it's the only reason I can see why they would genuinely want to lift rates: to save the pensions. But the problem is they'd need to lift and maintain raised rates for years to be able to save the pensions, and that's just not possible at the moment. Even if they do raise rates, they would only be able to go for a symbolic rise and it will unlkely be enough. Whichever way you look at it, pension funds are still fucked.

The other option of course, is to follow Japan: have pensions buy stocks, and have central banks backstop and buy the same indexes so pensions can achieve their returns.

 

(half this stuff is collated from my reading of many smarter people than I, like Mauldin et al, I'm just putting it together. If I got anything wrong, feel free to correct me)

Sun, 03/29/2015 - 10:44 | 5939072 game theory
game theory's picture

Pensions are already holding equities.  And most US pensions have benefited twice from the Fed's moves because their long-term bonds *and* equities have increased in value. Lifting rates now does nothing to help pensions fund their future liabilities.  But I do often wonder if there is a hidden third mandate in the Fed's agenda on saving pensions from going belly up.

Sun, 03/29/2015 - 11:11 | 5939117 stranglesnstraddles
stranglesnstraddles's picture

Increase taxes and call it a state/provincial pension plan fund.. (i.e. Ontario gov't). 

Sun, 03/29/2015 - 12:14 | 5939212 sTls7
sTls7's picture

3rd mandate; prevent the collapse of the US. 

Mon, 03/30/2015 - 09:34 | 5941505 Wild Theories
Wild Theories's picture

I know this is a late reply and probably no one will see this, wasn't home yesterday...

anyway

That value increase is only "on paper", it cannot be realized in practice, to realize it you have to sell your bonds before maturity. So you sell, then you have to buy new bonds to keep a rolling stock to fund new pensions, what are you going to buy? what you just sold, at the same price or higher.

If you are a bond trader, you made money. If you are a pension fund who have to have a rolling stock constantly on book to fund new pensions, no amount of value increase from the "trade value" will be realized because if you sell bonds before maturity, you have to buy bonds to replace it, and what you have to buy is what you just sold.

Sun, 03/29/2015 - 10:49 | 5939083 GreatUncle
GreatUncle's picture

When you force an issue in one area into another you create the cross contamination in the new market.

WE ARE NOT EARNING ENOUGH TO SUPPORT THE CURRENT ECONOMY YET WE BORROW MORE FROM THE FUTURE KNOWING THIS TRUTH?

An old saying don't burn your bridges if you want to cross back - FED is burning bridges into the future so when the reality is finally accepted there can be no way back.

Sun, 03/29/2015 - 06:28 | 5938819 jubber
jubber's picture

I like Kyle Bass but he has got it hopelessly wrong, his JGB trade has been disastrrous, his Gold puchase has lost 20% and GM Bonds another disaster; the same goes for  JimRickards another clever man whose two books are a great read BUT his US $ collapse call couldn't have been more wrong, exactly where Peter Schiff came undone... in 2008.

These Guys may be proved right one day, but if you had traded their ideas you are skint...bacause the Central Banks have the Trillions to ensure that these outcomes to not occur...how long can this continue?, a long time because the ordinary punter, hedge fund, etc does not have enough ammunition to fight these guys.

Sun, 03/29/2015 - 11:15 | 5939123 I am a Man I am...
I am a Man I am Forty's picture

Kyle Bass is high if he thinks the FED is going to raise interest rates 75 to 100 basis points in June.

Sun, 03/29/2015 - 11:38 | 5939157 tictawk
tictawk's picture

Where they went wrong is believing that inflation will destroy the dollar.
I think deflation comes first as debt /credit collapses. Consider this, the purchasing power of the dollar is already diluted 95% over the last 50+ years. The only thing that returns purchasing power is the collapse of debt at a faster rate than the Feds ability to monetize. That's the runaway deflationary stage that will come next

Sun, 03/29/2015 - 12:01 | 5939181 andrewp111
andrewp111's picture

It is happens as you describe, the political reaction to the deflation will cause the ultimate hyperinflationary blowoff.  The only possible political response to massiv edebt deflation is for the US Congress to change the system from debt-based fiat money to direct-issue fiat money, combined with a massive increase in Federal spending. Such an action will stabilize things for a while, but then political pressures will push spending out of control. The need to borrow imposes a constraint on spenders, and if the Treasury could simply issue enough dollars to make up the gap between revenue and appropriations, the spenders would go hog wild and the dollar will reduced to the value of a "continental".

