YouSaid · the spoken record

Kyle Bass

lines on the record: 56
first: 2021-11-14
most recent: 2021-11-14
sittings or episodes: 1
sources: podcast

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“You've got to be thinking in ways that people are alive today, most people that are alive today, didn't really live through invest through the late 70s and early 80s. You know, when you think about the core of the investment corpus today in America, and that was a period in time in which the government could do something about it. Here, I think they're going to be walking a tightrope of raising short rates, flattening the curve, you know, trying to figure out how to stimulate again. They'll have to come back and inject some more capital in the markets and, again, grow the central bank balance sheets. Look, you've seen Japan do it, seen Europe do it. We're just behind the, if you think about it on a timeline, we're third in time. But, you know, everybody's doing it, whether you're the UK, whether you're the Bank of England, the PBOC, the BOJ, the Fed, everyone's doing it, and they'll keep doing it. So I think it's important to just think about how to defend yourselves from that.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“With US dollar. Yeah, I think they will taper. So I'm not saying they can't. What I'm saying is when they do, and if they start raising short rates, you're going to see a curve flattening and it'll be recessionary. So it'll snuff out economic growth in the United States. For us to maintain our global hegemonic position, we should outlaw the Chinese central bank digital currency. We should make it illegal. We should enforce the rules-based order within our own borders. try to become less partisan and have the centrist run things and not the progressives and the radicals on either side. The problem is I'm not hopeful about that. I think we're more divisive than we've ever been. And that's largely due to the gap between the haves and have-nots widening. And I think that continues to widen. So I think you and I, when we think about protecting what we've worked so hard to save,”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Know, I guess our conversation today has been on the fact that we're entering a stagflationary period, right? We're going to see nominal numbers continue to move higher. We're going to see real rates of return negative because the difference between nominal and reals inflation. And stocks typically keep up with about 80%, 80 to 85 percent of that move. you'll feel kind of good about it but you'll still be losing purchasing power i think over time so again i started this private equity firm called conservation equity management to do exactly what i would do which i'm doing to try to stay ahead of that insidious negative rates of return so you know if people want to talk about it they should call me”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Cars on the road, just remember that coal is what made the electricity that's in the car. So the entire idea of getting earth to a better place is really dependent upon only about eight countries. And China's the number one country. Whatever they do with their emissions, so goes the world. And clearly they're not even engaging in emissions conversations. They're telling us, oh, they'll be carbon neutral by 2050. I mean, give me a break. You know, like you and I could say whatever you want to say about 2050. It's a joke. But in the meantime, they are massively increasing their carbon footprint and they're doing it with coal. So when we think about hydrocarbon pricing going forward, I think you're going to see prices that really shock people. And I think that's actually going to empower some regime change in a number of countries, potentially including China. The worst thing an authoritarian leader can see is skyrocketing food and energy prices because it hits the billionaire.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“There's like places like France that have 70% of their grid as nuclear. There are some people that haven't figured out China is currently building more coal-fired power plants today than the entire coal-fired installed base of Europe. They're building that much this year. So yeah, they want to say they're building nuclear, they're building coal, they're building whatever they can build because their entire system is so broken, their grid is massively underserved and they're telling their bread and butter manufacturers that they can only manufacture every other week now because they have rolling brownouts. So they're having a real problem. Hydrocarbon demand is inelastic and it's growing at an ever-increasing pace. And whether China's building nuclear or coal, when you think about Chinese electric cars, the way you need to think about them is they're coal-burning cars because the entire Chinese grid is powered by coal. So when you're feeling good about seeing electricity,”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Craig, how do we produce the electricity to plug the gosh damn vehicles in? We burn natural gas. We burn natural gas. That's our alternative power source. So you can't spin enough windmills and have enough solar to power the additional electric cars. You have to put electricity into the grid. People just haven't thought this all the way through.