Kyle Bass, Hayman Capital Management, says rational investors are starting to sell Japanese government bonds.
Kyle Bass CNBC interview video and computer transcript below
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
holders of jgbs? again, it’s such a paradox. if the constituency believe fls the plan, which i think many people are believing. many are believing that the d.o.j. will be successful, or at least partially successful in generating some growth. then the rational investors will sell only bonds. there’s a quadrillion yen of bonds out there. it doesn’t look like the plan is big enough. so what happens from here? do you believe they will increase the plan in order to bring rates down as opposed to watching them go a bit higher. it looks like the d.o.j. had to be in the marketplace every single day trying to buy bonds to hold rates down. every day but twoe since april fourth. i think they are to make the plan bigger. kyle. youfl been talking about this for some time. the debt is 24 times the annual revenue. but in terms of your investment approach. what are you doing? where are you? what do you recommend to the viewers following you? i think the press has our ideology wrong. that’s not exactly true. the way to heaj a global portfolio, and we inves all over the world. the way to hedge from a systemic risk or sovereign risk is to try to find the most convex or optimal investment you can find and yes, we have positions where we are short yen. we also have positions where we have hedges against japanese rates. we’re not making a lifetime bet on japan’s failure. we’reing our bets. just like everyone that is short yen, yes, we benefitted marginally from shorting the yen. that’s [email protected] so far. well, one thing i don’t believe you have done is gone long on the nikea. those who have, despite the sell yn off last night. they seem to benefit and the betleef that the economy will get going in part spurred by larger exports for the major japanese companies? yeah, you know, when you look at japan, it looks to me like the industry has been hollowed out. and then to the u.s. manufacturing business getting hollowed out in the late ’70s and ’80s. they are exporting jobs because of the strengthening yen. so i think the weakening yen f you look at the balance, you see exports moving up 5% year over year. imports moving up 3.5. they still have a balance to payment deficit even after they strengthened from the lows. i don’t think — i’m sorry. weaken from the lows. i don’t think it’s the panacea that equity investors think it is. i think the people who have brought into the nikea, i refer to them as macro tourists. i think they’re renting the stocks. they’re not really owning them. there are well known investors. you know him well. a friend of yours, who disagree on paper, at least. he has taken out large resistance because he thinks they can bring japan back to leadership and the the economy to one that regains symbolance of growth. i do this it will generate growth. especially on the front end. taking the pulse of people who run companies over there and investors, it seems to me that many of them do believe that omninomics will be slooes partially successful. we think gdp growth at 3.5% this year. so i think dan’s going to be right about the front end and he is one of the greatest investors out there. so i think he’s going to be able to, at least partially become successful with the sony investment. in fact, he probably already has. but i do think that it is not the panacea. just weak yen doesn’t equal higher stocks. i think you’re going to see things get delineated from companies that will benefit. let’s say toid. some of the manufacturing companies that still have businesses on the continent, or on the island. and many businesses are just going to continue to move south. in a secular trend. so i think you’ll see things here in the next six months. kyle, as always, we appreciate you taking the me. of course, given all the volatility in japan, a story that we are following closely. kyle bass, thank you. thank you. great interview, david, does