YouSaid · the spoken record

Greg Foss

lines on the record: 122
first: 2021-04-14
most recent: 2021-04-14
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Okay, my friend, it's so nice to talk to you guys. And I'm not sure who you guys want to win in the NCAA, but I hope it's a close game. I hope there's a buzzer reader to celebrate. So thanks a lot for having me, and I look forward to our next encounter.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I wrote a paper. I wrote a paper. It's actually may be published in Bitcoin magazine, but I'll send you the link to the paper. It's in PDF format. It's long enough. It's maybe more than 40 pages or something. So I put my history there and I put my methodology for pricing Bitcoin as a function of credit default swaps and why I think it makes sense. And I'll just send you that link. Okay. I'll put it in our DM and you can attach that. And anyone who has any questions or most importantly any criticism, okay? I'm wide open. I want you guys to carve holes in this. I believe I'm right, but I'm never 100% certain. I will not go out and say I'm 100% certain about very few things because you just can't be. You need to hedge your risk and always learn and learn if you're wrong and adjust your position accordingly.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It's so important. Like, this is a non conscription army that you guys have, the highest technologies in the world. Bitcoin can help so many things. It can bring ASIC chip manufacturing back to North America, which itself is a source of a potential national defense issue. Canada needs that because we're a country of basically the population of California. We don't have a big central bank behind us like the ECB or the Fed. And quite honestly, we're in trouble. And that's not make me happy because my granddad served the country in two world wars and he didn't do it because he didn't love his country. He did it because he wanted a better future for our children. And I just want the same. And I'm sure you do. So let's do this Bitcoin thing. I wanted to thank everybody listening and to tell you guys that I take tremendous strength from the Bitcoin Twitter community. I've learned so much and I wanted to.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Your country. It's because you love your country, and we're doing this for Bitcoin because we actually love the country. We're not trying to destroy the country.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so he was based out of there. He lives in California right now. He's not in the, but he's a great guy. And let me tell you, you know, it's the service that you guys give to your country that makes you guys so, so good. I did one of my roommates from Cornell died in 9-11 in that horrible accident or the horrible event. And so as a Canadian, I've experienced some of the ebbs and flows of the U.S. culture. It's way different than Canada. We need you guys. I need Canada to get there arising gear, but we won't do it without the U.S. doing it because we never do. And this is why it's so important for our kids to embrace the alternative that I see as Bitcoin that fix the money, fix the world. As Marty Bent says, this is so important. And it's important for people that put, like yourself, that put service into the country. You don't do that because you don't love.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I wanted to thank you, A. Look, and I want to point out something that I'm really proud that I learned about you. So West Point Grad, it looks like you flew an attack helicopter at one time in your career. I had a friend from my hometown in Montreal that actually went to West Point as well and flew a helicopter for the U.S. Army in Alabama. Yeah, Fort Russell”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So one guy said, Why are you doing it on Monday night? And the only thing I could think of is because Gonzaga's playing. And I'm like, okay.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“An equity derivative market to fund his Bitcoin purchases. Brilliant guy like Saylor. You're a rocket scientist, man. You know it. These guys are just, I went to McGill and I took a couple of engineering courses with these walking mainframe computers. The beautiful thing about sailors, he can actually speak. I understand the math right, like, you know, here's the thing. Some of these guys you go to school with, they're just so smart they can barely even speak. They speak the base layer of the base language of the world, which is called mathematics, but they don't speak any other language very well. They're just a walking computer mainframe, right? So at least Sailor can speak”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And to own Bitcoin in that scenario is much different than a high grade credit that has very low leverage or a higher yield credit, but has very low leverage. GameStop has enough debt. They have $200 million of debt that they should actually pay down. It's a two-year maturity. They need to pay that down, get it off their balance sheet. their credit rating. It'll change their default profile meaningfully because if you have no debt, you can't default. And then they could start playing the Bitcoin game. But the first thing for them to do is solve their debt maturity profile before they jump right into Bitcoin. Okay. And this is what Saylor understands so well. He used an instrument