Value Investing, Videos

Jim Chanos On 10 Year Should Be 4% Right Now

Linette Lopez spoke with   Jim Chanos at the Nasdaq Market Site about the reintroduction of inflation to the market for the first time since the financial crisis, which is causing volatility unseen in years. Chanos also touched on Tesla, China, and what he refers to as “the rent-seeking behavior” of corporations.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

The following is a lightly edited transcript of the video.


Lopez: It's crazy because there are so many young Wall Streeters who have never seen a market like this. They've never been chained to their chairs. They've never been, you know, glued to their screens in the way they have to when the market is volatile. Do you have any advice for those kids?

Chanos: Well back in my day ... I mean no one wants to hear that. What Wall Street has benefited from among many things is basically a probably once-in-a-lifetime move in rates from 14% to basically 2% or 0% depending on whether you're looking at short-term rates. And we're not going to repeat that, I'm pretty safe in saying. So what Wall Street hasn't seen — with the exception of a few graybeards like Paul and myself — is high interest rates or rising interest rates for any sustainable period of time. And the big change will come when that changes. So I don't know if that's what's happening now. We'll see. But, you know, when you see things like Greece borrowing at rates lower than the US for two-year notes —

Lopez: It's a little wonky.

Chanos: It's a little crazy. And so things are happening in the credit markets that are making people a little uncomfortable. We've moved to almost 3% on the 10-year. But based on where nominal growth is right now — I mean with or without a rising CPI— I mean the 10-year should be north of 4%. So we're still in a very accommodative environment.


Read the full transcript here by Business Insider

Jim Chanos