Kyle Bass on China’s Moment of Truth

Published on
October 19th, 2018
Duration
53 minutes

Kyle Bass on China’s Moment of Truth

The Interview ·
Featuring Grant Williams

Published on: October 19th, 2018 • Duration: 53 minutes

Legendary investor Kyle Bass, the founder of Hayman Capital, joins Real Vision’s Grant Williams for a deep dive into China. From shifting capital flows around the world to the threat of China devaluing the yuan, these two discuss threats and opportunities that China presents investors now. Filmed September 17, 2018 in New York.

Comments

  • HJ
    Harry J.
    24 November 2018 @ 01:46
    How on earth can the small investor position to generate profits sufficient enough to offset the change in the balanced portfolio??
  • TE
    Tim E.
    13 November 2018 @ 03:26
    I believe Bass misrepresents how the HKD peg, or "Currency Board" system actually works. There are not two piles of money, one being "required" and one being "excess" reserves. The way it works is that if anyone (or, in actual practice, their banker) shows up at the HKMA exchange window with Hong Kong dollars, and wants US dollars, the HKMA is obligated by law to sell the USD at the rate of 7.85 HKD for one USD. Once that USD has been sold, and the corresponding HKD bought, those currency units have essentially exited the Hong Kong financial system. A hedge fund "attacking" the peg, basically just means their HK banker (or their intermediary's ultimate banker) has shown up at the HKMA looking to sell HKD and buy USD. As long as the HKMA has enough USD to back every HKD in circulation -- which it is mandated to have, by law -- the peg cannot break. By definition. The only way I can see it breaks is if there is a political decision taken that the run down in the HKD money supply, by virtue of too many HKD being converted to USD and exiting the system, makes the economic adjustment process too painful to bear.
  • TE
    Tim E.
    13 November 2018 @ 01:28
    "They're desperately short dollars?" Huh? China is sitting on $1.18 trillion of US Treasuries as a result of all the accumulated surpluses over the years. Sure, that's a "stock" not a flow. But when they need to, will they not cash that money in and covert it to a flow? Who's got the problem then? The US and it's trillion dollar budget deficits and tanking bond market, or China?
    • ML
      M L.
      16 November 2018 @ 11:46
      Problem is if they turn the UST stock into a flow, the value of the remaining stock is not static. It will plunge. Hence the problem.
    • BP
      Byron P.
      18 February 2019 @ 16:59
      This is really a false argument to say China can just weaponize their Fx reserves to tank the the US financial system and cause US rates to skyrocket. You need to think about WHY COUNTRIES STOCKPILE US dollar reserves in the first place. It is because this is the reserve currency with the most confidence. If China comes out with a Fx reserve number well below consensus, the yuan tanks. This reflects the market has confidence in the dollar not the yuan. If China were to dump their US treasuries in a relatively quick move, they know it would be China vs. the world, and they know the fx market is bigger than them and would sell off their currency. Further, China is an export economy. They know this, and they are far from having a consumption based economy. Why would they kill their number one customer - the US consumer market?
  • KT
    K T.
    11 November 2018 @ 05:03
    Could someone point me to the where Kyle gets the information that Hong Kong has spent 70 odd % of their excess reserves defending the HKD. They are indeed needing to buy HKD to keep the rate within the top of the band at 7.85 but from what I can only see,they have spent max US$40B of US$400B+ foreign reserves, that doesn't include the exchange fund. SCMP estimates the war chest at US$1.835T. HKMA did extremely well out of buying equities to support the market during SARS in the early 2000's and now has a war-chest multiple times the size of 1997. Curious, as that is why no one believes in HK that the peg will go anytime soon.
    • KT
      K T.
      11 November 2018 @ 05:23
      I guess disregard the above, asked and not answered below already multiple times. Its crucially important because if HK loses the peg its game over, especially the red hot property market. Most of the wealth in HK is in this sector and most of the lobbying power, HKMA know that and we have heard this drum beat of de-pegging so many times before. I can only assume Kyle has done his research and is not going to share that monetised information here.
  • BP
    Benton P.
    8 November 2018 @ 23:05
    Question to the group. This is more theoretical, but i'm just curious if anyone will answer. How would you put the trade on to bet that the yuan will devalue against the dollar? Also, does anyone have an analogue for what they think would happen to Chinese securities should Kyle's thesis come true? If there's say a 50% deval in the Yuan v USD, how much of that carries through to the chinese equities priced in USD?
    • AW
      Adam W.
      11 November 2018 @ 11:12
      Short AUD could be a good proxy for a trade idea
    • BO
      Bob O.