that's a quasi-equity instrument. It's not a dead instrument. A convertible bond is a large portion of it is equity. And that's what he did. He used the equity, the convertible bond, which is”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“This is really interesting. How about credit default swaps that are just settled in Bitcoin rather than settled in fiat? I mean, these are some wicked, wicked, cool ideas. Yes, so one thing I'll take out today is I saw a tweet by Anthony Pompliano, which was quite smart, except he said that they should take, so GameStop today announced that they were going to do a shelf filing for a billion dollars of debt and equity. I think they just probably said equity. And he said, well, they should put it all in Bitcoin. And I said, I thought to myself, no, you know what? need to put it all in Bitcoin. The first thing they need to do is pay down some of their high yield bonds because GameStop is a high yield borrower that high yield borrowers themselves should are typically their high yield is because you know they're they're straining to meet their interest obligations let alone their term repayment of debt yeah”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“So there's a big difference between a convertible bond, which Michael Saylor is, and a true senior credit that has no equity vol. Insight Michael Saylor, he's so smart. He already knows if he did a straight senior issue, he'd probably have to pay about 250 basis points more than treasuries. But the reason he went to the convertible bond market is because the convertible bond ARB guys, they want to buy equity vol. They want to own his equity vol. And by doing that, they effectively compress his yield spread to zero. Okay. And it's not, though, a true credit spread. It's equity vol impacting that yield spread.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“0% you know you can't you can't okay because he's a convertible back he has optionality in there he has equity vol priced in there”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“See it now, Greg Risky for USA, you'll see, and again, everything will trade relative to the USA, including all the banks, okay? So all the banks, if you pulled up a JPMorgan five-year CDS. Trades and lockstep with the USA. It will not. So there was a question that came up on your Ask Foss question. Somebody said, will high yield ever flip in the U.S. Treasury? And the answer there is no. The U.S. Treasury will always trade at a lower yield than the high yield market. It doesn't mean that a particular corporate credit, and there are very few AAA corporate credits left, but there could be a time, and this has happened in the past where corporate credits have traded at tighter spreads than the US Treasury. It's sort of hard to imagine. Look at Michael's happen.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And you can do it. It's there. I don't have it in front of me and I'm not smart enough to show you on the computer. Is it on the same?”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Okay. So, you know, you need to always admit your mistakes. You need to understand when you're wrong and make adjustments accordingly. And that's the key. And so I will just say this is why we need it for Canada. We need people to understand this. We need to understand the politicians to understand the fact that Canada is trading at 40 basis points is so much more important than the fact that it has this AAA credit rating, which is wrong. And this is the danger.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And all his venting over how it has no intrinsic value, all that Peter Schiff has successfully done is shown you what a poor risk manager he is. Because he has been for so long, so wrong. And he has not reversed his position.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Guys like Bill Ackman to go out and purchase huge insurance on the credit markets and thereby hedge his equity positions. It was what's called an upside-down trade, okay? He was using the top part of the capital structure to hedge the bottom part, but he did it. And what did he take out of that trade? It was some crazy amount and it allowed Bill Ackman to put up numbers during the COVID crisis that he otherwise would not have been able to put up because his positions in Hilton hotels and all these other things were getting carved. He just went up and bought enough protection on the credit markets that he offset his losses and equities. And people will say that was luck. No, man, that's not luck. That is skill in managing risk. And you need these instruments, instruments to allow you to manage risk. And that's all Bitcoin is. It's a risk management tool. And despite Peter,”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“You know, I think that you can create, I'll go on the positive side. Any developed market needs a derivative market, okay? Everybody says, oh my God, something like credit default swap was an evil thing if you believe Charlie Munger and Warren Buffett on that fact and about purchasing fire insurance on somebody else's home and then going out and trying to set their home on fire. That was an interpretation that was wholly misinformed. The derivative market and the credit default swap market was such a brilliant invention because it allowed the creation of credit indices much like equity indices. Equities don't have a maturity whereas all credit