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Months to two years. And those prices will unseat the current leadership because you're going to see energy prices and food prices ripping because of underinvestment and because of excess capital in the system. So I think that's the grave mistake that the virtue signaling is going to, that's what's going to happen. You're going to see these things happen. And by the way, the front end, so at the immediate delivery month of crude and natural gas, they can go anywhere. I mean, whatever that marginal cost is, our marginal barrel, what someone's willing to pay for it, someone's going to pay it. I'm not saying the whole curve out 30 years is going to move to 150 or 200. But what I'm saying is the front end of crude oil and the front end of natural gas, you could see numbers you're going to need a slide rule to calculate if I'm right about this.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“On the front end, demand might tick up from 100 million barrels a day to 105 as the world opens, and there isn't 105 of production. Oh, and by the way, for seven years, we've under CapExed production. We can't just flip the switch. So you see Biden at OPEC begging them for more production. At the same time, he's saying no more interstate pipelines, no more drilling federal lands. Like, I get what he's saying. And the people that are running Biden's energy and climate team are actually good friends of mine. Believe that or not. You can't turn something off in kind of an absolutist fashion overnight and flip a switch and think you can change energy sources because you believe it's a good idea. It is a good idea. But the incrementalist approach over decades is what it's going to take. And what's going to end up happening is I'm going to predict something. You're going to see prices you've never seen before for hydrocarbons in the next six months and maybe six months.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Combustion engines. So demand for hydrocarbons is inelastic. It's going to keep growing. And we're not spending the money to find it. So what I believe is going to happen, if we have a cold winter this winter, you're going to see numbers you've never seen before because you remember when oil went below zero? The front end, there was a problem. There was nowhere to put it. The exact opposite's about to happen.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“World, driving around cars and trucks. They're 1.2 billion cars and trucks driving around. How many electric vehicles are on the road today? I think it's around 30 million. 1.2 billion combustion engines, 30 million. It's amazing. They're 30 million electric cars. When you think about it in the grand scheme of things, we still, the world still uses a hundred million barrels of oil every single day. So if we stop spending seven years ago and we're not drilling for more now and there's the long rated decline curve of production is about 7%. So we lose 7% of production every year if we're not drilling. In the next 20 years, we'll have one and a half billion cars on the road that are combustion engines and we'll have 100 million electric vehicles. 100 million. Amazing out of one and a half billion.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Carbon industry. And then you started seeing over the top virtue signaling from corporate investors and corporate boards. And you've seen a mass exodus of funding in the capital markets for anything hydrocarbon-based. It takes decades, many decades to move from one fuel source to another. It did for coal. It did for natural gas. And it's going to for alternative power. But even with alternative power, we need a much better storage matrix. Right now, it's just a great idea. Wind and solar are amazing, but they're not powering any kind of major percentage of the grid. And they can't be baseload power. If we mothball the cold plants, we won't lend to natural gas and we won't lend to oil. And in fact, now private equity is having trouble raising money in hydrocarbons. So now we have a scenario where demand is inelastic, right? Do you know how many cars that are in the world?”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Environment and doing what we can to be responsible stewards of both the environment and our lands. But you have to take a major step towards sustainable power, meaning we blew it when we stopped engaging in nuclear power plant building. We could have solved this many, many, many years ago. We could have solved global warming. The same people screaming global warming and climate problems today are the same protesters that protested nuclear power after Three Mile Island after Chernobyl, and then maybe even after Fukushima. Imagine if we just stop flying airplanes after two of them crashed, right? The technologies are so much better. It's so sustainable. It's the cleanest, most, it's the best way to power things. But what we did is we stopped spending on hydrocarbons seven years ago, right? Public market analysts said, you can't spend outside of your EBITDA anymore to the hydrocarbon.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“It's oil and gas, right? It's seven years ago, the public markets, when we had kind of the fracking decline, and we became energy independent six or seven years ago when we were fracking and drilling it at such a high rate when oil was 120 dollars a barrel, call it 2014. And then we had an abundance of oil. And we're the Saudi Arabia of natural gas. And we had a ton of natural gas. And so oil prices dropped into the low 30s. And natural gas prices went below two dollars a m. And then we started virtue signaling. We said, you know what? It's time. It's time to go to alternative energy. We have global warming happening and climate change. And it's all well intentioned. So don't get me wrong. I believe that global warming is here and the numbers suggest it's here. Whether it's secular or cyclical, it'll be left to science over the decades. But so I'm a big believer in saving the”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“50% of the company, and we let their shareholders, Alibaba have the other half. Does that sound like a good deal? That sounds great. They literally stole half the company. Imagine if that happened here, you'd be behind bars in 10 seconds. But we just nod our head and say, well, I guess that's the way the Chinese do it. They just, because they're running the company, they get to keep half of it. Well, that's not the way it goes. And people just look the other way because they have FOMO, right? They have Chinese FOMO. They can't wait to get to the end of that 1.4 billion person rainbow of riches and Eldorado and somehow leveraging the Chinese people. When in the end, the Westerners never make the money.