China’s Currency Cliff

Published on
March 1st, 2019
Duration
46 minutes


China’s Currency Cliff

The Interview ·
Featuring Kyle Bass

Published on: March 1st, 2019 • Duration: 46 minutes

Hayman Capital founder and CIO Kyle Bass is back. In this riveting conversation, he tells Raoul Pal exactly how, why, and when China’s economy will come unraveled. As China’s growth declines, Bass says that its currency is at the heart of a coming crisis. And with growth rates everywhere decelerating, he believes his China thesis is as relevant an investment thesis as any. Filmed on February 12, 2019 in New York.

Comments

  • KS
    Kathleen S.
    23 May 2019 @ 13:53
    What about the Theory that China manipulated it's currency to make it appear more valuable than it actually was - in order to trade for USD's, it then took these dollars through it minions (posing as "capital flight") and used them to drive up asset prices around the world. Now Xi Jinping - can press the sell button and burst these bubbles - which will devastate Western markets.
    • KS
      Kathleen S.
      23 May 2019 @ 14:07
      Raoul asks where are the "outflows" --- Kyle says they are illicit capital flights that are going unreported?
  • my
    markettaker y.
    4 March 2019 @ 03:32
    The next trade he's talking about is obviously gold right?
    • AM
      Andrew M.
      4 March 2019 @ 10:56
      probably HKD or Yen. I'd imagine both would have to follow CNY down. the HKD peg looks particularly vulnerable and their property market is shot, while China is Japan's biggest trading partner (and export destination).
    • KJ
      Keith J.
      4 March 2019 @ 11:40
      It was mentioned as South East Asia specific, so I'm not sure he was talking about gold. More likely the other currencies or some variation I suspect.
    • DT
      Delvix T.
      4 March 2019 @ 21:13
      If it is SE-Asia specific, could it have something to do with Singapore real estate? Or is he betting against the HKD peg?
    • TZ
      Tibor Z.
      6 March 2019 @ 02:34
      Call me blind but I don't see anything out there undervalued other than gold! At some point all this market manipulation and debt will explode the world and we are getting closer!
    • MW
      Marcus W.
      7 March 2019 @ 11:11
      Have to be short CNY or HKD? Long USD, and maybe gold?
    • RE
      Russell E.
      9 March 2019 @ 03:15
      Short HKD is Kyle's primary trade.
    • BL
      Brian L.
      25 April 2019 @ 23:06
      I was thinking the same thing. That's China's tangible ace. The rest is all crap they can fudge-lie about being a neo-totalitarian sovereign.
  • SD
    S D.
    19 April 2019 @ 03:06
    Hi Raoul I've been listening again to Bass's interviews on China during some long drives I've had to do and I think they're really significant. I'm referring to his interview with you on the currency, and also with Bannon - and it's shocking that Bannon's world view is so poorly or little understood because it's compelling, logical, and convincing. But I have two questions: 1. How do projections for the gold price play into Bass's view that an impending dollar shortage is going to cripple China. Surely they will have anticipated precisely what Bass is expecting, and they will have a mitigation strategy designed to exploit the situation, above and beyond what you two refer to - opening up their financial sector to shove a bunch of bad debt on to America's balance sheet. We don't know how much gold they have, but we do know they have masses and continue to acquire more. Why then, are countries like Canada and the UK failing to shore up their own reserves? Would a gold buying program by either of these countries be seen as somehow disloyal to the US, and the US dollar? What is the rationale for a refusal to insure a nation against currency disruption by at least having some sort of commitment to bullion of various types? This all strikes me as profoundly political, because it's so essential. 2. You seem to imply that the impending dollar shortage you've been talking about now for nearly two years may be politically motivated a la Russia. Is this correct? If so, can we please hear more about this. And about anything at all to do with expectations of how China anticipates any type of movement towards convertibility, which you guys believe is inevitable, for sound reasons, seems like. This all just strikes me as stupendously important. You have provided really essential context on these issues. Please continue to pursue this issue, it would be appreciated greatly.
  • MS
    Matt S.
    6 March 2019 @ 21:13
    Great talk but man, I wanna hear what this asymmetric trade is before it's too late to get involved!
    • GS
      Gordon S.
      11 April 2019 @ 10:46
      CNH or HKD shorts (vs USD).
  • JB
    James B.
    4 April 2019 @ 01:18
    Unbelievable interview. I sent it to everyone I know. Can anyone point me in the right direction on what trades make the most sense given Bass's thesis on China. What is the best vehicle to short the currency?
  • BB
    Brooks B.
    1 April 2019 @ 18:44
    Amazing piece, can't wait for the follow up!
  • nd
    nicolas d.
    18 March 2019 @ 10:05
    Can we get a piece from Raoul on his Aussie view?
  • GB
    Grant B.
    15 March 2019 @ 20:26
    Very good. Thanks. Can mainland Chinese subscribe to Real Vision?
  • sT
    sid T.
    15 March 2019 @ 07:50
    sorry for using this language, but no other way to put it. Kyle has balls of titanium, going against china like this. I follow him on twitter, and it is amazing how vocal he is about china. to my mind he is a hero. thanks RV for this interview. it is gems like these that make my subscription worth it.
  • IA
    Ibrahim A.
    2 March 2019 @ 03:47
    Some remarks and questions: 1. Tax rebates on auto purchases expired at the end of 2017. There is bound to have been some front loading of purchases that has had an exaggerated impact on auto sales in 2018. Yet there was no mention of this. 2. China changed the regulations for second hand auto sales in 2019, allowing for the first time the sale of a second hand vehicle from the city / province it was registered to be sold in another city province. This has resulted in a booming secondary market. 3. A number of major cities with high levels of congestion and air pollution, such as Shanghai, have made getting a license plate as expensive as a car and extended the time to get a number plate / the ability to participate in an auction to get one to contain auto congestion. They have (I think in 2017) also stopped accelerated number plate issuance on purchases of electric vehicles. 4. If we take out auto sales, consumption is not down but up across the majority of categories in China - autos make up a very large portion of total consumption given the ticket size. 5. How does Mr Bass reconcile, the fast growth in China's oil imports with a slowing economy? And how does the growing imports of oil remain in its secular trend if the economy is going to slowdown / go bust? And how is it that a fiscally constrained China is able to purchase ever increasing amounts of oil? 6. Towards the beginning of the interview Mr Bass mentions China's problem is its need for resources. Later he mentions that Chinese foreign assets consists of Sri Lankan ports, Ugandan mines, etc. which are not as fungible as Japan's holdings of liquid international assets. However, if these mining and shipping assets reduce China's need for dollar based purchases of commodities and provide a captive resource, is that not a good thing for China? 7. The chart of the CNH volumes and precious stones purchases were shown as an indicators for record high capital outflows. How does Mr Bass reconcile them with the usual hot spots for Chinese outflows such as Hong Kong, London, Sydney, New York, and Vancouver real estate being in a funk? 8. For Mr Bass's trade to go wrong (which he has been wrong on for at least 4 years now) the US dollar does not need to lose reserve status nor does the CNY have to be ascendant. Rather, nothing has to happen i.e. the status quo remains in place and his trade does not work. I understand that Raoul is sympathetic to Mr Bass's view on China. However, given how well researched Mr Bass is, it was a real shame that Raoul did not challenge him more - or at all actually.
    • IA
      Ibrahim A.
      2 March 2019 @ 03:48
      For point 2, 2018 not 2019
    • DS
      David S.
      2 March 2019 @ 06:38
      Well said. DLS
    • SB
      Sunil B. | Contributor
      2 March 2019 @ 15:52
      On point 1) the rebates related to smaller engine size only. (most foreign are not in this segennt and have suffered most as mid and luxury sales have dropped) And the latest figure is for Jan end, so it like for like comparison The weak exports to China from Japan, Korea and Taiwan are not encouraging and show a marked slowdown in manufacturing and export orders. Imports from HK have fallen as well. Nearly an RMB 1 Trillion was raised by the local government in Jan-Feb to invest in infrastructure which is not encouraging as it shows private investment demand is low. A large part of social financing was short term, bonds, and equity financing The oil imports point is valid but tricky as China buys more oil during weakness to build reserves. Mining assets don't eliminate the need for USD as it is unlikely to host country lets them pay in RMB only. Hong Kong is a critical first touch point for capital outflows, not others Status quo is likely if the current account stays in surplus Well my 2¢
    • BH
      Bin H.
      2 March 2019 @ 21:38
      @Ibrahim A. I would like to try to rephrase your question. You are saying 1. China is not slowing down by a number of readings. 2. China still has plenty of ability to manage the currency. As to your first point, I totally disagree. Car industry was in a big recession, the price of HRC plummeted last year. The increase import of oil is simply because the oil price is low. It is a monopoly business by state owned company. When crude oil price drops massively, the gasoline price at sale only drops a little. It is a great time to buy for profit. As to your second argument, it is very complicated. My question is if something is to happen, why would China try ever best to protect its currency? My point is If things are under control or seem under control, they will do it for structural interest. However, when things are going bad or really bad, it is a different story.
    • IA
      Ibrahim A.
      3 March 2019 @ 02:09
      Not saying China is not slowing down - there is plenty of data suggesting that it is - nor am I saying the short CNY thesis is wrong. Just trying to ask probing questions and to challenge the thesis for robustness.
    • TZ
      Tibor Z.
      6 March 2019 @ 02:43
      For point 5 : What he said is yes, they import more crude from abroad so China burns more in FX reserves. They have to pay it in dollars. And the fact that China imports more it doesn't mean they consume more. We would have to know if China's own crude oil production is steady or slowing. But I got your point. Unfortunately there is no way they don't slowing! I checked all the forward looking economic indicators recently. All numbers are negative YoY! US,Germany and so on. And if Germany negative, China too!
    • MP
      M P.
      7 March 2019 @ 13:10
      On points 5 and 6, this is literally part of my job. On five, China's domestic oil production is mature and declining fast. The rapid decline you saw post-2014 was when the oil price collapse coincided with Xi's anti-corruption crackdown, freezing decision-making and spending for the three big oil companies (PetroChina, Sinopec and CNOOC). Its really challenging to raise output now because the companies did not spend enough between 2014-18 and the reservoirs are what they are - you can't run them forever, they will eventually enter structural decline (which is where they are now). So China pretty much has to import more and any increase in investment to get oil production higher - gas is a very different story - will only be seen in 3-5 years. On six, you're right - they reduce the requirement for imports. But the crux is that their production is either relatively low vs global capacity or not enough to keep up with rising demand for specific goods, like lithium for example. The production is simply too low, and in a cash crunch you'd want to sell them quick (like the Japanese could). The other issue is that the overseas holdings generally tend to be of lower quality to will command either a discount to 'real' value of a port, or will require a strategic buyer to buy it at fair value (of which there aren't many, with the exception of a few Middle Eastern companies). Japan, on the other hand, tended to go on a very high-quality spree.
    • AL
      Alexander L.
      14 March 2019 @ 22:38
      If you review Vancouver real estate valuations from Canada Mortgage Housing Corporation(CMHC), the CNH volumes chart corroborates perfectly in Vancouver, with a 20% value appreciation of real estate, in all categories.
  • SA
    Stephen A.
    14 March 2019 @ 00:04
    What changed in 2015? The FED started raising rates. That is the same thing that broke the US markets in 1870s. London at that time (center of global finance) raised interest rates and all the money went there to collect interest crushing the US stock market. Same thing here. By raising interest rates, US suffocated all the capital out of China.
  • AL
    Albert L.
    13 March 2019 @ 19:13
    Any ideas what this big South East Asian idea is?
  • TZ
    Tibor Z.
    6 March 2019 @ 02:54
    DXY has a 56,7% weighing in EUR. So it is inversely correlated most likely. What we have to ask is where will be a worse situation Europe or USA. USA: Debt EUROPE: Greece, Italy,Spain, Portugal, even France is in huge debt, BREXIT, Italian banking sector and spanish, euro scepticism, populist movements. I would say USD goes higher, EUR goes lower.
    • DD
      Daljit D.
      10 March 2019 @ 18:45
      What about the FED vs ECB and how that is priced today. If this is end of cycle, The Fed's much larger ability to ease (rates and QE) vs the ECB could mean for a stronger Euro. I'm also surprised Kyle and Raoul don't mention how a dovish Fed and subsequent weaker dollar could push back their China idea further than they anticipate.
  • VS
    Victor S. | Contributor
    1 March 2019 @ 22:46
    All good.... thanks but here is one point.... Europe in recession 100% so the EU goes down to par. The dollar has to be pushed down also ....the fed has to to do this ... .gold up , stocks down ,bonds up as the Fed lowers rates? That is my take away? The dollar will still be the reserve currency but it has to decline as the products around the world go on a 10-15% sale . Trump will force this issue.
    • BH
      Bin H.
      2 March 2019 @ 00:11
      Great view! If that happens, will China lower rates more than US?
    • DH
      Daniel H.
      2 March 2019 @ 04:43
      No way everybody can devalue. It is all relative, and the dollar will be (for a while) much stronger. The dollar deval comes later.
    • RE
      Russell E.
      9 March 2019 @ 05:26
      Despite any effort to devalue USD, what other currency would you rather own?
  • GC
    Gary C.
    2 March 2019 @ 01:18
    One large omission in this discussion , and I suspect it was intentional, was the Chinese plan to be able to print RMB for the dire need for commodities, especially oil. This issue has been elegantly described by Luke Gromen, on Macrovision,You Tube, and his recent book “Discussions with Mr. X. The thesis, briefly is the Chinese want out of the dollar mandate to buy commodities, so they know few commodity producers will accept RNB. The Chinese will offer producers of oil the option of trading RNB for Gold at the SGE. The gold will be traded in Shanghai, but the gold will be sourced outside of China. this maintains their grip on all the internal gold in China, and avoids the need to “close the gold window” as Nixon did in 1971.
    • BP
      Byron P.
      2 March 2019 @ 18:22
      Luke is wrong. He misses several steps before they could print RMB for oil etc, effectively defining the yuan as the reserve currency. The oil and gold contracts in yuan are only to help free float the currency and open their capital account. This allows their bond market to develop over time as confidence in the currency grows. It is still a while from that occurring. In the meantime, China will devalue and the dollar will go to all time highs. China and EM will fail this year, 2020 will be Europe, 2021 will be Japan, and then finally the FED will print.
    • DS
      David S.
      5 March 2019 @ 09:13
      Byron P. - China is and has been buying oil in Yuan from Russia at a very long -term low price. DLS
    • RE
      Russell E.
      9 March 2019 @ 05:25
      What would a raw materials producer do with Yuan?
  • GT
    Graham T.
    2 March 2019 @ 13:34
    OK I admit it, I am a bit of a tart and I drift in and out of RV videos and the print stuff (I was an original subscriber so don't shoot the messenger). Just occasionally, when my mind is drifting,I think, mmm Kyle Bass, I think I will listen (Chelsea are losing anyway so I don't want to listen to 5 Live) and WWWOOOOOWWW , WTF (as the Yanks would say). Let me play that again, did he say that?
    • RE
      Russell E.
      9 March 2019 @ 03:18
      I tend to multi-task too :p
  • BJ
    Brendan J.
    2 March 2019 @ 15:15
    Can someone tell me......... Raoul is describing the knock on effects of lack of trade with China and the Euro and the AUD falling... What levels would we be likely seeing in those currencies ? I remember Grant predicting about 0.40 in AUD if Im not mistaken.....
    • RE
      Russell E.
      9 March 2019 @ 03:18
      As an Aussie I just can't wrap my mind around the AUD at 0.40. I am short AUD but 0.40 is too crazy. We are a triple rated economy with large raw exports and Current Account Surplus.
  • BM
    Bruce M.
    8 March 2019 @ 00:43
    He never talks about all the real stuff they sell though
  • CD
    Christine D.
    3 March 2019 @ 04:43
    Regarding Australia: I live and work (in the construction industry) in Sydney and it is true that the media is full of negative news on the residential property market and it is true that new building approvals have slowed down. Banks made it harder to borrow to slow down the boom a little bit and they can switch it back on when they want. On the other hand, however, the media does not mention that the biggest ever commercial construction boom (not to mention infrastructure) is happening in Australia (at least in Sydney) at high double digit growth yoy. So overall construction industry which is 10% of the economy in terms of employment is growing strong. Furthermore I looked at data from the last 50 years on residential property prices and the recent boom has been nothing spectacular on a 50 year horizon so I fully expect the property market to start going up here in about 1-2 years. Now is a good time to buy for sure. Regarding the AUD USD exchange rate, honestly, should we aussies care too much? Maybe we will buy less Teslas for a while.. It would be great if someone responded and challenged my points with some more specific details about Australia for my learning. Thanks a lot.