does have a maturity and therefore your index could theoretically mature. And that's not what an index is, but what the CDS allowed is the continuous creation of a five-year contract that was placed in an index and allowed”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It's just like everything that the theory of agents, right? It gets harder and harder to resist it when Morgan Stanley says that they're doing it, when Goldman Sachs says they're doing it. TD Mank in Canada has just come out with a really, really good research report where their head of research says it's still a Ponzi scheme. And that's good because, you know, if TD Bank actually embraced it, they didn't ever embrace high yield bonds until after 30 years until the US guys were doing it so successfully. All I'll say is there's always a continuum of people that are early movers and early adopters, but it gets harder and harder for people to ignore it if big funds like Morgan Stanley, New York Life, Mass Mutual come out and endorse it.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Portfolio because why? Because it's brilliant portfolio provided interest rates truly are non-correlated with equities. But when they're correlated, which they are right now, meaning if yields go up, bond prices go down and equities go down as well, then in your risk parity needs to be rewritten. You need another asset in there. Stay rate, that asset is called Bitcoin. You know it. Don't be scared.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Especially if it done all the homework, sort of like Ray Dalio. Like he's done it. Ray Dalio's done the homework. And yet he just won't say the word. And he's still relying on risk parity, which Ray, you're also smart enough to know that that only worked when rates went from 14% down to 60 basis points. It doesn't work going the other direction. He has to have fun. Well, he does. And the hedge fund that I worked at for five years, we tried to mimic the Bridgewater”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Of not being long, right? That's the real risk of not being long. These tape bombs, okay, these bombs that come across your tape. Are real and they typically go on an asymmetric trade like Bitcoin. They'll go against you. So not only if you're not long Bitcoin, you are so short. If you're long it, but you're not, it's a core position, but you've been fancying and you've been trading it and you're not at your core holding. You're somewhat below it. And one of these tape bombs comes out where a central bank has purchased it for their reserves. Well, you're just, you just missed your whole opportunity.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Risk you're just saying, well, I'm doing Merger Arb and I'm earning this annualized. It's the same thing in the futures markets. These curves change all the time. There's counterparty risk. There's so many things that people just overlook. And I would just say I'm in Bitcoin not to create a fixed income or an income instrument. I'm in it because I think it's going to go from 50 or $60,000 a coin to at least a million dollars a coin. And I'm not sure how it's going to get there. And I don't want to be not long it if it gaps up by a couple hundred thousand dollars because some country comes out and says we've successfully acquired this many Bitcoin for our treasury. And the rest of the country is a real...”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Let's call a spade a spade. Things trade for price, okay? That's at the end of the day, things always trade for price. You never settle anything in basis points. You always settle something in price. And anytime someone starts talking to you in these fancy damn things like you earn 20% annualized and you say, well, how do you get to that annual? Well, you earn it for five days, but you multiply it by 60, right? Or 50. And you're like, what? This is some sort of convertible arbitrage. That's the funniest thing that they always do. They annualize the returns when there's a merger. Or I said convertible arb. I mean merger arb. When a target company is getting taken over and it's going to be done in 60 days. So they decide to annualize it by multiplying by six and say, yeah, well, I'm earning 15% over 60 days. So that means over an entire year, I'm earning close to 90%. Guys, it's not that. That's buggering up the mathematics of it, okay? It's about a price, okay? And the thing that you're investing in and you're going to earn something that goes from 97 to 100, but it could also go from 97 down to 77, you're not even reflecting the.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“In a cash and carry trade by owning the spot and selling the future and playing the upward sloping yield curve or contango. And it's so funny. A contango, like it makes people say contango and nine out of 10 people, even in finance, have no idea what it means. And then you would just say, well, upper sloping. And you go, well, God darn it, why didn't you call it upward sloping? Because you don't call a yield curve in Contango. You only call a futures curve in Contango, yet they're both drawn the same way generally, right? And then you say something like normal backwardation, and that's it. People's eyes glaze over and you just think you're smart, right? It's all these derivatives guys always think they're so smart.