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“You look at their markup of ant financial in their own income statement, and it was representing like a third of their earnings for 2020. And when Ant Financial goes away or gets revalued lower, they don't run it through the income statement. So, you know what? I don't know. I just, and think about how Ant Financial happened. Imagine if you and I were running Alibaba and we're like, hey, let's start this consumer finance platform. How about you and I and 15 other people? We just kind of split it off. How about we take”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Have you really peeled back the layers of the onion and looked at Alibaba's earnings? Alibaba's earnings come from markups of their private investment positions. And they run it through their income statement. Alibaba is like the biggest house of cards I've ever seen. You know, I have no idea what their real financials are, and neither do you, and neither does Charlie Munger, for that matter. You have never submitted themselves to a real Western audit. And now you have Xi Jinping risk. Trey, what discount rate do you put on a company that doesn't submit itself to real audits and has Xi Jinping risk? I mean, I think if you're a fiduciary, whether you're a fiduciary to your household or your kids or as a real market fiduciary, you should lose your job if you buy Chinese stocks that are unaudited, which are all of them right now.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“And they're all hyper levered to price. And then the banks are all going to have huge holes in their balance sheets and their banking system's three and a half times their GDP. They will print enough R&B internally to kind of save the Chinese people from jumping off a cliff. But I don't see global contagion into Western banks.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“And the European banks with massive derivatives risk. No one signed ISTA agreements with Chinese banks because Chinese banks demanded to have the jurisdiction beijing law. And of course, there's no such thing as Beijing law. So none of the either domestic U.S. or European banks have major counterparty risk there. So the question becomes internal. So are the Chinese banks going to get wiped out for sure they will have huge holes in their balance sheets. But with the Chinese government back depositors, without a doubt. So I think that tree is going to fall in the woods. I don't think many are going to hear it. I think there'll be some people that are super wealthy over there that end up losing everything. But I don't think a default crisis will go global here. I think that they will take real estate down, hold it down. The Chinese property developers are all going to be massacred. And because there will be no...”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“I don't think so. And well, let me rephrase that. I believe that if you've seen Goldman Sachs most recent report and expectations for Chinese GDP, they've taken it to zero. That's a pretty big statement, right? But if a third of your economy is going to go pretty significantly negative and the other two-thirds of your economy are slightly positive, you could get to a zero number. God forbid, China only grows at zero, right? But I think if China has a zero percent growth in GDP for a year or two, that just means global GDP won't grow anywhere near where anyone's expecting. So the global slowdown a bit. When you think about the systemic nature of what's going on, we all know Evergrand has about 300 billion of debt, 200 billion, call it internal Chinese debt and 100 billion external, maybe dollar bonds, you know, those bonds are not levered 10 to 1 in foreign financial institutions. Lehman was interconnected to both the US bank.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“In a speech just a few days ago, he talked about further moving property taxes higher in the midst of a real estate crunch. He is going to bring down real estate prices and they're going to stay down. That is the common prosperity of the people. That's his goal. And companies, you know, there are eight developers now in default. Evergrand is, all these bonds are going to get wiped out. That's the bottom line. And Westerners are going to do a lot poorer.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Want to marry a woman because the woman won't marry him and live in China in the parent spacement there. So they're not getting married, they're not procreating, they're not having children. And she realized this is a structural nightmare for him as a central planner. So they eliminated the one-child policy and said, how about three? Well, guess what? It didn't work. People aren't having three because they can't afford to have three. And real estate is a third of China's economy. In the U.S., it's about 18% of our economy. The real estate prices are so high and so out of reach, and the average Chinese person owns 2.3 apartments. It's where they've just been plowing their money in a speculative fervor. And so now what she's doing is introducing property taxes, which here too four didn't exist. So imagine if you didn't have a negative carry, well, you could go speculate in real estate. Imagine if you had to pay 2% a year, you wouldn't speculate that much in real estate, right?”