YouSaid · the spoken record

Vincent Daniel

lines on the record: 157
first: 2022-02-06
most recent: 2022-02-06
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

“And so the funny thing was, I think six months later, there was another meeting with the Bernanc. And I didn't go. I sat in one of the back rooms listening and I actually think I was creating an audience of the people that were in the room because I was just yelling, but I was allowed to yell because no one could hear what I was saying. But yeah, look, I'm one who blames a lot of what we're seeing right now on the policies of the Federal Reserve. understanding that the government was, they enabled the government to spend what they did, but if this is supposed to be allegedly or academically supposed to be an independent body, right? Independent of what we know that's not the case. But at some point in time, there needs to be an adult in the room to say, you cannot do that. And we should not be doing this, but they just enabled where we are right now.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And I asked them the question I wanted to ask him, which was some might say and argue, and I might be on this side, that the Fed enabled, right, the excessive spending of the U.S. government, which allowed all these fiscal deficits to occur, which allowed the suppression of volatility, which has caused, just basically caused all the issues, but I tried to say it in an extremely polite intellectual manner. Looks at me And he says, I completely disagree. Bangs the table, gets up and leaves. Yes, meeting over”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“But I was getting angry during the meeting because here I'm looking at and I'm staring at who I think is one of the key adversaries of the last 10, 12 years of lack of crisis discovery. So I finally, and I'm on the side cracking up because I know Vincent and I'm like grinding my teeth and I'm like, you know, I have a lot of quirks and I'm like in ticks and I'm like, and then finally I just blurt out and say, okay.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“So we at that time call it 2018 maybe Worked at a very large hedge fund for a brief moment of time, of which moment of weakness, yes, of which Bernanke was a consultant for that very, very large hedge fund. And the various departments got to meet with the Bernanke, right? And he could espouse his wisdom on us. And he typically, they typically did it right before big FOMC meetings, right? So this was a big FOMC meeting. He was talking about what he thinks they're going to say and how they're going to do it. He knew exactly what they were going to say. Exactly.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Tell us one about our meeting with Bernanke, which is a pretty good one. Should I tell that one? The only part I want to chime in is that. Vincent Very much like his mentor, Steve, for the meetings. Steve, when they ever had a big meeting, he'd be very excited and go sit next to the CEO. Ask his one question, then he'd get up and leave. When Bernanke We were instructed not to ask any tough questions. Vincent's super excited sits right next to. Bernanke and go for it”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“You can call it 10 years ago. And she, through her, we actually got to speak and meet with him. But now I think you have a much more interesting dynamic associated with inflation. Yes, it's at 7%. Yes, we're going to have base effects. Yes, the non-inflationary transitory people have a tailwind at their back that the base effects that by definition the inflation is going to go lower. We're spending a little bit more time thinking about what's going to happen to core inflation rates, wages. And I actually think the key variable that I will be tracking is have we broken the 40%. Spell against labor in terms of pricing power. We'll see, but I think it's slightly more probable than it's been in my career that labor might have some hand in terms of wage price appreciation. We're talking I want to tell this one”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Step right now, it's very hard being alone discenter, particularly in a meeting where everyone is browbeating you. And from my understanding, Honing is not part of the inner circle anymore because of what he said However, I actually think he was probably the one adult in the room that realized what were the implications of what we did. Now, going, if you remember Meredith Whitney was a big Tom Honing fan.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“It's a deeper question, right? So a few things you said, and for the last decade, we have not met our inflation expectations. I personally think that's bullshit. I actually think that inflation was running hotter than what CPI was suggesting, and I guess I'm one of these crazy conspiracy theories that believes in more of the shadow stats that inflation was higher. Nevertheless, well, no, a lot of people disagree. Anyway. In my opinion, what Honig was getting at, right, way back when. And look, that article really got to the essence of what he was trying to get at was that if you do this, Benefits are going to be disproportionately disproportionate to extremely wealthy people at the expense of Main Street and the middle class. And once you open up the Kimona of purchasing paper via QE, you're never going to get off it.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I mean, look what's happened to the energy sector melting all this money in the shale packs. They've had to really show a lot of discipline and people didn't believe them that they're going to cut their debt. They didn't believe them that they're actually going to return capital. And once they finally did that, you got the investors back. But when you burn investors, people just don't come back for a while And so that's what I see right now. And if any of these tech companies do burn investors like Palestine, For them to come back in full force. They just won't trust them. They won't trust management that they're going to do the right thing. Mean post fact, these tech stocks, the management teams have paid themselves so lavishly.