In an interview to appear on FOX Business Network’s (FBN) Wall Street Week Friday, April 15 at 8PM/ET host Gary Kaminsky and fill in host Maria Bartiromo speak with Hayman Capital Management Founder and Principal Kyle Bass about his thoughts on the economy and 2016 presidential election. Bass said, “there’s a  40, 50 percent chance in the next year” we may have a “brief, minor recession.” When asked what presidential candidate he thinks is best for the markets Kass said, “I think it’s Hillary” and that “I think she’s the most sane actor of them all.” Kass also commented on China’s economy saying, “the interesting thing is it’s not the end of the world.  You know, we’re not going to have a Lehman moment on China.”

Kyle Bass: No Lehman Moment On China
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Kyle Bass on whether we should be worried about negative interest rates in the United States:

“I think this is where the academics are kind of, clashing with the practitioners.  I think on paper, negative rates make a lot of sense, if you’re running academic models.  But in the world, in reality, they make no sense. And so having $7 trillion or $8 trillion in debt, um, trading at negative rates, having 30-Year JGBs, uh, trading at 50 basis points is absolutely ludicrous. And so this experiment that’s going on, we all know will end poorly at some point in time.  I just don’t know when that time is.”

Kyle Bass on whether people should consider taking money out of banks because soon they may be having to pay the banks to leave the money there:

“I think one of the fears that they have is a run on cash, right.  If they told you and I that they’re going to tax your deposits by 100 basis points, well, it’s better to put it in a safe or under your mattress than it is a — and that’s why you see a resurgence in gold.  The more they move to negative rates, the more gold is going to take off, because there’s no carrying cost.”

Kyle Bass on whether he thinks Donald Trump is right that we might have a recession:

“Well, Donald Trump may be right for the wrong reasons.  Right, from the perspective of what’s going on in Asia, Asia has a giant credit bubble that they’ve been building for the last 10 years, or longer, that, has kind of reached its atrophy level and it’s going to happen over the next two or three years. So whether that causes the U.S. to have a brief, minor recession, I think it’s kind of 40, 50 percent chance in the next year, personally. Um, but the —  it doesn’t mean that slow global growth is going to lead to persistent recessions in the United States.  I don’t buy that. But I also don’t buy this — this idea that monetary policy can generate true organic growth.  It can help us out of a crisis and it’s proven it can do so, but, um, listen, we’ve had eight years of full out, excessive monetary and fiscal policy cyclically adjusted and here we are today. And so when Lagarde goes to the G-20 and says we all need to work together, we’ve been working together…Everybody has been on easing monetary policy.  We’ve pulled all the demand forward that we can.  And now we’re stuck with kind of stagnation and excess capacity and a lot of debt.”

Kyle Bass on who the best person for President would be for the equity markets:

“So I’ll give a crazy answer.  I mean I think it’s Hillary. “

Kyle Bass on Hillary Clinton:

“Yes.  I think she’s the most sane actor of them all.  And again, if they – might seek a — economics advice from me.  It’s a good thing that no one seeks political advice from me.  I — you know, I’m a weekend warrior, an armchair quarterback as far as policy is concerned.”

Kyle Bass on whether Hillary Clinton policies will hurt the market:

“Well, so on drug prices, you know, how can you not say that we should rein in drug prices when they’ve been — been able to freely charge whatever they want to charge annually? You know, in the last 12 months, that narrative has changed dramatically.  And that’s for the better for our country.  It’s for the worst for a few drug companies.  It’s for the better for everyone, uh, both you and I and — and anyone that buys prescription drugs, it’s better. So when I think about the three policies that you just discussed, um, raising taxes, I mean I — one thing you have to think about is this divide between the haves and the have-nots.  The one unintended consequence of Fed easy monetary policy has been this distributive nature of, um, of their policies, right, a distributive nature where it made the rich richer. How many rich people do you know today that are worse off than they were at the peak of 2006’s greatness in the United States? I don’t know one…Minus some of the Lehman people, you know, I don’t know one. And so what happened is we went to this policy where, uh, we went through — to, go to QE.  QE, what that did was raise asset prices.  Well, the only people with assets are rich people, in general.  So they became much more rich. So that divide widened.  So now we have this unintended consequence of — call it a liberal Fed — is they made that, that divide larger.  And so — so I think it’s a big — I think this is a big issue. So when you talk about raising tax, I mean it’s inevitable, I think, that we’re going to have to raise personal income tax.  I think we’ve got to cut corporate tax if we’re going to compete on a global scale.”

Kyle Bass on whether he thinks the Chinese market will slow down:

“You know, for those that say China isn’t having a hard landing we printed, in the fourth quarter, they printed 5.8 percent nominal GDP growth.  That’s the lowest quarter — the lowest GDP growth in nom — nominal terms in 41 years, OK.  They had a reverse migration for the first time in 30 years.  They — 5.8 million Chinese went from urban back to rural areas last year. So I don’t know what metrics or how you define hard landing, but they’re already right in the middle of a hard landing. Uh, and so when you look at what’s causing this hard landing, it’s analogous to what happened in the U.S., right.  In the U.S., in 2001, we traded the dot-com bust for the housing boom.  Greenspan lowered rates to 1 percent.  And then by 2004, we started raising rates, but then we had 100 percent LTD lending and subprime lending, and everything that went on during that — that pre-dated our financial crisis happened. The exact same thing is happening in China.  China has grown its banking system 1,000 percent in 10 years.  It has over $34 trillion of assets in

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