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“That's pretty interesting. And what did that? Why does that now exist? It's because your prime broker is not giving you leverage on the CME because of the blowups and things in the most recent fund universe like the family office Archighost or however you pronounce it. Your prime broker has just lost a ton of money and he's not giving you leverage on these things. So it's interesting that the Kantango that exists in the CME is meaningfully lower than the contango that exists on the non-regulated exchanges. So I'll say yes it exists. Is it a true cash and carry trait? Absolutely. They tend to exist in futures markets. Is it a trade that I ever focused a lot on? I did not. So I'm by no means an expert. I will tell you this though. I would own Bitcoin not to earn a yield. I own Bitcoin as a hedge and I wouldn't want to give away that hedge by locking.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Boy, there's a lot of people that wanted me to get into that. A, and I'll just say, look, it exists. One of the most interesting things that I've seen about the Kantango is not that it will give you an annualized return in the double digits. And sometimes you need to be careful by turning short-term returns and multiplying it by four, turning it into an annualized return. But let's just look at the returns that are available now on the non-regulated exchange just like OKX and what are some of the other ones Binance, I guess, Derabit, those returns are actually meaningfully higher than the”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Back and forth between who will be the global reserve currency of the world. No one's saying Bitcoin, but that's what it's going to be. Bitcoin will be the global reserve asset, in my opinion. It's the most likely outcome. It's the safest outcome. But it doesn't mean the other system doesn't continue to function. We hope that Fiat will continue to function to allow for commerce rather than barter, to allow for free market setting of cross-currency rates across the world. And we hope that because why? Well, because you can't just overnight go to a Bitcoin standard. It just would be absolute calamity. You don't want that as the interim step. You want an orderly. You want an orderly transformation of the understanding of what a reserve asset really is.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“I think you're right. I think it would be, again, showing a sign of weakness rather than a sign of strength. I think that Chairman Powell is doing everything he can to provide the confidence to the system. I need to be clear. I do not want our system to fail. It will over time, okay? It's again a mathematical certainty, but how long is that time? I will give you probabilities that it's most likely within the lifetime of my children, which really makes me upset, okay? And it's maybe not as likely, well, certainly not as likely as it'll fail before my lifetime, but it doesn't matter whether G7 country fails. And if it's a G7 country, the likelihood the market's telling you this is it'll be Canada before anyone else and that pains me as well. But there will be other countries that continue to fail. And this is just a fact of life. And the IMF and the special drawing rights that they've come up with and all this political”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“If I was advising them on that person, 100%. If I was the Wall Street guys advising them on that, I would tell them, do not do that.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“You will lose money on a real basis over the next five years, on a real basis. And you probably will on a nominal basis as well after you subtract out true defaults. Okay. It's only math. You need to pay your high yield bond manager a fee after you've paid all your fees and you've paid for defaults. Anyone who owns high yield bonds right now, I don't know. They must be just getting into the game. Okay, because if you showed me this 30 years ago, I honestly would have told you, well, no, it's impossible. It would not exist. But yet here's where we are.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“From investment grade or the BBB credit rating level to the double B credit rating level or high yield, okay? Those four credits were General Electric, General Motors, Ford, and AT&T. Those four credits themselves are bigger than the entire high yield bond market. Can you imagine if those four credits got downgraded into the high yield bond market, the calamity that would have caused in the equity markets and in the subordinate markets of the capital structure, it would have been crazy. So the Fed went in and said, yes, we can buy high yield bonds. Now, they didn't just buy those four names. They decided they would buy the entire market. Well, now you've seen that high yield bonds are at the lowest yield they've ever been in history. And I will guarantee you, again, I'll make another guarantee. It's 100% certain that if you own high yield bonds right now,”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Just kind of spit on it. I have no experience in that, and I honestly hope it's not the case because as a credit trader, again, it's like, oh, well, isn't that interesting? The first, the sweat is starting to appear on the brow of the borrower being the U.S. Treasury. They're starting to sweat. That's not what you want to see as a lender, right? You actually just want to see confidence. You want to see. Even though they are out in the market purchasing $120 billion of debt each month, they're doing it in a fashion that isn't implying pegging the yield curve per se. I need to stress that the U.S. Treasury deciding to buy high yield bonds was in and of itself such a monumental event. And it was only because they needed to protect against the downgrade of four potential candidates being downgraded.