SkyBridge Capital founder and co-managing partner and FOX Business Network (FBN) contributor Anthony Scaramucci tells FBN’s Maria Bartiromo that “we are in a holding pattern” and that “people are still traumatized from the crisis.”
Anthony Scaramucci on sovereign bond yields:
“We had chairman Ben Bernanke yesterday, you had a collection of some of the biggest hedge fund managers in the world all super cautious about the long term bond yields, sovereign bond yields. I don’t know anybody in this conference that’s long those bond yields that far out in duration. Most of these guys are not going to short it because of the technical situation there. There’s still a lot of pressure on interest rates. I think one of the most compelling things that Dr. Bernanke said yesterday is there’s very little chance of inflation in the United States. He’ thinks we contained the deflation threat, but we certainly don’t have inflation. So I think we are in a state of this sort of holding right now.”
Anthony Scaramucci on the U.S. recovery and employment:
“I think there is some pressure in the wage situation still. Wages are up, but they are not up to where they need to be at this stage in the recovery. That’s a big issue for the United States. However, Dr. Bernanke did say something that I think is meaningful, since we implemented quantitative easing, our GDP is up about 8 percent in real terms. In Europe, they lagged us in their quantitative easing. They are minus 2 percent since the crisis. So there’s a 10 percent differential between the growth in the United States versus the decline in Europe. And I think that’s very telling too – they are way behind us and it’s not clear they are going to catch up and you can see that in German bond yields.”
Anthony Scaramucci on what he sees as the investment play:
“I just think we are in a holding pattern. If the Bund is trading right now at 76 basis points, it’s sort of like a 25 basis points to 115. That holding pattern is probably long term sustainable so you aren’t going to make a lot of money in that trade. I think where these guys are focused, for John Paulson it’s in the pharmaceuticals industry, for someone like Josh Friedman, he’s looking at distressed credit perhaps in the energy industry as some of those companies, because of the shock in oil prices, need to sort of restructure. Dan Loeb has a billion dollar stake in Yum, he didn’t even say that was an activist position yesterday, what he said was this is just great fundamentals. There’s possibly an opportunity to split the restaurant business in China off from the other businesses in the United States and European business. And so he sees huge opportunity to unleash value there…And so I think people are staying away from these low interest rate sovereign bonds and I think that they’ll stay away from then for the near term.”
Anthony Scaramucci on what’s driving persistent deflationary fears:
“Just remember if those rates are going up and they are based on real interest rates and not on inflation, that is very positive for the markets because that means there’s demand out there for that money. That corporations want to go out there, use that money and find successful things to invest in. So that would be very good for us. But we don’t see that either. One thing Dr. Bernanke said last night is that there is a secular low demand in these countries and that’s what’s driving the persistent deflationary fear. So we have to figure out a way to get demand up…People are still traumatized from the crisis. My personal view is that there’s almost like a post economic stress disorder that’s still taking place 7 years after the crisis.”
Anthony Scaramucci on the recent news that IRS employees evaded taxes:
“You know you’re not surprised by this story, none of us are. So that’s the biggest surprise. I think something really persistent here in the trust of the government and the average citizen. When you hear stories like this or you hear stories about people evading taxes inside the government…you’ve got a tremendous amount of distrust and that slows down the system as well. And don’t forget that we are 29 years away from our last corporate and individual tax reform. And so we’ve had 70-80 thousand pages of tax code that have built up since the last tax reform. People are going to spend a lot of time avoiding taxes, including the IRS employees.”
Anthony Scaramucci on recent comments Dan Loeb made about Warren Buffett:
“I like Warren Buffett, I have a huge amount of respect for him. Embedded in some of his commentary is a little bit of a disconnect with his actions and I think some of us are frustrated by that…He’s avoided taxes. He rails against the hedge fund industry yet he hires hedge fund managers, he himself had a hedge fund. So he just has an interesting point of view on these things. But I’ll tell you what, there’s not one person in this room who is a money manager that hasn’t learned something from Warren Buffett.”