    • CD
      Christine D.
      3 March 2019 @ 04:47
      One more point, I agree if the 50 year long trend of interest rate decreases turned and rates would go up to lets say 8%...then yes, everyone here down under would be @#$@d...but even Raul Paul said previously that he does not expect that trend to be broken and I do hear that the RBA (Reserve Bank of Australia) is considering rate decreases. So all this underpins a continuation of property price trends from the last 50 years which is 4-8 years of strong growth and 1-3 years of 10-15% correction. Overall 7% return CAGR over 50 years.
    • PC
      Peter C.
      3 March 2019 @ 05:20
      a 7% CAGR for real estate in Aussie is high relative to the rest of the world. i also think the lower returns for real assets has to do with the ease & commonalty of using leverage.
    • BM
      Beat M.
      3 March 2019 @ 08:36
      exponential growth?
    • FG
      Flavio G.
      3 March 2019 @ 08:45
      The sky is the limit! You sound young.
    • BM
      Beat M.
      3 March 2019 @ 09:13
      you never win an argument until they attack your person.
    • BM
      Beat M.
      3 March 2019 @ 10:07
      You might have a 7% CAGR, a doubling in the last 10 years, but if you look at the AUD/XAU, you lost 100% in the last 10 years. So, in 2029, 14 trillion AUD residential market, AUD/XAU 3600 oz?
    • JH
      Jonathon H.
      4 March 2019 @ 00:56
      Christine I also live and work in Australia and will try to add some colour here. Australia's big problem is too much household debt, which has gone into property due to record low interest rates. For arguments sake let's call this a bubble. This has provided tremendous speculative gains for property holders over especially the past 20 years. The problem is that housing is not a productive asset and a return needs to be generated to pay the loans off. In a rising market this is not a problem, but as you point out prices are now falling pretty steadily. If you look at leading indicators on the Australian economy they are terrible and suggest a sharp contraction in growth, which is needed to pay off debt. Bank loans are dropping fast and learned individuals would argue that is the sound of air coming out of the bubble. The other problem Australia has is a twin deficit which has to be funded (as discussed in China's case here). The stress will be borne by the currency as Raoul notes. Sadly it is not just Teslas but your clothes, watch, handbag etc. that will rise in price as Australia has no significant manufacturing base left. A drop in the currency will lead to a rise in inflation and a drop in living standards (as we are poorer on a global measure). Finally we are about to elect a government that will perform a textbook economic experiment. They plan to increase taxes on income, capital and housing whilst significantly increasing government regulation. This will probably not be helpful to the economy. We may see property prices take off again and you are right over the long term, but remember your return is dependent upon the price you pay. I hope you can see Australia has some real challenges ahead over the next few years and I am not sure we have the ability to meet them. This is briefly echoed by Raoul and Kyle above. Be careful out there!
    • DS
      David S.
      4 March 2019 @ 06:04
      Australian and Aussies are great. Every country has many problems to solve. I think that Australia will pull through better than most. Good Luck! DLS
    • BM
      Beat M.
      4 March 2019 @ 07:54
      I admire your „chin up“ attitude, you will need it. Australia didn’t so much pull through, it was more a drag out by China. Should AUD fall to 0.4, causing inflation (as described above), forcing your National Bank to counter with higher rates, foreclosures would go trough the roof. It is not going to happen IMO, some form of statism, freezing, markets, debt jubilee, MMT etc. will slowly bleed you/us to right size, compared to the much bigger, younger, more wanting nations (China, India)
    • PS
      Paul S.
      4 March 2019 @ 10:21
      lol
    • RM
      Robert M.
      5 March 2019 @ 22:55
      Beat: How did you calculate AUDXAU down 100% in last 10yrs? My calcs are AUDXAU down 32% in last 10yrs but at 3% annual interest on cash, which is 34% over 10yrs, AUD is ahead of gold by 2%.
    • NI
      Nate I.
      5 March 2019 @ 23:22
      Commercial has long lead times so you won't see the housing slowdown in real-time. Dwelling approvals are trending down after a 3 sigma deviation higher. The massive growth in housing loans looks very similar to the US debacle in 2008 - except in Australia, it is concentrated in 4 banks. I guarantee the government will print to keep them from collapsing as defaults begin to mount. Australian household debt to income ratio has now surpassed the US peak in 2007. If nothing else, this is a giant red flag screaming bubble. Clearance rates have a definite negative slope for the past couple years. I could go on-and-on, but the bottom line is that bubbles always burst and you are in the early phases that will move into the commercial arena in due course. By way of disclosure, I'm short the AUD versus USD. Even after the 10% decline this year (my 10% gain), I think there is still room for it to run and my short is still open.
    • MW
      Marcus W.
      7 March 2019 @ 11:47
      Some great points in here @Jonathon. 1. Firstly, 50 years is far too short. You need to go back to data available since 1880. 2. 400,000 households in Australia are already negative equity. - They'll be mailing their keys back or holding on. 3. 500 Billion in interest only housing loans are due to reset to P&I over the next 3 years, roughly 200B per year. Payments will double as prices are already falling. Will they pay double the replayment or just default. I'd say they'll just mail the keys back. Quite simply it is impossible for Australian housing prices to continue to rise in the next few years without growth in credit supply. Private debt to GDP in Australia ais 60% higher than that of the US. It's simply not possible for Australian households to take on more debt. Even if they could it's not available due to the Royal Commission and crackdown on lending criteria. Australian household debt to income is 230% at last count. The highest in the world. There's also a lag of 6 - 9 months for this to take effect in the broader economy. Unemployment will now begin to rise creating a downward spiral. There's absolutely no possible way for houses to increase in price from now. And not within 2 years. If I'd say about 2021 - 2022 but who knows. The market has been in a bull run since about 1992 and I noticed I just couldn't get houses to cashflow from about 1996. With P&I loans. Not using interest only to make the numbers work but a proper cashflowing investment. My current trades: 1. Bendigo Bank has the largest portfolio of Interest only loans. My prediction is they go out of business or are bailed out. I'm short (BEN). I'm short Commonwealth bank (CBA) - I'd short the All Ords but my S&P trade covers that. 2. I'm short AUD over the USD from 69.8 which will open up 60. 3. I'm short the S&P 500 from 2800+. And DJIA 26000+. 4. I'm long JPY over USD, though I could be wrong here. 5. I'm long Gold and Silver, especially over the AUD. Since metals are traded in USD. 6. I'm short the Australian housing market and now own nothing. I've been looking forward to this for a very long time. 2008 was fun but this is even better. I've never seen so many opportunities to be short in so many markets. It's like which ones do I choose. So far I've shorted CNY in negotiating my export contracts in CNY as when priced on payment in USD terms they will be far lower. My products will become cheaper in China based in CNY and settled in USD. I've pegged all our prices and production in CNY. Let's see how this goes. A great watch is this video which simply and clearly explains what's coming. https://www.youtube.com/watch?v=w8fCmUbjDtg Australia, Canada, South Korea have it coming. US debt levels are far lower though corporate debts levels are massive. US is in far better position in general though. My safe haven with be USD mostly. Happy trading.
    • RE
      Russell E.
      7 March 2019 @ 12:16
      You should talk to some bankers. APRA clamped down on lending practices before the Royal Commission and now banks are even more cautious. Loans are being refused and approvals times drawn out. Property listing numbers are the highest they have ever been as more listings stay on the market longer. This will be a catalyst for depression in Australia led by falls in residential real estate.
  • HH
    HODL H.
    3 March 2019 @ 17:31
    How do viewers get this presentation?
    • RE
      Russell E.
      7 March 2019 @ 12:13
      Register with Hayman Capital.
  • HO
    H2 O.
    3 March 2019 @ 20:19
    This came across like a Rickardsesque infomercial selling CNY/CNH shorts. This is where a little bit of push back from RV interviewers would provide a lot of value. Should ask some good follow-ups instead of fawning over guests. I think they can take it.
    • CC
      Chris C.
      4 March 2019 @ 10:13
      Hard to push back when Raoul totally agrees! And may even think it’s worse than what was discussed.
    • HO
      H2 O.
      4 March 2019 @ 16:43
      Hence the infomercial moniker. KB knows too little about Chinese politics for an echo chamber approach to provide real value for viewers.
    • AM
      Andrew M.
      6 March 2019 @ 10:54
      Is this h20 from h20 asset management? if so, you should ask RV to do a rebuttal. i don't think a deval is imminent. they will do anything to keep the wheels on ahead of 2020, the 100th anniversary of the CCP. but respected China watchers - such as Enodo - say the chance of a Minsky moment (which would be accompanied by a deval) in the next few years is pretty high. they will have to take a huge hit to GDP to recap their banks also. Zhou Xiaochuan said so himself. Not sure what he has to gain by saying that...
    • DC
      Dan C.
      7 March 2019 @ 05:04
      I think you make a very good point. I agree with the data and conclusions put forth but it would've been good to hear (well researched, valid, substantive) counterpoints or challenges to the data. This was a very good conversation and it flowed well so challenges would've stopped the flow but... it is good to hear the opposite end of the story from the interviewer sometimes too.
    • RE
      Russell E.
      7 March 2019 @ 12:13
      If they are about to start running CAD then it's only matter of time when the USD reserves run out. Who wants Yuan?
  • JS
    Jason S.
    4 March 2019 @ 01:38
    Didn’t he say Yen was going to collapse awhile back?
    • RG
      Raymond G.
      4 March 2019 @ 05:40
      correct
    • IP
      IDA P.
      4 March 2019 @ 20:08
      IT WILL
    • MW
      Marcus W.
      7 March 2019 @ 11:09
      Did he? Thought the Yen would do well in time of crisis. I'd want to be long one of these but which is better? Agree USA is far more stable. Perhaps I should be moving into USD.
  • MS
    Matt S.
    6 March 2019 @ 21:09
    Populism is not ugly, it is a beautiful thing to behold :) Down with the EU tyrants.
  • MS
    Matt S.
    6 March 2019 @ 21:05
    lol... I just realized Raoul looks like a handsome Ben Bernanke!
  • MS
    Matt S.
    6 March 2019 @ 21:00
    (((Foreign agents acting on our soil))) - reminds me of another group.....
  • SD
    S D.
    6 March 2019 @ 17:55
    Hope he's right. Let's hope that the Oval Office and Congress deliver proper payback. Or will the West, once again, lose its balls and insist yet again on snatching defeat from the jaws of victory? Presumably, Lighthizer isn't the lightweight Stockman seems to think he is.
  • CG
    Christopher G.
    6 March 2019 @ 13:57
    Do US oil exports take away from global US dollar supply?
  • JB
    Jake B.
    6 March 2019 @ 09:06
    Absolutely Brilliant. Two macro minds we can’t get enough of. Look forward to part 2!
  • RR
    Robert R.
    6 March 2019 @ 05:13
    Wow, amazing conversation. Gotta figure out the best trade here. Kyle, I love your presence on Real Vision, keep sticking around!
  • TZ
    Tibor Z.
    6 March 2019 @ 02:30
    And what about investing in CHF? Could you guys do a video on currency risks? Thank you!
  • TZ
    Tibor Z.
    6 March 2019 @ 02:28
    Guy, I think you gonna laugh on this but back in the day, early 2016 I bought a truckload of gold mining stocks! Now the funny thing is that I am European and I wanted to buy them in EUR and "accidentally" I bought all in the NYSE in USD....not thinking about the foreign exchange currency risk!!! :) Up till recently I thought okay, I am going to have gains on the mining stocks but when I am going to change back my dollars to euros I might gonna loose 30-40%. I learned recently that I might just accidently nailed it! LMAO :D
  • DT
    Delvix T.
    4 March 2019 @ 21:14
    I would love to watch a discussion between Kyle and someone like Louis or Charles Gave on China.
    • JL
      Jim L.
      5 March 2019 @ 04:12
      and Kiril from 13d
    • GN
      Guilherme N.
      5 March 2019 @ 23:51
      Agree! Tweeted this suggestion a few months ago. Would be great to see this happen!
  • NI
    Nate I.
    5 March 2019 @ 23:32
    Great interview Raoul. Kyle is so right about China. It didn't come up in the interview, but China also exerts huge influence in Hollywood (in addition to the "think tanks", media, etc that were mentioned). I wish American business leaders would set aside their greed for the sake of keeping our Republic.
  • RF
    Ricardo F.
    5 March 2019 @ 17:28
    Epic!!!
  • JB
    Jason B.
    1 March 2019 @ 21:40
    Jim Rickards has said, according to his research, that approximately $2 trillion dollars of China's reserves are totally illiquid. $1 trillion is fully committed to the One Belt One Road project and the other $1 trillion is in hedge funds/private equity/additional sovereign wealth funds. If Kyle Bass is correct and Jim Rickards is correct, then China is close to insolvent then?
    • DS
      David S.
      5 March 2019 @ 09:18
      China is and will continue to be solvent for a long time. Mr. Bass is and has been wrong in this trade. Mr. Bass is smart and thorough, but he is looking at China as a corporation and not as a country in complete control of its decisions, at least for now. In addition, The Trump administrations wants a lower dollar and a stronger Yuan. Go figure. DLS
  • JL
    Jim L.
    5 March 2019 @ 04:06
    Excellent as always from Kyle. I'm a bull on Chinese equities but these stats and numbers are very interesting.
    • JL
      Jim L.
      5 March 2019 @ 04:12
      Not sure if he mentions in the last 15 mins as i had to cut it short but I guess the MSCI up weight will give them a lot of time to breath?
  • gg
    georgy g.
    4 March 2019 @ 20:47
    For China bulls get Michael Moritz from sequoia VC
  • gg
    georgy g.
    4 March 2019 @ 20:43
    Kyles view is always interesting but would be good if Raul and Kyle both covered the following: 1) China is very much unlike Tu and Argi in that it does not have as much External debt this provides for important flexibility and removes important pressure point; 2) Markets historically look 6-9 months fwd and all that negative data will have much easier comps in q3/q4, so the data will start improving and that’s need to be taken into account; 3) Chinese banks could be recapped at least partly thru other means one is foreign money and two is other instruments such as recently introduced perpetual bonds. It is unclear to me whether there is real trigger point right now in China
  • SH
    Stephen H.
    4 March 2019 @ 20:41
    HKD. Kyle mentioned it last time he eas on RV. HK/China burning through reserves to maintain for little benefit. Small downside risk?
  • IP
    IDA P.
    4 March 2019 @ 20:39
    how they survive? they all implement capital controls and fiscal stimulus
  • BH
    Bin H.
    4 March 2019 @ 18:32
    Is China currently net long or short dollar?
  • SG
    Steve G.
    3 March 2019 @ 17:37
    Montgomery Burns meets Queer eye for the straight guy. Kyle shuffles through his stack of papers while answering questions coming across as psychotic. Perhaps the China trade has finally made him lose his mind. This was just sad.
    • JC
      Joe C.
      4 March 2019 @ 17:39
      I know right I hate it when people back up their theses with research charts facts and data.
  • DF
    Dominic F.
    3 March 2019 @ 11:36
    Thanks for this interview Kyle and Raoul. It is so hard to know what is going on in China it is great that Kyle is shedding some light on it. My question is: Is it possible/plausable for China to 'recall' all those 'Capital Outflows' at some point with the co-operation of nation states like Australia and Canada? Maybe these 'outflows' can no longer be traced so the ones that got out were the lucky ones. Or Maybe Xi wants to repatriate these funds from Australian and Canadian housing for example? Thanks.
    • DC
      Dave C.
      4 March 2019 @ 02:03
      The following is a fascinating analysis of the impacts and motivations of Chinese purchases of global assets - particularly realestate - applies to both #Australia and #NewZealand from @DeepThroatIPO https://deep-throat-ipo.blogspot.com/2018/10/when-will-xi-click-sell-button.html
    • KJ
      Keith J.
      4 March 2019 @ 15:56
      Some interesting reading at that link Dave, thanks for posting. Wary of online sources and bits of it are something of a ramble but the overall themes are very interesting. In more recent posts, for example, he draws the opposite conclusion to Raoul and Kyle regarding the RMB and USD. He seems to be saying the CCP have been doing a big pump and dump of assets in the west which will pave the way for a big crash in Western assets and the RMB to take over as world reserve currency. Deciding who is right is way above my pay grade but it feels as though gold could be a good investment either way.
  • MD
    M D.
    3 March 2019 @ 04:19
    All, Any guesses about what the asymmetric trade could be? Given Bass’ general focus on larger themes, I strongly doubt its uranium (i.e. an offset to oil, which he noted is negative for the current account). My best Guess is that it is something around Hong Kong (i.e. assets or the currency). I bet he comes back to argue that the Rmb/USD at 8+ and a slowdown in global trade hits HK on the nose, driving a break in the peg. A break in the peg shatters global investor confidence in HKD assets, including property, and results in a tremendous drop in HK asset values and FX.
    • LC
      Liliana C.
      3 March 2019 @ 07:01
      This is my guess too👍
    • JK
      Jan K.
      3 March 2019 @ 10:36
      Bitcoin
    • AM
      Andrew M.
      4 March 2019 @ 11:22
      That's what I'm thinking. There's no reason for them to keep that peg, especially if RMB moves lower. Would corroborate what he said in his last interview about no one focussing on HK, even with a crisis brewing there. The other trade could be yen - which would confirm Bass' long-term thesis on Japan and its debt overhang. It's likely they have to follow RMB down too, given China is their largest export destination, and so if China is reflating the world Japan would definitely jump along for the ride.
    • JH
      Jonathon H.
      4 March 2019 @ 11:29
      I would plump for the HKD peg. V limited downside with massive upside (asymmetric). It appears to make no sense as HK is used as a vehicle to get money out of China. And just ask Soros and Druckenmiller how much can be made tilting at pegs
    • JC
      Jerry C.
      4 March 2019 @ 15:43
      HK is not in South East Asia which he specifically mentioned
  • SM
    Stephen M.
    4 March 2019 @ 14:44
    Probably JGB's. Again.
  • TB
    Terence B.
    4 March 2019 @ 14:32
    Epic tease at the end! You better get together before that trade becomes crowded!
  • KS
    Karen S.
    1 March 2019 @ 15:42
    https://en.wikipedia.org/wiki/1938_Yellow_River_flood China is being backed into a corner and they will do what they need to do to survive. Gold to 20k.
    • DR
      David R.
      1 March 2019 @ 15:59
      20K+ gold could put China on top of the world again like it was before for almost 2 millennia, given that China (unofficially and rather secretly) possesses much more gold than everyone else. Does US or UK actually even have any real gold anymore? On the other hand, plunging gold and soaring oil would kill China and very much help US.
    • KS
      Karen S.
      1 March 2019 @ 16:15
      US just took 50 tons of gold from ISIS so there's that lol: https://www.zerohedge.com/news/2019-03-01/us-army-takes-50-tons-gold-syria-alleged-deal-isis
    • DS
      David S.
      1 March 2019 @ 18:22
      Estimated official China gold reserves is 1.842 trillion metric tons. Any broad estimates of the gold held in China by individuals? Once gold is in China, many say it never leaves China. DLS
    • RK
      Roger K.
      1 March 2019 @ 22:22
      Japanese were literally walked through China in the WWII, like Germans did in the Belgium, Netherlands and France. Only people who had a courage to face the Japanese onslaught were the Nationalist , who are Taiwanese today. Rest are cowards! They were cowards then they are cowards now.
    • KS
      Karen S.
      2 March 2019 @ 00:44
      Not true. I've personally bought gold in china and brought it on the plane and took it home with me. What's your email? I'll email you the pictures if you don't believe me.
    • DR
      David R.
      3 March 2019 @ 01:25
      Roger K - Disparaging as "cowards" those defenseless, slaughtered 30-million women & children & impoverished civilians at the hands of a large, trained, well-armed , mass-murdering foreign army is insensitive, ignorant and even offensive. Would be like labeling 6-million Jewish victims of Nazi gas chambers "cowards". And yet those defenseless "cowards" who survived the Japanese army's massacres were able to regroup and a decade-plus later drive the best of MacArthur's forces out of North Korea. Then twenty years after that, they were instrumental in decisively defeating and altogether purging the US from Indochina in a convincing, humiliating US military loss with almost 1-million US soldiers killed or permanently maimed, as the rest of the Americans cowardly ran off in mayhem like the beaten bloodied dogs they were, tail between legs, abandoning millions of their own and defenseless "allies" to fend for themselves. Pretty clear who the real cowards were. Those who from the safety of jets high in the sky dropped masses of highly toxic chemicals and more bombs than all of WW2 onto tens of millions of defenseless Asian civilians, but couldn't fight worth shit on the ground like real men without getting their asses whipped and killed, finally having to flee for their lives against their lesser-equipped-yet-superior, victorious enemy... To quote you, "Cowards! They were cowards then they are cowards now".
    • DR
      David R.
      3 March 2019 @ 01:29
      And the Nationalists aren't Taiwanese. Even their languages differ for pete sake. The Taiwanese were ethnic Chinese long native to Taiwan, while the nationalists are a mainland Chinese political group who fled to Taiwan during their post-WW2 civil war against the Communists, not against the Japanese. And in fact, before the final decisive Chinese civil war, the Chinese nationalists and communists put aside their differences to fight together against the Japanese invaders, in vain. During the war, the nationalists fled to the south, while the outmatched communists continued resisting and bravely fought using guerrilla tactics against the Japanese occupiers in northern china. So your depiction is quite inaccurate.
    • DR
      David R.
      3 March 2019 @ 09:59
      I apologize if my comment two-up was an excessive reaction for anyone (it was). Some members here are Asian based (like myself, a western-born expat now living & married in Asia) or ethnic Asian/Chinese, many of whom lost family & friends in what they call the American wars. At the end of the day, they overwhelmingly seek to just live a peaceful life with their families with good food and shelter. Like most people everywhere. If we are to make it as a species, which seems increasingly doubtful in just recent years, then we must embrace that we are humans first and national citizens second. We must cease and oppose anyone vilifying other nationals or races like too many neocons and neoliberals do, arguably unwittingly for the mere profit of some in big corporations (as Ike so presciently warned us about a half-century ago). The war mongers are our true common enemy and given their way, they'll be our end as a species.
    • RK
      Roger K.
      4 March 2019 @ 13:48
      DavidR- I never said the victims were "cowards". Please don't try to twist the words. Actions speaks louder and you cannot change the History or the FACTS!
  • AM
    Andrew M.
    4 March 2019 @ 11:06
    please get Jeff Snider for a full-length interview to talk about China's $ problems. His thesis is fairly similar, but perhaps more nuanced (much more focus on Eurodollar and the HK bypass). https://www.alhambrapartners.com/2019/02/19/not-even-pboc-supports-yuans-reserve-role/ https://www.alhambrapartners.com/2019/01/17/revisiting-hong-kong-for-reasons-we-wish-we-wouldnt-have-to/
  • KD
    Kevin D.
    2 March 2019 @ 13:05
    China is basically managing its economy with a lot of the core tenets of MMT, primarily “fiscal deficits don’t matter as long as they are used to grow the economy.” Will they be able to continue doing this, and thus increase the momentum in the west towards MMT? Probably not, but they have been able to hold this together a lot longer than the China Bears thought possible (this is not a criticism of China Bears. I am firmly in that camp and have the losses to show for it). And if/when it all unravels, no doubt the MMT Brigade will wave this away and say “that wasn’t real MMT”. I agree with Kyle that the real FX balance is far worse than official numbers show – which is why they have been so aggressively trying not only to limit outflows, but also to encourage inflows. But the Current Account going negative may not be the tipping point that Kyle expects, if they are able to widen the Capital Account surplus (as he touches on). Their efforts to muscle MSCI have now been made public. Will ‘Wall St’ continue to prop up the Chinese economy (and by extension the CCP regime) by directing flows into Chinese bonds and equities? So far, the (shameful) answer appears to be a qualified ‘yes’. Which gets back to what Bannon railed about in his interview. The Wall St elite has allied themselves with CCP policy goals. If this ‘works’ for China, and they stave off crisis – and continue to threaten global order – then Lenin’s apocryphal statement that “The capitalists will sell us the rope we will hang them with” may turn out to be correct. Kyle touches on this point, but he should really make this a bigger focus of his overall thesis.
    • LC
      Liliana C.
      3 March 2019 @ 07:08
      All good comments. EM flows are “hot money”. Easy come, easy go. Hence, very dependent on confidence. True that Wall Street is the China/EM cheerleader 📣, however, don’t believe they’re doing it to support communist regime. They love Brazil especially after Bolsonaro. So no, Wall Street is simply looking after Wall Street profits.
    • AM
      Andrew M.
      4 March 2019 @ 10:10
      the inclusion in equities and bond indexes will help, but it will be a one-off boon for capital flows unless people have long-term confidence in China (admittedly China govies are a good hedge for EM debt managers as they are risk-off, but still). And even then it won't be huge. foreign bond ownership of China's bonds before inclusion was ~2%, despite very good carry vs developed market bonds (China was the best performing sovereign bond market last year). Yes, there are some ownership restrictions, but compare that to a country like Indonesia (40% foreign owned). As Kyle says, there is simply no real appetite for RMB (this is true even in central bank holdings) until they open their capital account or it's convertible to something tangible (the dream is gold, but it hasn't happened yet). Obviously the former requires a big one-off devaluation, the latter is years away. Before then, it will be a constant tug-of-war, with the CCP trying everything to stabilise the RMB amid a pervasive slowdown (unless they try to stimulate one final time, which buys them a year, max). To own Chinese assets long-term, you basically have to ascribe to the view that China won't open their capital account and will be able to print RMB (convertible to gold) for commodities. A devaluation is more likely in my mind, and pegs are made to be broken. in which case they may as well open up their capital account, reset, and then it'll be a fantastic opportunity. until then - and while China flirts with recession - not so much.
  • DS
    David S.
    3 March 2019 @ 02:54
    Thanks to a comment by Darryn L. in a recent Larry McDonald presentation, I watch Mr. Koo’s RVTV presentation 2016. I also watched an impressive 2016 YouTube video – ACATIS Konferenz in Germany, link below. IMO some of the reasoning of Mr. Koo impacts on the CHY/$US and why Mr. Bass’s trade has not worked yet. Both of Mr. Koo’s presentations are worth serious attention and I requested RVTV that he be invited for a follow up. Deflating QE will take years and many fortunes will be made and lost. I still do not know what to do, but I understand the problem better. DLS https://www.youtube.com/watch?v=8YTyJzmiHGk
    • DR
      David R.
      3 March 2019 @ 10:02
      David S, I'm not a fan of Richard Koo, but it sounds worthwhile particularly if you say so. Thanks for the comment. I don't know what to do either, other than short-term trade or stay out (but in what, dollars?...lol). A nightmare scenario is a non-linear, sudden, surprise "reset" by policymakers while I'm inappropriately positioned. Similar but bigger than the SNB break of the peg three years ago, which we all knew was as unsustainable then as debt is today. Respect, David.
    • DS
      David S.
      4 March 2019 @ 06:31
      David R. - Mr. Koo has helped me understands a part of the problem, especially the Japanese experience. The fact that QE is trapped inside the financial sector is reasonable as it certainly did not go into the real economy. Some of QE will stay with increased requirements on the bank B/Ss and some of the P/E inflation will be reversed with QT, hopefully slowly. Share buybacks - executive compensation - have little benefit on the real economy either. I would like to see if Daniel Lacalle, Mike Green or Russell Clark have any points of view on this. If we could get a handle on the central bank QT effects in real time, we could have a great insight to the next ten years of macro trades. Regards. DLS
  • CM
    Cory M.
    3 March 2019 @ 03:10
    So, if the EU goes into full recession before the US, does the invested capital all flow into the US (particularly into equities) - just further increasing the size of the bubble?
    • AM
      Artem M.
      3 March 2019 @ 12:57
      That’s what people keep saying but it makes zero sense to me, why would you want to buy an over priced asset anywhere? I have a feeling commodities will see the next boom as they are probably the most undervalued now. Incl. gold and silver
    • DP
      DAVID P.
      4 March 2019 @ 00:28
      Watch the recent Brent Johnson interview on the dollar milkshake theory
  • DP
    DAVID P.
    4 March 2019 @ 00:24
    Capitol flight from China, U.S. last to roll over in a global recession, British pound going to parody and Euro going negative…Sounds a lot like The Dollar Milkshake Theory!
  • SU
    Shakeel U.
    3 March 2019 @ 22:48
    It would be great to hear Raoul in depth view of China
  • JS
    Jason S.
    1 March 2019 @ 16:02
    Huge Kyle Bass fan, I reckon he has absolutely nailed this China call. China well and truly peaked in 2015 and possibly on Martin Armstrongs ECM date of 2015.75. I reckon we could see a currency devaluation in China as soon as the next ECM target date of Jan 2020. China is in big trouble. I am very surprised that commodity prices (copper, precious metals, crude oil, nickel, zinc etc) are holding up as well as they are. It just goes against all logic. With USD breakout, could see a very choppy second half of the year.
    • DR
      David R.
      1 March 2019 @ 16:21
      I reckon not. Actually, Martin Armstrong has said only a million times that the US and the entire West collapses after 2020 as Asia continues to rise, with China becoming the undisputed leader of the whole world again in 2032 and thereafter. He wrote about that again twice just in February on his blog. I dunno whether he'll be accurate but he's clear as day about it.
    • DR
      David R.
      2 March 2019 @ 21:10
      Martin Armstrong ten days ago: "Western society will crumble by 2032. The crisis begins 2020/2021. The year 2032 is by no means the beginning of the process, but rather the end. China will replace the US as the world power in 2032." https://www.armstrongeconomics.com/armstrongeconomics101/ecm-armstrongeconomics101/2032-where-is-comes-from/ You misunderstand his ECM model as 2015.75 was a cycle low, not high, for China. Maybe go attend the conferences or at least buy the reports. His best report on China is his Aug 2018 ($300) entitled, "China On The Rise: How-When-Why China Becomes the New Financial Capital of the World". Covers everything from China debt, GDP, yuan, shadow banking, property, bubble, consumerism to a chapter, "Why China is Not Really Communist".
    • JS
      Jason S.
      3 March 2019 @ 14:22
      David R. “China was a cycle low in 2015-not a cycle high”. Are you serious? Look at the macro date on all of Kyles charts. China peaked in 2015 and is likely to implode or devalue in 2020 IMO. It’s crisis, much like Japan, will be contained however. Not many countries are exposed to Chinese debt, ex Chinese. Most likely China explodes in 2020 and opens capital account, while devaluing yuan and implementing massive QE to reboot in line with Felix Zaluaf targets. DYOR, look at the facts and think for yourself! Cheers
    • DR
      David R.
      3 March 2019 @ 21:01
      Jason, you initially quoted Martin Armstrong and his 2015.75 ECM point. I clarified that issue with his actual quotes & analysis (or that of his AI trading system Socrates) including references. Take it up with him or else trade against them, good luck with that though. Cheers.
  • HP
    Hart P.
    2 March 2019 @ 06:33
    You talk about the Aussie dollar and just about every currency except the CAD. Come on man you know you have a NA audience, at least talk about us a little.
    • AW
      Aaron W.
      2 March 2019 @ 19:59
      About a month or so ago The Macro Tourist had a blog post where he mentioned a way to play US winning trade war with China could be long the CAD (largest trading partner of the US) vs AUD (exports raw commodities heavily to China).
    • MG
      Mike G.
      3 March 2019 @ 18:48
      It's too depressing to look at the CAD, almost as pitiable as the country itself. Government scandals, money laundering, real estate bubbles, one of the most indebted populations on the planet, regional conflicts rising, and ZERO gold reserves because we might offend someone if we were to reacquire some. It's truly becoming a Peso. Back to weeping...
  • NG
    Nicolas G.
    1 March 2019 @ 20:55
    Wow... the BTC mistake was unbelievable for someone like Kyle.
    • wm
      willem m.
      2 March 2019 @ 08:33
      Noticed that one as well
    • DB
      Douglas B.
      2 March 2019 @ 15:19
      What do you mean by BTC mistake?
    • SM
      S M.
      3 March 2019 @ 18:13
      Point was china, not BTC.
  • IN
    Igino N.
    2 March 2019 @ 18:44
    you own gold, gold is money all the rest are currencies
    • BP
      Byron P.
      3 March 2019 @ 01:50
      WRONG
    • WM
      Will M.
      3 March 2019 @ 17:36
      Gold is insurance against a financial collapse, but it can STILL go down. It just might be USD up sharp and high along with gold but primarily in other currencies. The question is Byron, gold is clearly tangible and historical and desirable as historical wealth protection, why on farther would you put your faith in a piece of paper that is essentially an entry in an electronic ledger where the numbers can be faked and created at any point?
  • WM
    Will M.
    3 March 2019 @ 15:35
    So Kyle may have been wrong for several years on China..... But the quality of his arguments and data presented seems very high and his thesis sound. Could it just be that the amount of manipulation and financial shenanigans going on in a system that now has global debt (and corporate and in many cases personal debt) that meets and way exceeds that present in 2008, has warped and delayed the inevitable? I am with Martin Armstrong on this. What has happen over the past ten years just can't continue for ever, something is going to ignite the "powder". The impact of an imploding China would surely result in a global depression and debt implosion OR potentially very high inflation FOLLOWED BY debt implosion. I am very worried....
    • WM
      Will M.
      3 March 2019 @ 15:59
      The comments on Chinese propaganda and external manipulation starting with about 10 mins left is very very important. It is certainly true, and we in the West forget want everything now, the Chinese are in this for the long game and as Martin Armstrong says the future of World growth lies in the East as the West enters secular decline post late 2020s.....
  • SC
    Sejong C.
    2 March 2019 @ 08:10
    Just a suggestion for RVTV. In videos with graphs/charts/other material that needs visualization -> putting "visual material included" on the video description would be helpful. Furthermore, including these graphs/charts as jpg files would also be great. I would rather only listen to videos without visuals (that is, videos that only focuses on the figures of the interviewer/interviewee) with downloaded MP3 files, and watch videos that includes visuals. Great interview, as always.
    • PD
      Paul D.
      2 March 2019 @ 09:07
      Fully agree a chart pack please. Excellent interview
    • DB
      Douglas B.
      2 March 2019 @ 15:47
      Macrovoices always includes a link to a slide deck, albeit they are an audio podcast only. I do find this extremely helpful.
    • AR
      Abishek R.
      3 March 2019 @ 15:57
      Shout out to all the Macro Voices fans inside the real vision comments threads.
  • JA
    James A.
    2 March 2019 @ 11:12
    Kyle really is on a stop at nothing mission to uncover the skeletons in the closet on China! Compelling viewing; a strong opinion backed up with rationale albeit I do agree with Nick Gs comments below. Considering the airtime Kyle has now had slamming China the last 12 months how about time to hear the other side of the argument and get a China bull on the show. What do you say Raoul ?
    • AR
      Abishek R.
      3 March 2019 @ 15:53
      Please find real vision a China bull that is ready to stake his/her reputation and present their thesis. RV is trying..
  • MK
    Manoj K.
    3 March 2019 @ 00:31
    Anything which Kyle mentions can be said about US. Atleast China produces something tangible, US prints its worthless dollars, supplies it through its Capital flow channels throughout the world to buy real stuff. world is fed up of US and its worthless Dollars. More power to China !
    • AM
      Artem M.
      3 March 2019 @ 12:59
      At least that’s what Ray Dalio says
    • AR
      Abishek R.
      3 March 2019 @ 15:49
      Manoj, I think you may have missed the point. If I have legitimate currency backed by sale of USTs, that Im guaranteeing anyone who holds them to redeem and also earn an annual interest of 2.6%, and whereas you have fake currency that is not backed by any obligation inside a closed capital system, you are withholding the true worthless-ness of your currency to the world. Then it, doesn't matter if spend all my money in a strip club and you spend all your currency in building schools and cancer hospitals, you are still running a scam.
  • AG
    Alex G.
    2 March 2019 @ 02:52
    Every Kyle Bass interview leaves me amazed how thorough his research is
    • NS
      Nathan S.
      2 March 2019 @ 04:26
      Except for those bitcoin comments! Off by 12 months
    • DS
      David S.
      2 March 2019 @ 06:42
      Mr. Bass is thorough, but so far not correct. If he really follows his own logic, Mr. Bass should be short the $US with all the off-budget liabilities and long the CNY. DLS
    • VM
      Vincent M.
      2 March 2019 @ 13:20
      On your point #7. Property is not readily fungible nor moveable (sewn in your clothes) as compared to diamonds. Most importantly it does not have ongoing costs nor a paper trail of ownership. Lastly, I would note that Canada had a program for residence based on a foreigner purchasing a home for a period of time.
    • VM
      Vincent M.
      2 March 2019 @ 13:22
      And forgot to mention that the new tax law may have an impact on NYC and Brexit on London Real Estate.
    • FM
      Felix M.
      3 March 2019 @ 15:34
      q
  • RK
    Robert K.
    3 March 2019 @ 13:08
    Great stuff. It is very sad to see the investment world closing both eyes ignoring the moral implications of pumping money into this dictatorship. https://www.cnbc.com/2019/03/01/msci-to-quadruple-weighting-of-china-a-shares-in-global-benchmarks.html
  • AM
    Artem M.
    3 March 2019 @ 13:02
    Good interview. But I can’t believe someone at Kyles level did not know when BTC had it’s major drop, I would have thought someone would have corrected him ahead of time, he was a year off.
  • CH
    Charles H.
    2 March 2019 @ 11:19
    No one knows the size of their gold reserves. They've been buying physical gold whenever their currency strengthens, are the largest gold producer in the world, and do not allow any gold to exit the country. Their foreign currency reserves may be low, but their gold (real money) reserves could be large.
    • TT
      Terry T.
      2 March 2019 @ 20:12
      That is my point as well. I don’t know how their gold hoard figures into this so I hope Raul and Kyle cover this in depth next time.
    • DR
      David R.
      2 March 2019 @ 22:01
      Does anyone believe that the US and UK actually possess any gold anymore? Regardless, it's foolish to hold foreign fiat paper as a reserve, beyond a bare minimum. Credit the SNB and PBOC in this regard. That China now has most of the world's gold (and other hard assets) and carries little foreign FX in reserve anymore is probably a major strength going forward, not a weakness as KB suggests. Don't forget China also has almost 90% of the world's rare earth metals, without which everyday life reverts back to the middle ages in a matter of months - the ultimate ace card. Poor Kyle should've stacked gold coins the past 3-4 years instead of his nickels that he can't unload or spend. He overlooks he golden rule, "He who has the gold makes the rules".
    • DR
      David R.
      2 March 2019 @ 22:27
      Unfortunately, Grant Williams wasn't there to challenge KB about why physical gold reserves might trump foreign fiat currency reserves.
    • SG
      Siebe G.
      3 March 2019 @ 12:27
      I was thinking in that direction, with regards to his next piece (asymmetrical trade).. Could it be gold short? IF they get a reserve problem, and they do have gold, would they sell it for dollars? What other way would there be to increase the reserves?
  • DG
    David G.
    1 March 2019 @ 20:58
    So, there is this thesis floating about that the Chinese (CCP) have a grand plan to dump US assets (treasuries, bonds, equities, real-estate) as part of a strategic pump and dump scheme designed to crash US markets. As we saw 2 months ago when a puny 10% drop caused Mnuchin to start cutting himself and the FED to panic and shift policy 180%, everyone (esp Chinese) know without a doubt the FED would be forced to ride to the rescue to save the US economy by throwing the printing press into hyperdrive, thereby devaluing the dollar and threatening its reserve status, which theoretically would makes the RMB (comparably speaking) more respectable. Finally, if China is indeed short US Dollars as Kyle suggests, wouldn't dumping US assets en mass provide the source of dollars China needs?
    • DR
      David R.
      3 March 2019 @ 10:24
      Rest assured, the CCP has no such intent unless forced under drastic, war-like circumstances, like some neocons seem to want. Such "dumping" would be bad for business and self defeating. They're not that stupid. It smacks of more neocon propaganda and misrepresentation. China is not short US Dollars, as China has most of the world's gold plus other assets, similar to the SNB, which are instantly convertible into dollars, probably at a profit now. KB's presentation entirely omits that key fact, which is possibly why he keeps losing on it for countless years. Instead, there is a surplus of dollars globally, which is partly why USD has been in an overall downtrend since 2016 and indeed even since 1985. The dollar "milkshake" theory has failed since latter 2018. Wait until MAGA MMT or Socialist Democrat MMT gets fired up; the dollar will be so oversupplied from printing that its value is likely to plunge, at least relative to real assets, if not in terms of other shitty currencies being devalued as fast as the buck.
  • JW
    JONATHAN W.
    1 March 2019 @ 14:20
    it is very good insights
    • TE
      Tito E.
      1 March 2019 @ 20:58
      but very bad english
    • DS
      David S.
      2 March 2019 @ 07:27
      Tito E. - Language is communication. I understood what Wijaya J. was expressing. Let's not get carried away with language when the content is understandable. I would like to see more comments from both Wijaya J. and you in the future. DLS
    • TE
      Tito E.
      3 March 2019 @ 07:30
      It was a bit of a cheap shot. Sorry Wijaya J.
  • BF
    Bill F.
    3 March 2019 @ 02:46
    spectacular macro data shared by both! bravo.
  • DD
    Daniel D.
    1 March 2019 @ 17:11
    I respect the guy but, enough is enough! This has been his singular obsession for a very long time and heretofore he's been incorrect on timing. RV has retreaded this topic now one too many times. Can one really claim they are correct if for instance you are wrong 9 out of 10 years and then finally in the tenth year your thesis proves correct? I guess you can if you stay solvent long enough although you have to factor in all the opportunity costs that you forwent in the interim. Trump is going to cave soon and the Chinese economy is going to get a positive bump as a result.
    • DR
      David R.
      3 March 2019 @ 01:48
      He has been wrong for more than ten years actually. And his buddy Gordon Chang will have been wrong for 20 consecutive years if China doesn't blow-up this year. Instead, if you'd ignored these pair of misguided fools, and had bought a lot in a Chinese tier 1 city in 1999, your $30,000 investment then could sell for about $30-million today. Reference "The Coming Collapse of China" in Amazon books, which was written almost 20 years ago, lol. Sounds like Kyle Bass year after year after year, etc.
  • MN
    Michael N.
    2 March 2019 @ 23:57
    omg killer interview! did kyle drop the slope of a line formula as well lol. cant wait for part 2
  • MM
    Mike M.
    2 March 2019 @ 22:22
    Not sure I am ready for this CAT 5 it sure does seem close at hand. All it will take is an Arch Duke Ferdinand moment. Great conversation.
  • JB
    Jamie B.
    2 March 2019 @ 21:53
    Kyle has been pounding the drum on this trade for years. On a multi year time frame, early = wrong.
  • cl
    connor l.
    2 March 2019 @ 21:13
    Riveting interview. Thank you. Buy bitcoin.
  • ET
    Eduard T.
    2 March 2019 @ 20:51
    Great interview! Thanks Kyle and Raoul.
  • TT
    Terry T.
    2 March 2019 @ 20:15
    This was outstanding. I have been a RV member for going on six months and I feel like most of the content is not conducive to my investing style, meaning too much content directed at traders. But then some of these big macro pieces come out and remind me of the value I get from RV.
  • BP
    Bryce P.
    1 March 2019 @ 14:50
    More blah blah blah from Kyle on China.
    • DR
      David R.
      1 March 2019 @ 15:12
      Even a broken clock is right for 1 minute of the 1440 minutes in a day.
    • DS
      David S.
      2 March 2019 @ 07:16
      David R. - My friend, it may be right twice a day with a 12 hour face. DLS
    • SS
      Sam S.
      2 March 2019 @ 18:57
      I'm willing to bet numerous Asians are RV subscribers and part of the China can do no wrong viewpoint. The Chinese are NOT our friends. Which is unfortunate. Kyle's making his case, no more.
  • SS
    Sam S.
    1 March 2019 @ 14:59
    Now this is REAL VISION into the future by two huge PRO's in the business. Kyle, we're dying to know the asymmetrical trade???? What is the insurance trade too?? Can't express how clean and easy to follow this presentation. Can we have some more please?!
    • GT
      GAVIN T.
      1 March 2019 @ 21:37
      he said wait "4 or 5 months" for it... wth?
    • SS
      Sam S.
      2 March 2019 @ 18:53
      Gavin, he certainly did say that twice. However, in that we must do our homework, a taste of the trade he's looking at, could help with timing, study, agreeing or not. Lot's of trade ideas presented on RV after the presenter has taken a position. I don't want the leftovers. All the best.
  • DR
    David R.
    1 March 2019 @ 15:53
    KB's long USD/CNY is among the very most crowded trades on the planet, and like all such crowded trades, it will likely fail (as before) and indeed this has already been moving against him for months. The other side of this trade against KB currently includes, among others, Luke Gromen, Seth Klarman, Peter Schiff, Ray Dalio and Erik Townsend. In fact, in the panel discussion at the most recent Cambridge House Resource Investment Conference (available on youtube), Brent Johnson, Peter Schiff and Erik Townsend all opined that USD/CNY will eventually trade down to 1:1 parity!! Similar long-term conclusion echoed by Juliette Declercq and Luke Gromen at Macorovoices Live conference. Meanwhile, KB and heaps of specs & amateurs altogether on the same side of the boat vs the aforementioned legends... guess who probably loses his shirt (again!).
    • JB
      Joe B.
      1 March 2019 @ 15:59
      Can you summarize the process to get to parity? Or frame the thesis? Thanks
    • PD
      Peter D.
      1 March 2019 @ 16:05
      Bass is entertaining, insightful ... and wrong. If you want to bet against CNY you need to look at the other side of the trade; the USD. America's fiscal position, particularly its unfunded liabilities and other off-balance sheet obligations, is in as bad a shape as China's, if not much worse. Indeed if you add off-balance sheet growth in US unfunded liabilities - which TIA estimates at $5 Trillion per year, - the US fiscal deficit exceeds 30% of GDP. Double that of China's which has no unfunded liability issues. More dangerous to the Bass scenario is the fact that America and China are almost certainly coordinating currency policy behind the scenes. The reason that Bass sounds so good, is that America has few policy experts who really understand the China story. So there is no one to tell the other side. RV needs to dig deep and to get Spengler on here at some point.
    • DR
      David R.
      1 March 2019 @ 16:06
      Forgot, I think Jimmy Rogers is on the other side of this KB trade too, but by his own admission he "is the worst market timer ever", lol. Gotta love an always self-defacing, humble multi-billionaire like Jimmy. Would enjoy seeing Jimmy Rogers on RV sometime :)
    • DR
      David R.
      1 March 2019 @ 16:12
      @Joe B... You can see it on the aforementioned utube vid, but they didn't elaborate specifically on parity. Martin Katusa raised it and they went along in agreement. No time frame given either. Sounds half-baked and unbelievable. Nevertheless, they discussed the trend more thoroughly and reasons for it, if not why eventually parity, which to me sounds like just throwing out some red meat, haha.
    • DR
      David R.
      1 March 2019 @ 16:41
      Clarification: per Santiago Capital's Brent Johnson, USD first goes up significantly before a much bigger collapse in the long run. And George Soros is targeting 1:1 USD/CNY parity ultimately (per 35-minute point in above-noted video).
    • MN
      Maverick N.
      1 March 2019 @ 17:49
      David, Kyle may have been wrong on a couple of occasions, especially with the timing part but what RealVision has always focused on bringing to the table is the process these investing legends use to frame their thesis. IMHO we should be discussing more about what is missing from his process and subsequently formed framework rather than who's on which side of the trade. Therein lies the real learning opportunity otherwise the world was better off watching that clown Jim Cramer and RealVision would have shut down in 2016.
    • DS
      David S.
      1 March 2019 @ 18:32
      Peter D. - Well said. It is easier to look at China's problems rather than our own. With all the currency volatility, I do not see why more overseas companies do not pay a higher interest rate for loans in local currency. It would raise their interest cost but may lower the risk. DLS
    • DR
      David R.
      1 March 2019 @ 21:14
      Maverick, It's far beyond the scope of a short comment and not my job to rebut a 46-minute prepared presentation with a couple of sentences (beyond the fact that it's already a crowded trade). Besides, who am I to do so? So, I've given sources for you to consider on the other side (most of whom never appear on RV), plus some specific media examples, all of which you can research if you're interested. And here's another: the free-to-all 82-minutes macrovoices podcast episode #155 from Thursday of last week with three of the folks above (register for free to get the essential 30-page chartbook for it). That'll be far superior to a comment here and better equip one to have more confidence in whether they still agree or disagree with KB. Good to consider KB's work too, as we shouldn't just trade in an echo chamber. Carry on.
    • DB
      Douglas B.
      2 March 2019 @ 15:25
      Maverick....well said
  • DB
    Douglas B.
    2 March 2019 @ 15:13
    Is anyone here staring back at the most Asymmetric trade Kyle bass has ever seen?
  • TS
    Thomas S.
    2 March 2019 @ 15:07
    I could listen to Kyle and Raoul 24 hours a day.
  • BM
    Beat M.
    2 March 2019 @ 12:47
    Fantastic! I needed this so much! All the bullshit talk lately (Gross favoring MMT, P. Malmgren sees 10 years of happy growth, Powell playin‘ good boy) Extending, pretending, just please, no pain! The basement is on fire, we could have jumped out of the first floor, but we were afraid. Now the fire is geeting to the 10th floor and we are standing on the roof, hoping for chopper(money) to save us.
  • RE
    Russell E.
    2 March 2019 @ 12:24
    Brilliant insights.
  • BF
    Bret F.
    2 March 2019 @ 11:40