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“1992. Let's take Peloton, for example. I'm not saying we're not. But there is a level if your balance sheet is correct, and if there are underlying assets. A company that are worth something Certain price, it might take longer than people would like, and we could get into the concept that we believe wholeheartedly in duration. But at a certain point, there might be intrinsic value in a name like Peloton. You have to start doing work. Is the balance sheet okay? How's the cash burned? Are the assets worth I think there will be tremendous opportunities on the long side when we get there. That's what we saw in 99 2000. Lot of these broken down or text names that didn't work, Amazon was probably exhibit A. There was tremendous opportunities. And I think that's going to happen. We just got to get through this negative part of this.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“They'll never make And so It's going to get, you know, it's going to go when people stop going to the movie theater. Finally, figure out what normalized EBITDA does. Yeah, but I want to get bullied. So, no, I'm serious.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Crazy how much leverage they have, and they'll never make money. I mean, maybe they'll have a quarter here and there, but”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Better really do your history on this one. With Bear Stearns, them getting cut in half, that's a function of leverage, right? So that's what causes, so there's two ways to short a stock. One is valuation, and when the Fed's not on your side, you can't short anything like that. But when there's leverage involved, we can go from being a very viable, profitable company to bankrupt in a matter of weeks. But to get to your other question.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Both of them are different. So, to answer your question for something the 50 times sales was the Negmi 9-2000 cycle. So if you just go and take a look at some of the charts that were the then high flyers, whether it was the Cisco's, the Amazons, interestingly enough, micro strategies is I call it the bubble cockroach. Take a look. It was a big bubble stock in 999 as well. But look at the price the sales migration of those on the first one and they were trading at 20, 30, 40 times sales. And they went all the way down to two to three or one or four times sales. So when someone says to me 50 times sales to 20 times sales is a bargain, experiencing 99 in 2000, you start to laugh, you try to laugh internally because they didn't go through the cycle, but you are laughing saying, young person, you...”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“So the way I was thinking about it, so I've seen two bearish cycles right now, and I've been in a seat, a professional seat, where I've seen two bearish cycles. The first time I was on the sell side, that was the 99 tech bubble. And then, of course, the Great Recession.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Went to D1. You know, God bless them, but they're billionaires because they've gotten all the flows. The rest of the old economy stocks are just hated. I mean, still today, they're just hated. The energy sector goes up and be like, oh, God, I got to buy these stocks, I guess. You know, they just hate them. And you can see that in the past, we've been remarking, you know, because in 16, you know, we own value stocks too. And when everything sold off, value stocks went down more than tech did. And so we were sitting there going, oh man, we're going to get demolished in our value stocks this year. And surprisingly, they've actually gone up. Our shorts have gone down. It's the first time we've seen this in a long time.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Let's kind of, we can go deeper into this, but, you know. From financial guys, we were originally financial guys. And there's basically no capital left in people running financials, like long-only financial. There's no one left, right? One of our friends today is one of the sort of last hedge funds standing. He got redeemed because it was the best performing fund last year, but he didn't have an extra compliance officer. I mean, that's how stupid people are. That aside, there's no money, right? These people don't control assets. Look how many people control energy funds. There's none there. All the incremental capital, almost exclusively has gone to people with a growth mandate, right? Look at all the hedge funds. They're all down the same because they all own the same stocks, right? Because all the flows went to Tiger, went to...”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Some stocks they say it's a bottom. Oh, the stock has gone down 80%, it only can go down 20% more. No, a stock down 80% can go down 80%. And, you know, people who said, oh, Bear Stearns, it went from $50 to $20. It's a buy. They obviously that was incredibly wrong. You know, likewise, there are people saying, hey, this stock was trading at 50 price to sales. Now it's at 20 price to sales. So it's a bargain. I take it you don't agree with that, but is there some point at which, let's say, peloton's at $2 a share where you're saying, hey, this is actually a buy?”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And from our perspective, the way we're thinking about it is that we're sitting on now almost all long-term capital gains on this stuff. If things turn down, we're just going to heave them overboard. Right, they'll be gone, and so Will be in cash. And so, listen, we have that ability, and it's one of the reasons we set up like we are. Sometimes you just don't want to do anything. Sometimes doing nothing, sitting in cash is a great idea or sitting in gold or something safe.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“To call it blink. They are going to acquiesce to markets. I didn't think it was going to be, I don't think it's now. It could be another 10% in the S&P, but at some point they're going to change their tune and change their narrative such that they're not as hawkish as people think. And they're going to have to do that because you are right. They will tank the economy if they tighten money too hard. To me, that's not highly probable right now.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I also think about it from bottom up top down the basis, which order gave a lot of the bottom up, the underlying fundamentals of things like shipping are phenomenal. Just the demand side, as well as more importantly, almost the supply side. They're just not making. We're not making that many ships for the past five to seven years. But to get back to your question, because I think it's interesting, you are right. If they tighten too much, you're going to have significantly slower economic growth. And all these value names are not going to work. That's my opinion. And it is our view that at some point, it's our view that the feds is not looking to tank the economy. If we were of the perspective that we were truly in a Volcker moment where they were actually going to send us into a recession to fight the inflation that we're seeing right now, then we should not belong any of the names that were long. I just don't believe that. I believe at some point the Fed is going to go.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And these companies have tremendous amounts of cash. And funny enough that shipping rates haven't come down. And so, you know, we like to. Always press on if you have a thesis figuring out where the consensus is wrong. And just like we're big in oil and gas stocks and the curve was severely backwarded. And we just believe that was wrong, right? And then the same thing with shipping. The rates were super backwarded. And so we just thought that was wrong. And so it's playing out right now for us. But that's why we like to do it.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Why is it that you think that quantitative tightening or just monetary tightening, whether it's raising rates or QT, will be good for value stocks, but not good for those hyper-growth stocks? One could argue, and perhaps an analyst at Arc and Best might, that this sort of tightening of monetary policy, you're right, it's going to be bad for demand. So people are going to be ordering less. They're going to be spending less. So shipping rates are going to go down. People are going to be traveling less. There's going to be less demand for energy. But in that environment of, and I'm not saying I believe this, but in that environment of growth slowing, as you say, growth slowing is good for growth stocks. What do you make of that?”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I'm unsure right now is The path of the economy without quantitative easing, without fiscal stimulus, and without the fiscal tax credits, you pull in all that stuff out. And without the wealth effect of all these stocks going up like they have. I don't know how much pull forward is in the actual economy, right? You know, how much extra tech spending happened? And how much extra baseballs that dick sporting goods do we buy? The economy could do okay for the next year. But again, our biggest issue is the sovereign leverage. There's not that much they're out of bullets at this point. The consumer balance sheets and the corporate balance sheets are fine. the government took on all the debt.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and so far for, again, for the past 10, 12 years, the Fed's words, they've learned that their words are just as important a policy tool is actually, and it's actually even more useful than actually doing something. So I believe that at some point they're going to try and change the verbiage of the narrative of hawkishness from super hawkish to less hawkish, hoping that the markets. I think we're going to get both. I think it's more probable that Jared's right and that we get both rather than we get one or the other.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“With Jenna Dillon, and I think he's completely correct, they're going to have to choose either a recession or inflation. And I'm kind of in agreement with him. They're probably going to go somewhere in the middle. But at some point, they're going to have to make a decision. I think the decision right now for them is easy. We have to fight inflation. I mean, President Biden is going on every single press conference, and he's actually tilted towards the Fed to say do something about it. It's hard for me to believe they're going to do a 180 and start becoming accommodative again.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Like to deal with improbabilities and Nothing certain. But the one thing that feels close to certain. I can't see them doing QT. I can't see them doing four hikes this year in two to three hikes next year. It's just too much stress on the system. And so far we've seen the interesting thing for us is going to be for all of us, it's going to be, okay, the S&P is down, seems to have a 10% drawdown. The Qs have had a 15% drawdown. where the S&P has a 15% drawdown, how does the Fed feel? What do they do? Because then all of a sudden you're starting to balance the inflationary forces that they're feeling, not just inflation, but from the politicians, to let's fast forward the clock, the angst that people are feeling because FANG stocks are down 20% and there's a huge wealth effect. And it's going to be interesting to see which one they choose. And I was listening to a podcast.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Too many things to balance. They're trying to balance inflation. They're trying to, you know, someone needs to buy our debt, and they're trying to keep the wealth effect. They're trying to engineer this perfect landing. Okay, I just don't think they can do it. And for now, if they do some engineer some sort of soft landing, We still think that a lot of these value stocks can do better than growth stocks.