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“I think that an unintended consequence of central bank largesse has been asset prices have gotten out of hand. And in China, when we talk about how housing is priced here, call it five to seven times our annual income, four and a half to seven times our annual income. In China, in tier one cities, housing is now like 30 times average annual income. It's at a level that's so high that when you look at the birth rate, the average Chinese woman, it's 1.2 children per woman to just sustain a population, that number has to be 2.1. It's 1.2. So you're having a major population decline starting in China. And the reason being is the Chinese men can't afford once they get to be adult age. They can't afford to have a job and buy a house. So they're living with their parents in their basement. And none of the men.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“In and get these deals done for Taiwan Semi to build these. Imagine spending $17 billion on one building tray. Imagine what that building's going to look like. And those are being built today, right? We have Samsung about to break ground in Taylor, Texas. We have Taiwan Semi building its first. And I think its second waiver fabs in Arizona, broken ground. But again, those periods of time and the capital it takes to build those are enormous.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Well, it changes my opinion of Taiwan Semis business overnight. Yeah, absolutely. If it's under the centralized control of the Chinese Communist Party, then you have an entire myriad of new problems to think about. And immediately, if the Chinese are running Taiwan semi, our government and they take it forcefully, they take Taiwan forcefully, our government's likely to ban all products from China. We're going to have to alternatively source. We're going to have to go to a different supplier. And we as a country realized what kind of position we were in and that we had let the frog boil without our knowledge. And it was actually under the Trump administration last two years, the Security Council tasked a former Naval Intelligence Director to help us.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“We still have a duration mismatch if they move now, right? And if you're thinking about their calculus, moving sooner rather than later is in their best interest. However, they haven't rolled out their CBDC yet. So again, this my calculus, and who am I, I'm some financial guy in Dallas, but if I were to bet when something's likely to happen, I would bet the second half of next year or sooner.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Military planes landing there, and they're pushing these videos all over China for the people of China to prepare for battle. I haven't seen that level of rhetoric in China to date, but it seems to me like things are speeding up at a quantum speed, right? At an incredible pace. So whether they wait for the Olympics or not, I can tell you that conversations that President Biden has had, was she surround Taiwan. We have a big national security problem with Taiwan, right? Taiwan Semi is very, very, very important to the US, to the U.S. military, to our well-being. And it's literally 100 miles from the Chinese border. And so the problem is it normally takes about five years to build a wafer fab. We're about a year and a half into the Taiwan semi-fabs being built in Arizona. And let's say it takes three or four years instead of five.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Take you forcefully. And his success as premier and emperor for life is contingent upon that reunification. And if he doesn't achieve the Chinese dream or the great rejuvenation of the Chinese people, then he has failed and he'll no longer run China. That's literally what he said, October 9th, if you read carefully what he said. So he's raised that. He's banging the wardrums a little harder. I don't know if you've seen just today, Trey. But for the first time in Chinese media, what I'm seeing all over China is they're talking about how they're fortifying positions in the region in which they're going to attack Taiwan from. And there are propaganda videos showing missile silos getting carried down the streets of China that are all camoed up and trains with tanks on them headed to the region, airplanes.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Know they're not thinking about it. There's a It's either people don't believe it, they don't believe China will do it. If they listen carefully to Xi Jinping's October 9th speech, he basically raised the bar on Taiwan. He said that he's trying to achieve the great rejuvenation of the Chinese race, quote unquote. And he is intent on achieving the, quote, Chinese dream. Those are two really important phrases. What he is saying is, and he says that peaceful reunification of Taiwan is a foregone conclusion. It's inevitable. In fact, they said it, they reiterated it again with their foreign ministry spokesperson yesterday, Wang Yi said that yesterday. But back to October 9th, so today is November 4th. So call it back a little bit less than a month ago, what she said in that speech was if you don't surrender peacefully, we're going to”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Lives, what we simply press a button. If their rollout of their CBDC is successful, that changes the calculus of their entire geopolitical risk game. If we lose that button, then imagine how belligerent China can be if they're not relying on this. So I think, again, that calculus is something that we all need to be thinking about”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Know they've tried really hard to get people like MBZ and MBS to settle in R&B. And that's been a tough, again, road to hoe. But I think with the outset of a Chinese CBDC that becomes fungible and tradable and transactable and also is potentially freely tradable in and out of dollars, it gives them so much more to stand on today. Let's just, let me give you hypothetical. If they attack Taiwan today bombers, fighter jets, and then amphibious assault, we have an economic nuclear button today. Their entire world depends upon dollar settlement. If we sanction the Chinese banks, the joint stock banks and the SOE banks, we take China off the Swiss system and their economy collapses overnight. We have that button today. We don't have to send sailors into the South China Sea or the Taiwan Strait and risk our brave men and women.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Will have a meaningful dialectic about this rollout sometime very soon. I believe it should be banned outlawed and illegal for any U.S. corporation or individual to hold. That sounds hyperbolic, but you either have cancer or you don't have cancer, is how I view this.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Militaristically, but then they would also have a stranglehold over you because if you came out and you were, let's say you transacted a lot with China and let's say they screwed you on a transaction and they were supposed to pay you a million dollars worth of their CBDC and they only paid you $800,000 and you said no no our deal was a million they would say sorry tough and then you go and make a public comment on Twitter and say they just screwed me out of $200,000 And then they turn the rest of your central bank digital currency off because you said something negative about the regime. Just think about that world. I don't think people have thought that all the way through. And I know the national security council, our intelligence agencies, DOD, we as a country have thought about this deeply. I don't think the press has written about it much at all. And I don't think there's been a lot of a proper dialectic here. And hopefully we will.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“No, I think what people maybe don't realize and maybe some do is China can make two moves on the chessboard on the launch. They can say anyone that imports and exports, i.e. engages in trade with us, China Inc., you have to settle on our currency. And if you don't like it, that's okay. Find somewhere else to trade. So they literally could force you into their digital currency. And then they could say, oh, by the way, anyone that invests in China or has investments here, from now on it all has to settle on CBDC. And you say, no, I kind of like the dollar. I like my dollars being invested there. And they say, sorry. It's illegal. You have to buy our currency with your dollars. So what that would do is that would bring in trillions, literally trillions of dollars into their coffers at the central bank. And then they would not only have more dollars to exercise their global belligerents with economically.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“The rollout of their CBDC next year is the biggest risk to the rules based order in the West that we've faced in the last several decades.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Libertarian ideals of private crypto. But when you think about central bank digital currency, it's the opposite, right? It's run by the government, for the government in a centralized manner. They know exactly who has it. They know your spending proclivities. They would know Trey Lockerbie's social security number and where you like to spend it, how you spend it, how much you have. It would enable them not only are you adopting the Chinese tech stack. You're not just putting some digital currency in your wallet. You're adopting the entire Chinese digital tech stack. and you're giving them the ability to export their digital authoritarianism to you. The Chinese government could bribe you directly without being under the watchful eye of regulators or law enforcement. Imagine if the Chinese government has the ability to bribe, cajole, coerce anyone anywhere in the world if you're holding on to their money. Like imagine that world. That world would be a much worse place to live in. And so I believe.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Currency, yeah, their own. Yeah, I mean, that would radically change China's geopolitical, call it belligerence. And when you think about how offensive they've been in the last few years, first of all, in their complete botched review and allowance of scientists into Wuhan to figure out where Patient Zero is and where this thing came from. They're not a responsible global actor. They are completely irresponsible global actor. They have a grand strategy. They're executing it. They're executing it well. And we are now trying to understand in a much larger picture what it means for them to have a CBDC of their own, a central bank digital currency of their own. And again, it's antithetical that even private crypto, private crypto is decentralized. The ideas, you know, call it not being under the purview of watchful eyes of centralized governments. And I understand all of the kind of”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Weekend where you live there, you probably have a second home or your parents did or your friends do, and that's what you do. You go to a lake or you go to a ranch, you go to a farm. I believe you're going to see those prices move faster than, especially in front of those population demographic moves, I think those are going to move faster than inflation will.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“What I'm talking about is when I think about the macro movements of the population today in the United States, you have high cost, high tax jurisdictions like New York, New Jersey, Connecticut, and then you have the entire West Coast of California. Those people are all moving to places like Texas, like Tennessee, like Florida, because they're pro-business, they're low to no tax at the state level. And I know rich people can move to Aspen and Utah and everywhere that super rich people are moving, but you can't move entire Fortune 500 companies to places like those enclaves. So when you think about where the pro-business environment is, who's going to win over the next decade, 10 to 15 years, it's going to be places like Texas, Tennessee, and Florida. And with that nonlinear population growth comes big movements in land within, call it two, two and a half hours of major MSAs, like whatever you do on the”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“It is to mitigate this. And I know that's not where you want me to go on Bitcoin, but it's how I feel. Now, I own a couple of private positions in big firms that are trading, lending against, and developing Bitcoins and NFTs and all of the digital universe of alphabet soup things that are out there. So I think that the blockchain, I think that NFTs, those things are all very much here to stay. Private crypto, I put a question mark by over the long run. And so I'd be careful with that now.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Billionaires out there in Bitcoin land. And I think the easy money's been made is what I'm telling you. And I think from here on out, it's going to be really difficult to make money there. So what I look to are things like real assets like even rural land. Rural land, you can do a lot of interesting things with. You can actually put a judicious amount of leverage on it. Call it 50% leverage and stay way ahead of this kind of insidious degradation of your savings. And so I actually launched a private equity firm a couple of months ago to engage in not only acquisition of rural land because that's where I want my money, my family's money, but it's also to engage in mitigating environmental impacts from big industrial and commercial users of land. So I'm kind of, I'm actually a tree hugger at heart. I love the environment. I love the outdoors. And that's where I think the best place to go.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. You know, I know millennials love private crypto, and I know you're probably a millennial. But I know that people like to think it's a perfect substitute or a great substitute for gold and or an inflation protector. I tend to think that you're going to see kind of authoritarian governments and Western democracies alike start to really clamp down on Bitcoin. I know China's first kicked the miners out and then banned private crypto. They did that a year earlier than I expected them to do it. I think next year you're going to see intense regulation come from the U.S. Treasury and IRS. And so when I think about how to think about discount rates, and I think where you're going with that question is kind of how do I protect myself from this insidious inflation? I think there are much better inflation hedges. I know Bitcoin's done well. I know that the returns have literally been off the charts for many, and there are many newly minted”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“I think it is the alternative was to have a much deeper recession in 2008, 2009, to have a calamitous recession in 2020. The middle class, their ability to trade up, do better is taken away from them, right? So the negative real rates of return really hit the middle class. And the poor, they hit the poor, the worse. So I think the very people that they're trying to protect are the people they end up hurting the most. But it's insidious, right? Because it's hard for you and I to say, well, even though you and I have a retirement savings, we know it's going to buy less stuff than it would have bought two years ago. But we don't know how much less. And they're not actually telling us how much less. You and I just kind of have to figure out what the new cost of living is going to be in the new paradigm. So again, I say it's insidious because it's not black and white and it's very difficult for people to measure.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Giving you real numbers. It's really important to think about they always talk about also CPIX food and energy. So they're like, wait a minute. If you don't drive or eat, your bank account would have been okay. It's just crazy. So I try to look at things in real terms and how they affect the population and what your wallets really feeling when you go fill your car up and what your wallet's feeling when you take your wife out to dinner and you get the bill and think it's in pesos but it's in dollars you know it's insane what's been happening”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Your bank account still went down $40,000 and you wrote the check, but you have to realize that so many things are tied to the CPI, especially like government pension payments and there are cost of living adjustments tied to that number. So when you look at, let's say, Germany, for example, they don't chain weight their inflation data. So Germany just printed year-over-year numbers of 11.7% inflation. Sounds about right to me. It's so fascinating when you peel back the layers of the onion to try to understand what the incentives are behind the people putting these numbers together and then what real life is. Real life is your bank account. Real life is what things actually cost you, not what they used to cost 30 years ago because you had analog this and roll up that. It's what can you buy today? How much does your bank account decline? So they're kind of playing fantasy football with the numbers, right?”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Five and a half. So here's what chain weighting means. They say, Trey, we realize that your bank account just went down by $41,000 because you wrote a check for a new car. But, you know, we, the government, well, we must compare apples to apples. So in your new car, you have a digital speedometer. In your old car, it was an analog speedometer that was just driven by more mechanical means. So if you were to replace your digital speedometer with that analog speedometer from 1990, then your speedometer wouldn't cost $900. It would only cost $70. And so they chain weight every part of the car. You have electric windows. Well, maybe in 1990, you had the roll-up windows. So you have to subtract the cost of electric windows. You have to subtract the cost of your GPS navigator. You have to subtract the cost of everything to try to compare an apple to an apple, when in reality,”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“It means the government rigs inflation. So let me give you a perfect example. So 30 years ago, the average price of an average car in America was about $13,000 a car. Today, that number is just over $40,000. So it's up over 300% in 30 years. So when you think about the construct of the Consumer Price Index or the CPI, there is an auto component to that construct. I'm just picking one out just because it's easy for us to remember how much cars used to cost and how much they cost now. And of that 300 and so percent increase, what percentage of that do you think has made it into the CPI? So of a plus 300 number, what do you think has been calculated into the CPI over that time frame?”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“Down to the low 30s by the mid 1970s. So when we had the embargo and oil price spike of 79 and then runaway inflation in 1980 where Volcker showed up, we could afford to briefly raise rates. So it's important to think about where we were in the late 1970s when you look at our sovereign balance sheet and corporate balance sheets and where we are today. Again, Volcker cannot ride in today and fix this. You can't arrest inflation by raising short rates. You'll bankrupt the nation. You'll bankrupt corporate America. You'll bankrupt everything. So I'm of the opinion that a move from zero to one percent is about all we can do on the short end.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“End or the short end. And so if we raise rates from zero to one and then one to two, all of a sudden interest on our national debt starts costing us more than 10% of GDP and things start collapse. I mean, the government can't afford that, right? So this is not like the period of time in which Paul Volcker can ride in on a white horse and raise rates to snuff out inflation. Think about this. We won World War II. We deficit spent going into World War II. So our national debt in 1946 was about $106% of GDP. And we won. We eliminated the productive capacity of about two continents. And we helped rebuild with the Marshall Plan, Japan, and part of continental Europe. And we ran a trade surplus with every single trading partner in 1946. So we were able to pay off our debt from 106% of GDP.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“It's not only that, it's the expectations of the participants. So we look at corporate America, you look at individuals in America, everyone has reset their expectations to borrowing around these low rates. And you have to think about the rate moves as a percentage of the base and not as an absolute. So if rates drop from 8% to 5%, and then we raise them five to six or six to seven, you're moving two off of five, right? Are you moving down three off of eight? When you're moving from five to zero, and then you try to go from zero to one, the rate increase is almost infinitesimal, right? Meaning as a percentage of the base. And so that's what's more functionally relevant than nominal change in rates. And so that's number one. Number two, everyone is including the sovereign, including the U.S. central government balance sheet. If we move short rates, almost everything's financed on the front.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT
“I mean, I will agree that I think the amount of appreciation of real estate in the last two years, it's unprecedented. It's never moved this far this fast. But I think that Price levels of wages move. So my answer to you is I think assets, including real estate, are going to continue to move much higher over the next decade because I think the central banks can't raise rates more than 100 basis points. We're not going to move the front end very much, and it's going to flatten the curve when they do. So I think if we start aggressively raising rates in 22, I think you're going to see the curve flatten and maybe even invert almost immediately. And that's a real difficult scenario for the central banks.”
2021-11-14 · We Study Billionaires · TIP396: China and the Macro Impact w/ Kyle Bass · IDENTIFIED FROM THE TRANSCRIPT