Sun, 03/29/2015 - 12:45 | 5939279 game theory
game theory's picture

I don't think the dollar will collapse via hyperinflation...clearly it is a possibility...but a very very low probability.  The US gov't plans to raise taxes for the next few decades in order to pay off their debts as well as pay off the gov't workers with their above-market pay and generous platinum pensions/healthcare. In other words, the antidote to any coming inflation won't just be higher rates, but also much much higher taxes.  

The US gov't is absolutely committing suicide with it's policies to enrich the few at the expense of everyone. I wish we could have some deflation in the size of gov't.

Sun, 03/29/2015 - 12:10 | 5939204 sTls7
sTls7's picture

Time will tell.

Sun, 03/29/2015 - 06:36 | 5938822 Batman11
Batman11's picture

The West made all the mistakes Japan made in 1989 with exactly the same results.

1) 1989 - Massive property bubble bursts
(2008 - massive US property bubble bursts - leveraged up and exported throughout the West with Complex financial instruments)

2) Decision to hide bad debt and assets on bank balance sheets

3) Policy tools for recovery - low interest rates and QE

Result stagnation and sovereign debt accumulation.

Japan is 20 years ahead and has sovereign debt at 400% of GDP, this is the Wests future.

Sun, 03/29/2015 - 07:06 | 5938838 Panic Mode
Panic Mode's picture

What amazes me a lot of so called economists, hedge fund managers, investment bank analysts, think the Japanese model is okay. Why kicking the can is acceptable? Why making the future generation poorer is acceptable? Why a bomb is getting bigger haven't exploded yet is acceptable?

Sun, 03/29/2015 - 11:30 | 5939134 tictawk
tictawk's picture

I disagree because our economy is very much larger and we are far more indebted. In fact today the world is awash in debt which was not the case 20 years ago. There is no new Frontier economically to grow us out of this debt. Ergo the debt will consume us. The Fed has maxed out its options with ZIRP. There is no turning back now. Once the markets turn the move toward collapse will be swift.

Sun, 03/29/2015 - 06:43 | 5938826 Panic Mode
Panic Mode's picture

Capital control - your pension fund will be swapped into CDC, bank bonds and soverign debts. The mandatory contribution to pension fund will gradually increase.

Sun, 03/29/2015 - 12:30 | 5938866 RaceToTheBottom
RaceToTheBottom's picture

Listening to that interview/discussion my takeaway was that nothing bad is on the horizon....  At least for the US

Not sure what to believe or think....

but I think I heard a bunch of complacency on that call.  Pretentious complacency.  

It might be to be expected, as the world has been manipulated for the last 6 years....  The sheep are close to being all lined up....

 

Sun, 03/29/2015 - 09:15 | 5938937 Ignorance is bliss
Ignorance is bliss's picture

I think Kyle Bass doesn't know when the SHTF. Previous guesstimates have cost him a lot of money. Therefore, you walk the walk and talk the talk until it's time to run to that fortress full of nickels in Texas.

My take away, Go to work, make a living and prep for the day you know is coming.

Sun, 03/29/2015 - 10:08 | 5939007 lakecity55
lakecity55's picture

Nobody knows when TSHTF, however, I am convinced this website will give us some warning,

Sun, 03/29/2015 - 09:30 | 5938960 Last of the Mid...
Last of the Middle Class's picture

I like Kyle, but here he comes off as just another fucking rich guy paying lip service to the obvious problem at hand resulting from massive QE. I see more and more lip service from these sort ever day but no one will talk about lets do something now. Devalueing our currency again is NOT the answer, it is doing the same thing over and over again expecting different results, and we all know what that is. Shiitttt

 

Sun, 03/29/2015 - 10:14 | 5939019 negative rates
negative rates's picture

Mirror mirror, on the wall,...............

Sun, 03/29/2015 - 10:26 | 5939038 Ignorance is bliss
Ignorance is bliss's picture

I use to share my thoughts about the economic end game. No one iwas interested and now that I suspect we are getting close I don't share those insights any longer. Someone might think My house might be a temporary sanctuary from the storm.

Sun, 03/29/2015 - 11:18 | 5939131 Winston Churchill
Winston Churchill's picture

Its now time to hide in plain sight.

Sun, 03/29/2015 - 10:39 | 5939062 GreatUncle
GreatUncle's picture

The central banks created the economic gap between rich and poor on behalf of the poor (they didn't have to but they did). That gap is the issue underlying the whole economic problem now because it does not matter if you are rich or poor it is the degree of rich or poor that in fact matters.

Poor got wiped out because of the FED policy and the wealthiest preserved but "and you would want it" the poor to be able to support the economy (totally ignored). Now the FED is trapped trying to keep it all going but making the gap open up even more in the process so you can show intent if you ever want to roll out Nuremberg II Trials and crimes against humanity.

The question is not how to correct the economy because it will NEVER work the true question is how to close the gap between rich and poor and in the process the poorest can support the economy once more.

 

Sun, 03/29/2015 - 10:55 | 5939092 VW Nerd
VW Nerd's picture

Kyle,  You will not invest in China because you do not know what numbers to trust??  Russia a command and control system?  Compared to???  Wow!  Your thoughts on official US gov't employment numbers? inflation numbers? GDP? Corporate (non GAAP)earnings?  Recently it appears to me that your level reasoning has become somewhat tilted...I don't know, maybe it is me.

Sun, 03/29/2015 - 10:59 | 5939096 Remington IV
Remington IV's picture

Kyle Bass ... is he ever right about anything ????

Sun, 03/29/2015 - 11:51 | 5939171 hamstercheese
hamstercheese's picture

I'm not so sure of the assumption long rates will hold steady while short rates increase.  If I can get the same yield on the short end vs the long end I'll sell the long and take the short end because, as said, it's an uncertain world.

Sun, 03/29/2015 - 12:08 | 5939197 sTls7
sTls7's picture

Backed into a corner, we saw this coming.   Telling us something we already know.

Sun, 03/29/2015 - 13:34 | 5939392 In.Sip.ient
In.Sip.ient's picture

"...Equities would be the toughest to exit.. it's like a 5-lane highway going in and goat trail coming out... Brazil is great example"

 

Take out the "Brazil" example... your talking about the actual condition of Wall St.

 

!

Sun, 03/29/2015 - 13:36 | 5939395 insect0man
insect0man's picture

Phock Kyle Bass and the Anti-American, short-sold, sub-prime jackwagon he wobbled in on.

Sun, 03/29/2015 - 14:30 | 5939548 TeethVillage88s
TeethVillage88s's picture

Well looks like US Congress would have to do something to change the Economy in the Next Crisis.

- That is a scary thought as we remember ACA

- Monetary Policy, QE Maxed, LIRP Maxed
- FISCAL Spending Maxed
- Monetary Lender of Last Resort FED Loans?
- Capital Reserves & Report Cards have been done
- Increasing FDIC Reserves/Funds?

- Or Reform Accounting, Auditing, SEC, FINRA, Financial Ratings, Corporate Tax Write Offs, Capital Controls of Off Shore Production and Off Shore Services & Tax Shelters for the Rich, Target Executive Compensation for Cutting Jobs and for having Looting Levels of Compensation that cheat investors, Target Executive Perks, Admin & Overhead Costs for Luxury Items, Planes and Limos

Sun, 03/29/2015 - 13:52 | 5939440 Icelandicsaga.....
Icelandicsaga...............................................'s picture

If memory serves . Kyle Bass met with the administration early on and was told .. O and company goal was to collapse the dollar .. think I saw that on ZH a couple of years ago .. well on the way I would say.

Kyle Bass ...

"How do you solve a problem when you are running a 10% fiscal deficit. You are not going to get growth in the absence of private sector demand. So the government's idea now is we are going to export our way out of this. When I asked a senior member of the Obama administration last week, 'how are we going to grow exports if we do not allow nominal wage deflation?', and he just said we're going to kill the dollar. It's a dead answer but that's where we're headed".

Sun, 03/29/2015 - 14:22 | 5939517 TeethVillage88s
TeethVillage88s's picture

Kyle Bass was being way too conservative about only 10% FISCAL Deficit. It might have hit that or gone below 10% from time to time, but normally you should think 15% or 30% Budget Increases in a Military Build up like under G.W. Bush.

G.W. Bush just had some good GDP Growth and Tax Revenue as a result of his FISCAL Spending.

Even Obama is getting good Tax Revenue from the Winners in the Economy Right now.

But Obama just Increased the Budget for 2015 with an Increase for DoD as part of that.

$T Debt Added
J. Carter, ,$0.37 T (4 yrs)
R. Reagan, $1.69 T
G. H Bush, $1.4 T (4 yrs)
W. Clinton, $1.627 T
G. W. Bush, $4.357 T
B. Obama, $6.365 T (4 yrs)
B. Obama, $8 T (6 yrs est.)

Obama had 16.6% FISCAL Deficit Spending over 6 years. $8 Trillion/6 years = $1.33 Trillion added Deficit per year (although he had a Recession and Financial Crisis to deal with)

Bush has 12.5% FISCAL Deficit Spending for 8 year period.

2015 Federal Budget $3.9 Trillion
2016 Federal Budget $4 Trillion

Total-Federal Government Actual Budget 2014 = $3.5 Trillion (B. Obama)
Total-Federal Government Actual Budget 2012 = $3.54 Trillion (B. Obama)
Total-Federal Government Actual Budget 2010 = $3.45 Trillion (B. Obama)
Total-Federal Government Actual Budget 2008 = $2.98 Trillion (G.W. Bush)
Total-Federal Government Actual Budget 2006 = $2.65 Trillion (G.W. Bush)
Total-Federal Government Actual Budget 2004 = $2.29 Trillion (G.W. Bush)
Total-Federal Government Actual Budget 2002 = $2.01 Trillion (B. Clinton)
Total-Federal Government Actual Budget 2000 = $1.79 Trillion (B. Clinton)
Total-Federal Government Actual Budget 1998 = $1.65 Trillion (B. Clinton)
Total-Federal Government Actual Budget 1997 = $1.6 Trillion (B. Clinton)

Sun, 03/29/2015 - 14:42 | 5939596 Magooo
Magooo's picture

These hedge fund guys are IRRELEVANT.

 

Not a single one of them has beaten the S&P over the past 7 years.

 

Which begs the question --- who gives us fuck what they think and --- why give them money to manage when they can't beat the index?

Sun, 03/29/2015 - 18:08 | 5940121 hamstercheese
hamstercheese's picture

In their defense I suppose one could say, somewhere between here and infinity, they are betting on the inevitable. 

 

Talk about a long term view....the world will always need a currency, always.  If ever there is a time without one a new one will emerge since power abhors a vacuum.

 

Since peace is a normal consequence of trade beware of capital control and trade related announcements.  Those are not indicators of peace.

 

I can see increasing civil unrest throughout the world as oil exporting countries cannot subsidize the import of staples [food, etc, not office supplies] and taxes continue to be raised to pay off government debt which was increased astronomically everywhere - which, incidently, has also increased money supplies astronomically.  Kyle is right I think in observing the rich getting richer and the poor getting poorer.

also, here's a link to a very sad photo....

https://twitter.com/NadiaAbuShaban/status/580457804810551296/photo/1

Sun, 03/29/2015 - 19:29 | 5940296 Magooo
Magooo's picture

This is an extinction event.  There will be no need for a currency when there are no people

Do NOT follow this link or you will be banned from the site!