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And We've talked about this for years, but the whole economy is such so financialized. Everything we see it, everything that you buy is on leverage, cars, houses, stocks. Look at, I remember going back and looking at the 2000 bubble, they had the margin debt, retail margin debt. Well, we're way past where they were in 2000. I just don't know that We're even more financialized than we were, call it 10 years ago. I just don't think that the world can handle Qt quantitative tightening and hiking. I think they need to hike to control inflation, but I just don't think they can. I think we're so far past the point of no return at this point.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Which has created inflationary pressures, and now the people who have been buying our government debt hasn't been foreigners, really hasn't been domestic savers. All the banks have bought some. It's really been the Federal Reserve, right? Which is therefore also included and added to the inflationary pressures that we're having, and it allows governments to spend money. So too much of expansion of balance sheet, or some of us call it digitized money printing. That's actually Powell's words on 60 minutes, not mine, I could say it.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Right. A good thing like that can go too far. And I think we've gone too far. So, yes, government should be there to expand the spending when you are going into slower times. You are correct. However, you can't do it for 13 years straight, right? And we've been doing it for, and you can't expand the way you did over the past three years.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And they should. And they should. And they should at times. And the problem with. We used to rail on canes, but He obviously said in good times you don't need this accommodation and actually be counter-cyclical. This time they just went crazy.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“A few things to keep in mind. One, you are right. Governments are there and they could expand their balance sheets significantly more than we can.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I mean, the funny thing today is that the markets call it down 10% for the year. I think it's the number maybe less. And the whole market's crying, right? And like, oh, we're about to have a policy error. They haven't even finished QE yet. It's bananas. Like these people are just insane. I don't get it. And, you know, and the whole tech narrative or the growth bros, as Vinny calls them, they, you know, it's like fake bearishness, right? They think the economy is really bad, so therefore rates stay low. So their valuations stay high. The whole thing's perverse.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“I'm trying to remember exactly when we started shorting arc, but it definitely had something to do with listening to Powell statements and realizing that the error of significant accommodation was over. So then all of a sudden you had the ability to actually put your fundamental hat back on and actually just look at some of the stuff and say, this is crazy.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“So we were going nuts on this MMT thing. We would always ask when does it stop? And the Achilles heel always for the MMT crowd was inflation. And so with the 7% inflation prints, we've effectively killed the MM&Ters. They were just dead wrong. And the feds just in a box. And so it was that kind of combination with, we clearly saw the bubble, but pricking it is another thing. And so we were very long last year. And for the first half, and then in June, Powell definitely pivoted because he went from, you know, we're not even thinking about thinking about hiking rates. And so in June, he pivoted, and you can see a lot of the turmoil happen then. You can actually like Arc peaked, I think, in March. And we shorted it probably right around then.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Or Shopify or any of the stocks that have come cascading down and do like they did over the past 12, 13 years and about face and safe markets. They can't do it right now. That's what gave us, in our view, the ability to have the ability to short stocks and feel comfortable about it. All the other ingredients that we wanted to short the stocks were there over valuation, sometimes negative rates of change, various other factors insider selling. The one thing that wasn't there that was the most important thing was Fed intent and Fed intent has changed.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Towards them from voters, crying, rightfully so, about the levels of inflation. So for us, what that does is it forces the Fed to hike, to be more hawkish, and they can no longer bail out markets, at least at this point in time, right? Because one of their key mandates is to fight inflation. They have to fight inflation. So there's no way they can look at”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“It's for us, for me, and I think for Porter, the key ingredient that changed our mind was fed intent and inflation, right? Do we have now the last CPI print and the last few CPI prints were well, well, well north of the two or the averaging of 2% that the Fed said that they wanted. That wasn't that long ago when they said that. No, it wasn't. And think about what that does. Well, first off, they were wrong on in terms of how high they thought this was going to go. They've been wrong so far on the idea that all of this would be transitory, but probably more important than that. Politicians are now getting a lot of angst.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Listen, I think it's pretty clear to me that we're in a pretty big bubble. I mean, in terms of Bitcoin was great, right? They had a nice little simple idea, store of value, can't debase it. But then 4,999 other coins came along and effectively debased Bitcoin. And you still have Elon Musk. And then... Paying 50 times revenues. It's just pure insanity, you know, and these are tech tech companies which, you know, arguably can be Disintermediated in 10 years from now, right? And who's to say that their technology is the right technology? And there's a thousand companies going after payments. And there's not going to be that many winners. And so paying these crazy valuations is just not smart, in my opinion.