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“The steepness of the curve, it reflects the steepness of the curve. And, you know, right now the only thing that the U.S. Treasury actually focuses on are not, you know, they're purchasing $120 billion of bonds each month, but they're focused on manipulating the short-term yield or the overnight, the Fed funds rate, but they have not specifically said that they're going to jump into the yield curve control.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It's just so massive, guys. And it just What happens when 300 trillion loses 10% of its value? Oh, that just happens to be the equivalent to the entire USA deficit. Now we're talking real money. Who is this born by? This is born by people that have matched long-term assets being their purchase of long-term bonds with their long-term liability. So insurance companies, pension fans, all of that.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“One or whatever, right now still basis points. It's like, you know, basis points are for kids, right? I mean, at the end of the day, it's all about price, right? Bonds trade for price. They do not trade for basis points. And each one of those basis points, when durations and rates are as low.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“For absolute indications of stresses and risks in the system, not manipulated like yield curve control. But if you, you know, I want you to expand on that. So let's say it is somewhere between 2% and 3%. So I'll go with you.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“2% and maybe even right around 175 because don't forget if it goes out to two they can't just stop at 2% they need to bring it back and actually make the bond perform so they need to get that extra 25 basis points as making it appear that the bond is performing. This yield curve control whether it's 175 or 250 or 3% again will cause people to look to the credit default swap markets. Okay, because people will start saying oh my God, this is not a true reflection of risk. I need to look to true reflections of risk. And the US Treasury is not going to be able to sell default protection on themselves. It's like you don't go to an arsonist and purchase fire protection or fire insurance, right? The U.S. Treasury will never be able to control the credit default swap markets. And that is why you need to look at those.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Let's assume you're right. You know that that means that the 10-year bond, which has a duration of about an eight, if it goes from 170 out to 3%, another 1.3, 8 times 1.3 means the 10-year bond will lose another 10 points in value. Just to get to where you think it's going to cause maximum pain. And I'm going to tell you what that's wicked more than maximum pain. And then you take the 30-year bond that's already lost So, I actually think you're 3%. I think that's high. I actually think it's.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Rick Santelli, Rick Santelli, who traded in the Pitts for many years would agree with that. It's about, you know, it's about returning to reversions to the mean. You know, what happened in the last year was just total manipulation and whatnot. And it's like a spring, a coiled spring. It's bouncing back. So yes.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Preston, I've seen it see when it started with Lehman Brothers. It didn't go from six to twelve. It went from 6 to 60. And then it went from 60 to 150. And then it went from 150 to 7% upfront. And this is when the contract changes from a annual premium to, hey, you want me to insure $10 million of your debt? Give me $4 million up front because that's what happens. That's how the contract actually starts changing. And these gaps are painful and they tend to be driven again by people who were selling and leveraging a low basis point return, picking up nickels in front of a steamroller. They went from being a seller. They had to reduce their position, i.e. become a buyer. And there was just a wall of buyers and the spread just lifts really quickly.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Yield curve control. What's going to happen if the United States invokes yield to curve control? Typically, they'll peg the 10-year rate at some number. So right now it's 170. Let's say they decide to peg the 10-year rate at 175. My opinion is that's going to get so many more people looking to the credit default swap market for truth. It's going to push people into this somewhat esoteric part of the credit markets called credit default swaps. And people will focus more on it.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And I'm not here to scare anybody as much as just tell people, look at these markets. These are true risk markets. You get so many people who say, oh, you must have had so much fun. You had a negative view on these sovereigns. You must have had so much fun shorting their treasuries. And I'd say that's how little you really understand about credit. You don't short a treasury bond. You buy default insurance. It's a floating rate obligation that changes as a function of the credit, not as a function of administered yield rates or yield curve control or all this other garbage that the central banks can do. And I wanted to hit on that. Yeah, let's talk that.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Excellent question, and this is why we can't go too far on this path. I mean, if you put a recovery rate of 5% in there, which probably is more likely the right number for a sovereign versus a Corporate, then you'll get a much higher chances of profitability. You back out higher a de facto chance or probability of default. And then people might really start getting scared.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“And all the equity has just been crammed down. The equity gets crammed down and it becomes an option. Okay. And when there's a restructuring, 40 cents on the dollar. So they pick this number, Preston. It's nothing scientific. And if you lowered that recovery rate, the probability of default would actually go up because it's just backing out the probability of default in a mathematical formula.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“It's typically in bonds, okay? What tends to happen, it's sort of needed. When a bond defaults corporate or we say governments, but generally it's around corporate, it always tends to be at the lowest levels of subordination. There tends to be about a 40% recovery rate. I don't know why. It just is a number that the market, again, has gravitated to. There's nothing scientific about it. There's a bond trading expression that bonds do not spend much time in the 60s, okay? Or they go from 60 and gap down to 40. Okay, because people then realize, oh my God, it's gone from being a bond to a quasi-equity. Because what is the bond trading at 40 cents on the dollar? It's not the bond of the company anymore or the credit. It's actually the equity of the company.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“We have to be, but this is the biggest problem that these people have a podium without actually doing any research and people believe that they've done the research. Right, and they get up there and they spew this fud, and people take it at face value because, oh, this guy must know something when in fact he's just regurgitating stuff that he's read and hasn't peeled back the layer of the onion. I would always say if you have not actually seen the blockchain in action at tradeblock.com or if you have never experienced the beauty of transferring value from a Bitcoin wallet iPhone to other mobile phone, you have not even done the research at what makes this system so beautiful, right? And having grown up without a personal computer because they didn't exist in 1986, I'll tell you, it takes a lot for an old guy like me to come to grip with things like Twitter, to come to grips with things like an iPhone that's so powerful, it's more powerful than what was required to put two men on the moon, right? It's just an unbelievable technology and what I believe to be the most.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Okay, that's a good way of doing things too. Someone who's wrong 100% of the time is just as valuable as someone who's right 100% of the time, right? So it's very important”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Well, you know, until Wall Street runs to their best client, hey, I'm purchasing Vall from you. I'm purchasing Vall, meaning I need protection. Vall is a, when you buy VAL, you're buying insurance. You're buying protection. I'm buying VAL and long-term sell, sell, sell. And whoever the guy was, the Nobel guy was. Well, this is crazy. We're at 99% confidence intervals. And yeah, you are. If you base it on six years of data, come on, you can't run a whole long-term capital management on six years of data. But that's what they did. And then who bailed them out? Okay, so then another example of socializing losses because if they had failed, then so would have some of the big investment banks failed. And if the investment banks failed and some of the cronies would have failed, and hey, I lived it, man. I'm not telling you this is there's anything right about it. It's just the way the system works.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT
“Realize, oh, I'm picking up nickels in front of a steamroller because that contagion, hey, I'm a seller, I'm a seller, and then your boss taps you on the shoulder and goes, Foss, you know, you've way oversold your position. Go out and buy some. And you know in your heart of hearts, you're like, but boss, I've been the only seller. There's no other sellers. I'm trying to protect my own market. And then it starts to really gap because the market says, hey, the only guy that was selling insurance to us all like long-term capital management, they're now up higher. Okay. That's the scary part. It's when the seller turns into the buyer and the market realizes holy moly. And that's called contagion. And it happened with long-term capital management. The whole street ran to long-term capital for Vall. Long-term capital was selling volatility based on six years of historical data, by the way. And these guys are Nobel Prize winners. My Lord.”
2021-04-14 · We Study Billionaires · BTC021: Bitcoin and Bonds w/ Greg Foss (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT