Kyle Bass, founder of Hayman Capital Management, took to CNBC yesterday for an interview about the investing landscape as a result of the coronavirus outbreak and the subsequent sharp sell off in markets. Bass talked about value investing, real estate, global banks and why he refuses to call the virus "Covid-19".
Bass said he was really impressed by legislators working together and getting the spending bill through congress exceptionally quickly. "When you think back to the financial crisis, it took months to get everyone on board with TARP. Here we've moved some spending bills through in light speed," Bass said.
Regarding he virus' impact, Bass took a long view: "What's most important is that these things do happen. Things like this Chinese virus come into the world and they ravage the world and then they leave. We develop some sort of herd immunity."
"The Hong Kong flu was the last real big one," Sullivan responds, perhaps unconsciously using the location of the virus origin to indicate which one he was talking about.
Bass continued with his longer term outlook: "One of the things that the U.S. does best is that we all come together during crisis and we work hard to get through it. And we're getting through it. I don't think the government is asking people to send their kids to battlefields. They'ere asking people to stay home for a month," Bass says. "These spending bills should help."
"There are drugs out there that have worked to head off the severity of this Chinese virus," Bass continued.
Bass also said he thinks you can once again be a value buyer again: "It feels to me like the panic is so much larger than the financial crisis of 2008 and I think calmer heads will prevail. I think the prices that some of these things are transacting at today will be buys of a lifetime."
When asked about whether or not its a balance sheet problem with the banks, Bass says that instead of being the center of the problem, the banks are at the center of the solution: "We have the strongest banking system in the world. Europe never recapitalized, so their banks are in real trouble. The US will be the anchor for the world this time."
He continued: "It was the biggest bull market in history prior to the Wuhan virus attacking our marketplace. It's created dislocations in many companies that I think will be rectified on the back end. You can be a value buyer once again."
On the housing market, Bass said he didn't think there would be a crash: "I think with rates back to 0%, what's likely to happen if you look forward. What you're going to see is 0% rates, enormous amounts of liquidity, I think inflation's going to run hot and I think it's going to be a really interesting housing market at that time. I don't expect housing prices to drop much in the U.S."
"There will be a real big surge," he says.
Later in the interview, the CNBC host takes exception with Bass using the term "China virus".
"Let's just call it Covid-19," Brian Sullivan pleads. "Not Wuhan or China or coronavirus. Let's just call it Covid-19. I think that will bring us all together. Can we do that?"
Bass pushed back: "Changing the naming convention for viruses that's gone on for the last 100 years - the point of origin has always helped people understand which virus it is. The Chinese communist party has asked the world - actually, propagandized the world - with this Covid-19. If we start naming diseases after numbers, we're never going to remember what kind of disease it is."
"I want to make sure we don't take it to a country level," Sullivan responds.
"We call things West Nile Virus, why can't we call it the Wuhan Flu? We can call it whatever we want to call it, I'm not going to call it what the Chinese government wants me to call it."
You can watch Bass' full interview here: