Famed activist short seller Carson Block pulls no punches as he takes aim at Canada, Jack Ma and the U.S. pharmaceutical industry in this interview with Brian Price. Block, who serves as CIO of Muddy Waters Research, discusses the red flags he looks for when hunting for fraud, and reveals which companies are currently on his radar. Carson also touches on how his line of work has led to both tremendous success and death threats. Filmed December 4, 2018 in New York.
Hedge fund manager Kyle Bass says a US-China trade deal can’t be reached
Hedge fund manager Kyle Bass is doubtful a trade deal between the U.S. and China could be reached and believes the Federal Reserve’s rate cuts are less effective these days.
“Every deal that the Chinese have signed up with us since their inception into the WTO since 2001, China never lives up to their promises,” the founder and chief investment officer of Hayman Capital Management said on CNBC’s Closing Bell on Thursday.
“At some point in time, one of our administrative officials is going to hold their feet to the fire and this is kind of a battle of cultures because the Communist Party doesn’t want to submit themselves to anything measurable or enforceable. I don’t think an agreement could be had,” Bass said.
American and Chinese negotiators will meet for face-to-face talks next week after the negotiations fell through in May. Treasury Secretary Steven Mnuchin said there are a lot of issues for the two countries to work out.
Investors are now betting that the Fed is going to cut interest rates at its policy meeting next week and that there will be more easing this year to sustain the record-long economic expansion. However, Bass said the central bank’s primary tool has lost some of its mojo.
“We believe rate cuts are less and less effective once you’ve been at a zero rate bound…They will have less efficacy. I think in early 2020, you are just going to see softness in the U.S. economy. We might have shallow recession, but if we do and we will immediately go to zero rates,” Bass said.
In such an environment, Bass recommends buying long-duration assets including long-term bonds and real estate.
“The best way to defend your investments in an environment like that is to buy long-duration assets, i.e. you want to own apartments, you want to own office buildings and you want to own long bonds,” Bass said.
He also said the U.S multinational corporations with high dividend yields will outperform. Junior preferreds of Fannie Mae and Freddie Mac is his “highest conviction position,” noting that they are trading below par.
Kyle Bass: China’s currency would collapse 30% to 40% if they stopped supporting it
Hedge fund manager and Hayman Capital Management founder Kyle Bass said on Monday that without state support, China’s currency would plunge.
“What’s happening in China is they have to have dollars to sell to buy their own currency to hold it up. If they were to ever free float their currency, I think it would drop 30% or 40%,” Bass told CNBC’s “Closing Bell.”
“And the reason is they claim to be 15% of global GDP in dollar terms, but less than 1% of global transactions settled in their own currency,” Bass added. “And so, they prop their currency up…everyone calling them a currency manipulator – they are trying to hold this whole thing together.”
Bass’s comments came after the Chinese yuan crossed a closely watched barrier against the U.S. dollar. The onshore Chinese yuan changed hands above 7 against the dollar, the currency’s weakest levels against the greenback since 2008.
The new lows for the yuan came after U.S. President Donald Trump unexpectedly announced fresh tariffs on Beijing last week that are set to take effect from Sept. 1. China on Monday said it could slap tariffs on U.S. agricultural goods that it bought recently, state-run media Xinhua reported.
Will a Currency Crisis Bring Down China? (w/ Kyle Bass & Raoul Pal)
Hayman Capital founder and CIO Kyle Bass is back. In this riveting conversation, he tells Raoul Pal exactly how, why, and when China’s economy will come unraveled. As China’s growth declines, Bass says that its currency is at the heart of a coming crisis. And with growth rates everywhere decelerating, he believes his China thesis is as relevant an investment thesis as any. Filmed on February 12, 2019 in New York.