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“The risk that we saw on bank balance sheets, now I feel it significantly more so in sovereign balance sheets, right? Understanding the fact that there are theories out there that we can never, ever go bankrupt, that we could simply just print money and inflate or away out of the problem. But in and of itself, think about that statement, right? Like, oh, we're in such dire straits. We're just going to inflate our way out and financially depress every person that decides to own a fixed income instrument of any kind. That to me is the, wow, what are we doing here type moment for me?”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“To me, what's as nuts right now is not necessarily something I see on. Company balance sheets, it's really the leverage associated and the money printing associated with the central bank. And what we view as expanding the Fed balance sheet. What happened in March 2020, which I understand what we needed to do, but to effectively expand the balance sheet by three to four trillion dollars. To me, and still. Call the United States a AAA sovereign credit, right? To me, that's the baffling part now is that we've taken what I think for me.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Priceless. If you could go back and listen to there's a transcript, if you could get your hold of it, where he got very upset that the CEO at the time of IndyMac, Mike Perry, yelled at a young analyst. And Steve felt like he owed the community to, so he gets on the call. At that time, a loud buy side people on the call, which you don't really do that much anymore. And he effectively, he berated Mike Perry on the call.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Whenever City reported, he was like a kid in a candy store waiting to just put his simple balance sheet in and to see where the ratio was. And then, of course, he would go and call every single analyst and tell him about this stupid simple ratio. But it was so correct. They just did not have enough capital.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Unlike Vinny who models everything, he roll forwards credit and does all these great models, Steve really didn't do any modeling. He modeled two things. First was he modeled Citigroup's balance sheet. I think he just had leverage. He just did equity assets and something else. And then Deutsche Bank, towards the end, when it got bad, he started doing Deutsche Bank as well. But that was the only two things he kind of ever minded.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“Correct, and 50 to 1 leverage on assets. Collateralized by housing that were significantly overvalued. I mean, that's just so when you talk about bad actors, horrifically bad actors. So they needed to be penalized. It made all the sense in the world that the regulators did what they did. But as someone who invests in these companies, you could safely say to yourself, well, I really shouldn't be looking at these companies as viable investments after they reverted to a much more normal valuation.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“They behave. So badly to the point where it made sense. So when we think about walking into Great recession. One of the simple little ratios we looked at was a bank's capital relative to its asset size, right? Tangible common equity, as we like to call it. Forget about even the regulated aspects of Tier 1 and all the other Basel type of ratios. This is just simple balance sheet. The large banks had for every hundred dollars of assets they had, they had in the range of between $2 and $2.50 of equity.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“The Fed did such a bad job of supervision. Vinny and I had this running debate of who's the worst Fed president ever between Bernanke and Greenspan. And I always say Greenspan because he allowed all this mess to start to start with with the non-regulation of the financials. But after 08, they heavily regulated them. One of the tools for a company is the use of its balance sheet, right? You can, if you're a balance sheet intensive company, you can either shrink and buy back stock or whatever. But the banks weren't allowed to do anything. I mean, once a year, you know, finally, I think they got permission in like 2015 to maybe return capital or something like that. But, you know, they couldn't do anything. They couldn't return capital. They couldn't buy back their own stocks. They had to ask permission for the dividend. And they were, you know.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“But then at a certain point, then what you're left with are entities that are well capitalized, which is great, but they don't necessarily have great prospects for them going forward. Rates are low, credit quality is already snapped back, and the valuations have come to normal. Since that time, I would say for us, the financial services industry, the regulative financial services industry, the banks and the like, have been more trading opportunities as opposed to investments because they've become effectively utilities and words of the state, slowly but surely.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT
“And these stocks were trading at tremendous discounts to book value, tangible book value. So just on a simple risk-reward basis and saying, well, and at that point in time, Porter and I said, well, and you picked, I remember, you remember it by the months, you even remember some of the stocks that you chose going long, you chose the highest quality bank at the time US bank. I chose American Express. We wanted to go along them. And the view was, if we're wrong, then the whole world's over. Because if these things go under, nothing's going to work. And that's how low these stocks were relative to where they were and the like. And that's the initial reason why we got bullish on the financials at that point in time.”
2022-02-06 · Forward Guidance · The Next Big Short: The Debt Supercycle | Vincent Daniel, Porter Collins · IDENTIFIED FROM THE TRANSCRIPT