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Detailed Recap of Kyle Bass on Bloomberg

April 09, 2013 | About:

For those who are at work and would prefer to read rather than watch the lengthy appearance by Bass on Bloomberg today, here is a recap:

- Bass made $500 million shorting the housing bubble and believes that his three-year bet against Japan's government bonds is going to be even better.

- While he isn't naive enough to believe he can predict the end of a 70-year debt super-cycle, Bass does think that we may be close to the "beginning of the end" for Japan.

- He started sharing his views on Japan in the middle of 2010 and believes that the stresses are now really starting to appear.

- Bass believes that the quantitative analysis is so obvious that everyone can see the fact that Japan is insolvent; what needs to happen to trigger the crisis is a change in market perception.

- When that change happens, he thinks it will happen very quickly

- Bass indicates that 90% of his portfolio is actually long things like structured mortgages, housing and U.S. stocks.

- His bet against Japan is structured so that he is risking losing 1% to 2% of his portfolio for the potential upside of 300% to 400%. It is a very asymmetric bet.

- Bass has long had a position in gold because all central banks have moved to an unlimited money printing policy. He is perplexed as to why gold is as low as it is.

- At some point in time he feels he will be rewarded for holding gold instead of paper; he views gold as a currency and not a commodity.

- He thinks if Japan goes as he expects. U.S. Treasuries could go to negative yields in a flight to quality.

- His long position on housing (mortgages) isn't a bet on housing getting materially better, but rather just not getting worse.

- From a historical perspective he thinks housing has bottomed as most housing busts take six years to wash out the excess.

- He thinks that Bernanke HAS to keep interest rates extremely low because the U.S. can't handle the increase in interest payments.

- Bass believes it is crazy to think that the U.S. can raise rates by 200 basis points which means that housing should do okay.

- When asked about activist investing he indicates that he isn't interested but is quick to point out that the big-name activist investors like Loeb and Ackman have very strong track records

Holy smokes, this is the kind of interview that the financial networks need to have more of. I could watch Kyle Bass all day long. Thoughtful, modest and no drama.

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Canadian Value

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