      14 November 2018 @ 01:17
      Yep, see today's Sydney Morning Herald (14 Nov 2018). comment from Stephen Batholomeuz p25.
  • PM
    Philip M.
    8 November 2018 @ 22:32
    Extremely compelling arguments...but I'm left confused in that I was under the impression that the Chinese were the biggest holders of US debt....could they not just repatriate it and actually cause the US a few issues?
  • HJ
    Harry J.
    6 November 2018 @ 16:33
    Really great and interesting. How can the small retail investors defend our assets against this occurrence. I believe Kyle May be right not perfect but right. I wish he managed money for me. Thanks RV
  • DC
    Dave C.
    31 October 2018 @ 18:59
    Re the concentration camps and the oblique reference to the Muslim Uyghur population - Kyle has been listening to spooks too closely or not doing enough of his own research..... https://journal-neo.org/2018/10/05/china-s-uyghur-problem-the-unmentioned-part/
  • JC
    Joel C.
    31 October 2018 @ 03:25
    yikes... being a Hong Kong'er seems like a little preparation may be in order... thanks for the insight. nothing like a positive nudge from RV to open the bag of nails and start hammering down the hatch
  • RK
    Roger K.
    29 October 2018 @ 22:40
    I wish If I had to listen to him more. Simply great! Thank you Kyle.
  • FL
    Flavia L.
    26 October 2018 @ 07:03
    I like Kyle’s analysis. But his story about China executing state department employees in front of colleagues is not entirely true. I think he is referring to this: https://www.nytimes.com/2017/05/20/world/asia/china-cia-spies-espionage.html. Over a two year period, China arrested or killed 18 to 20 people who are spying for the United States, crippling US’ intelligence gathering capability.
  • F
    Floyd .
    25 October 2018 @ 22:18
    Completely fascinating and informative. To those that are critical about his position being influenced or biased here is a a little prospective,of course he is making a bet on his opinion that he hopes to profit from. We can listen to his logical and objective prospective and agree or disagree that is the magic of RealVision! I wish he would have addressed the weakness in the equity market however,if the government is manipulating it that have a strange way of doing it.
  • MC
    M C.
    25 October 2018 @ 17:36
    While excellently researched, presented and articulated - it is way too sanctimonious. In the end, Kyle is a capitalist (absolutely nothing wrong with that) with a thesis that he is hoping to personally profit from. He needs to lighten up on the moralizing. The Chinese will do what is in their collective best interest. And that is their right.
  • KJ
    Kelly J.
    25 October 2018 @ 05:56
    While I agree with your basic point that the US needs to negotiate strongly with China as a competitor as well as collaborator, your views are getting too US centric, Kyle. You seem blind to US advantages and malfeasance that other countries have to contend with. I agree with Christine G's comment: "This idea of Trump trying to level the playing field is odd. What does a level playing field look like when the dollar is the reserve currency? What about Brenton Woods 1 and 2? What about Triffin's dilemma? Bass talks about China wanting its cake and eating it too, What about US Inc wanting its cake and eating it too?" You did fantastically well shorting what basically was massive mortgage fraud and bogus securitization by Wall Street that the FBI had called out years earlier to Congress in 2004 as a threat to our financial system (but which was ignored by the corrupt politicians too busy checking their brokerage balances). Then in 2008 and thereafter, the US printed all those dollars and the Fed minted secret trillions in credit to keep US banks afloat and recapitalize them in place without penalty to any person or bank restructure, (and let your and my shorts be paid off and be worth something rather than go down the tubes along with the counter-parties and financial system). And the corrupt US financial sector and gov't, instead of having to institute capital controls like a corrupt third world country would have had to to keep global investors from fleeing the fraud for their lives, could instead flood the world with dollars because there was just no alternative currency, no alternative banking system, no retreat from the corruption that then has continued here and in Europe in price-fixing, insider trading and fraud, papering over bad debt with new paper to the advantage of those with money in the bank year after year to this day. And the fraud will now re-ramp up to new heights under the right wing's prime mover, deregulator and lighting rod they love to disavow: Trump. The US has what I would call an unequal playing field by design, for non-insiders and foreigners alike! And now you want the University of Texas endowment you have some control over to enforce sanctions on Iran based on the Republican minority-in-the-world description of how terrible that denuclearization deal is for the US and still present yourself as fact-based and non-partisan? I don't think so. Why not divest the endowment from fossil fuels when the Intergovernmental Panel on Climate Change - world scientists - just told us we have 20 years or less to actually get off of fossil fuels and avoid the onset of major climate catastrophes by 2040 or earlier? In fact, I'd say we're already seeing them ramp - in Houston, North Carolina, Florida. Not likely a popular position in Texas, I imagine - but why haven't you embraced that, since it's clear you're a very smart guy who works to stay grounded in reality? You're a good guy, Kyle, but my respect for the depth and balance of your views in assessing the realities of the world today is taking a hit... https://finance.yahoo.com/news/kyle-bass-university-texas-impose-100000173.html
    • MC
      M C.
      25 October 2018 @ 17:38
      well said
    • BP
      Byron P.
      21 January 2019 @ 23:59
      Kelly, you are unfortunately a victim of rubbish put out by mainstream media regarding climate change and multilateral geopolitics.
  • NA
    N A.
    25 October 2018 @ 02:12
    Those commie Chinese with their kimonos.
  • TL
    Tianyun L.
    24 October 2018 @ 19:43
    Kyle I love you but beware of following in the footsteps of Ahab. The soviet were able to kept their facade going until oil prices hit an inflection. There are other things you can do with better risk adjusted returns. Brazil is hitting an inflection like Argentina in 2016, you can make a lot of money on longs there.
  • PC
    Peter C.
    24 October 2018 @ 16:05
    Has there been any clarification yet regarding "excess" FX reserves in Hong Kong. The number quoted is so different from official published reserves
    • DS
      David S.
      24 October 2018 @ 19:20
      Not yet. It may just be the difference in how $US reserves and excess $US are viewed by the investor. We will see how it plays out. DLS
    • TE
      Tim E.
      13 November 2018 @ 01:32
      Maybe someone got the exchange rate wrong and took a number that's actually USD and thought it was HKD... lol
  • SG
    Sanjaykumar G.
    24 October 2018 @ 16:04
    How to find out excess forex reserves ? I guess it is related to forex reserves - short term forex obligations ( from trade as well as capital flows) how to tack that? Many customers hedge their forex exposure which adds to complexity. Apart from that countries which are importing prices insensitive materials e.g. crude oil and gold .. their commodity demand and hence the forex requirements is also not fixed. It will be based in few assumptions. What formula is used by speaker I am curious to know? Thanking in advance.
  • DS
    David S.
    24 October 2018 @ 14:26
    C.S. - I saw Mr. Bass in a CNBC 12/24 video proposing the elimination of any investments in the Texas Universities Portfolio in companies that do not comply completely with all US sanctions. This seems like a continuation of the full-court press on forcing China to devalue its currency that Mr. Bass has been proposing and positioned for many years. Another side of Mr. Bass's full court press is to back the president's use of tariffs on China to force them into more financial difficulty. This is a good example of "my enemy's enemy is my friend" as Mr. Bass does not hesitate to show he is not a supporter of the president. This continued full-court press may finally bring about a major decline in the value of the Yuan, but it will certainly cause major disruptions in the FX markets. I would be very careful in Yuan or $HK positions as this will have a life of its own if China is cornered. DLS
  • MB
    Matthias B.
    24 October 2018 @ 10:04
    top quality interview with compelling arguments laid out in a concise and comprehensive manner. the only negative feeling I got was Mr Bass’ effort to put the US on a moral high ground. That is not deserving and inconsistent with past US political and corporate actions. It comes across that the US is happy to dish out to gain advantages but when others respond with similar actions, then it cries foul. If the US wants to remain a moral, political and economic leader, then act accordingly. still I admire Kyle’s profound macro knowledge and wish I could be so articulate.
  • SD
    Stephen D. | Contributor
    24 October 2018 @ 09:31
    This was a very high quality exchange. The question that appears in these comments quite frequently is "Kyle Bass has bet against China in the past and lost, what's different now?" and it is a good question. I would say two things are different: 1. Xi has collected more power around himself than any leader since Mao before the disastrous famine of 1959. That makes the Chinese system more prone to mistakes, and those mistakes when they come will be magnified. 2. The imposition of tariffs on China are not a short term tactical stance, even though President Trump sometimes seems to make policy on a whim or a tweet.. The strength of the feeling is revealed in Peter Navarro's polemical Death By China, which is long and not that good but instructive of the depth of feeling https://www.youtube.com/watch?v=mMlmjXtnIXI It also shows why it might be a rare bipartisan issue in the US. The US withdrawl from the Universal Postal Union, a move led by Navarro, underlines how things are changing, and not to China's advantage.
    • NA
      N A.
      25 October 2018 @ 02:17
      Agreed, it's bi-partisan and easy, nobody in the US will bat an eyelid if China gets bashed. They are trying to contain the rise of China, which is only natural. I only worry that trying to delay the inevitable might ironically speed it up. Intra Asian trade is way up, actually China trades more with Asia than EU and US combined. Every Asian country except India has more than 50% of it's trade within Asia. Apart from trade, the tariffs and US aggressive stance on tech, IP etc (which is well warranted), will just make China speed up it's move up the value chain, increase spending in R&D and so forth.
  • DS
    Darryl S.
    24 October 2018 @ 09:30
    Bass on discussing the genesis of the trade wars, on Trump and what he has actually achieved vs. the cacophony of political trashing of Trump himself is seminal. And refreshing. Objectivity during times of high emotion is what makes a good trader.
  • ME
    Malcolm E.
    24 October 2018 @ 07:03
    Very enjoyable but from, dare I say it New Zealand, I hear Bass as a very centric U.S. commentator perhaps not fulluy accepting that the Chinese not so much 'stole IP' but actually America was too free to give it away because doing so made them a quick buck and that was all they were interested in. Is not the real problem of China influencing U.S thinking more that Apple, Wrangler, Nike and other U.S icons wanted to advantage thmselves with cheaper labour costs and you (U.S. employess) suckers be damned if we are going to pay for your retirement fund too. But a quality interview.
  • DY
    Damian Y.
    24 October 2018 @ 05:16
    Great interview. It's a breath of fresh air to hear some common sense about China. There are so many China bulls out there that will not listen to any facts or reasoning about how corrupt China is. They remind me of the bitcoin millennials who would attack you if you said anything negative about bitcoin. Just reading some of the comment below and people are saying negative things because there are no trade ideas. These interviews that Grant does are for your knowledge. It's like reading a history book on finance. There are no trade ideas but you get a lot of knowledge out of it. With this knowledge you then then come up with your own ideas instead of relying on others. If your ideas turn out wrong then you can take full responsibility for your mistakes and learn by them instead of blaming someone else. If you need someone else to give you trade ideas because you have none of your own, then you are basically saying "I've got no idea." There are so many trade ideas out there if you just open your mind. My only complaint about this video is that it only goes for 1 hours. Kyle has such a great mind and a depth of knowledge when it come to finance and China that I could easily listen to him for several hours. Thanks RT for another great Kyle Bass interview.
  • JM
    John M.
    24 October 2018 @ 03:11
    I assume Kyle Bass has given up on his other trade i.e. short Japan. I thought the arguments he presented were very compelling and yet it didn't happen at least not within his expected time frame. Would have appreciated a question about lessons learned.
  • CM
    C M.
    24 October 2018 @ 00:38
    One of my favorite things about watching the RV videos is reading the comments. Most people keep it between the lines in adding worthwhile thoughts. Appreciate the added insights.
  • AB
    AJ B.
    23 October 2018 @ 18:54
    Thumbs up. Only critique is Kyle needs to study the American press. It's not Trump's job to communicate how his policies benefit the US. The media's job is to report the truth, not mislead.
  • CG
    Christine G.
    23 October 2018 @ 13:34
    This idea of Trump trying to level the playing field is odd. What does a level playing field look like when the dollar is the reserve currency? What about Brenton Woods 1 and 2? What about Triffin's dilemma? Bass talks about China wanting its cake and eating it too, What about US Inc wanting its cake and eating it too? The financial system and government have done very well having the reserve currency; manufacturers and workers have not (as predicted by being the reserve currency). US Inc has done very well for the top 10 percent. Government has been able to spend (mostly on the military) while giving the wealthy tax breaks. By financializing everything, we have cultivated a very short time line (how much can management make this quarter; how can we use financial instruments to kick the can down the road). The Republican refrain about big government has let the power elite reduce government, take tax breaks, and be short sighted; we have not dealt with real needs like investing in the future (e.g., climate issues, education, infrastructure). Investors have been able to make money often without doing due diligence and the Chinese have taken advantage of weaknesses in our system; why not, God knows there are enough Americans taking advantage of weaknesses in our system. Certainly Trump is and has taken advantage of as many weaknesses as he can. He continues with short term policies that continue or worsen major weaknesses while running the most corrupt administration of modern times if not ever. I think Bass has brought up real issues while side stepping root causes and problems in our system. Why does the press get it wrong? Why do voters often get it wrong? Why does Congress often get it wrong? Because the world is complex, people are under-educated, economic and financial systems are poorly understood, people who want to manipulate others and systems have more practice manipulating than the public has at not being manipulated.
  • RB
    Raghav B.
    23 October 2018 @ 05:01
    Excellent stuff guys. Keep up the quality interviews.
  • mp
    michael p.
    23 October 2018 @ 00:17
    Talk of trade deficit. Never heard that from Bass until now. Hopping on the Trump train. Not wrong but not sure that was the original negative China thesis, I respect his own intellect and view point but he has been wrong for some time. Real vision needs to not just promote its founders views.
  • HH
    HODL H.
    22 October 2018 @ 14:11
    Best part comes at the end with dig on Botox Lips Mnuchin. Motives of person running department is skewed because Chinese helped finance films before he was appointed and he will care about that after!! Well said Kyle! Mnuchin’s definitely has conflicts there
  • SD
    Salvatore D.
    22 October 2018 @ 13:04
    This whole interview makes no sense if KB's comment about HKD reserve to USD 11Bln is not accurate or formerly corrected. RV please check KB...
  • VS
    Victor S. | Contributor
    22 October 2018 @ 11:22
    I enjoyed the talk - but- grant ,people listen to get the guest’s opinion on what he thinks will make money and why! This was virtually academic and had very little on what to do. For example does he suggest shorting yuan? Is this the trade? I’m not sure. I think Real vision has to focus on getting the investment position and why? My 2 cents as data without a trading connection is like going to college-its almost worthless.
    • ZD
      Zachary D.
      22 October 2018 @ 15:25
      The problem with giving trade ideas without understanding the why, is that you’ll mishandle the trade even if you’re on the right side. “This talking head said that..., but what about this”... I’d much rather have Kyle’s why than his ISDA trade I can’t get into. If you thought that was worthless, that’s a shame.
  • JF
    Josh F.
    22 October 2018 @ 10:28
    Is there a link to any reporting on these State Department executions? It's not something I was aware of.
    • TB
      Tim B.
      22 October 2018 @ 17:16
      Likewise. That would very... Mao-ist for sure. Confirmation would be good.
  • VS
    Vasil S.
    22 October 2018 @ 09:45
    In Kyle Bass's last RV interview he told Raoul that the deval would happen between November 2017 and June 2018. It didn't. Yet in this interview he questioned trying to pick the moment everything turns. Did others' pick up on that?
    • PF
      Patrick F.
      23 October 2018 @ 16:58
      I did pick up on that and you are correct. But I'm not invested with him and so don't care. I thought KB did frame the issues around timing pretty well in this interview. I'm more interested in the intellectual capital (here, namely his). I'll pick my own trades and timing.
    • CM
      C M.
      24 October 2018 @ 00:14
      I think Kyle is learning how hard it is too short the Chinese. I believe his thesis is correct in the long term, but he made a number of comments in this interview that hedged on the timing while recognzing the Chinese government's ability to support its markets in the short term.
  • MS
    Matt S.
    22 October 2018 @ 08:05
    I don't know why anyone wouldn't like the Trump, the personality...! Telling CNN they are fake news! lol.. so true! So refreshing to hear a leader be a MAN!! Kyle Bass, he's a good guy. Smart too, could listen all day. This is good RVTV.
    • CG
      Christine G.
      24 October 2018 @ 03:16
      If you like charismatic con men, Trump is fantastic.
  • M.
    Milton .. | Founder
    22 October 2018 @ 07:16
    Hey folks - Thank you for sending us all the details and playback is back to normal. If you're still encountering problems, please let me know. M
  • AH
    Ahmed H.
    22 October 2018 @ 06:40
    As always thoroughly enjoyed KB's thots - esp the HKD trade. Have to say though - a little disappointed as there 's a lot of riding on my high horse in this - why's there so much china hating in the west? for me, parts of this interview did not sound objective - there seems to be a lot of 'personal' in this for him (maybe he's been short China too long? ) - also as someone else commented, lot of self righteousness - we are funding a govt. who is taken a million people against their will, so why are we buying their bonds?? -- really? is this even an argument?
    • MS
      Matt S.
      22 October 2018 @ 08:07
      It is if you have any morality... says more about your thinking, Ahmed, than that of "The West's" as you put it...
    • AH
      Ahmed H.
      22 October 2018 @ 08:38
      @Matt S. my friend morality is entirely subjective.. maybe this appeals more to your morals? https://www.theguardian.com/world/2018/oct/11/jamal-khashoggi-saudi-arabia-under-pressure-from-trump-administration - anyway point i was trying to make is that i felt some parts of KBs interview were too personal
    • AS
      Andrew S.
      22 October 2018 @ 20:08
      Unfortunately, the US lost whatever moral high ground it had claim to when we invaded Iraq.
    • CM
      C M.
      24 October 2018 @ 00:18
      I do think it is personal, as for anyone, who has put a stake in the ground concerning China and has been wrong. Eventually, his thesis may play out, but since his last interview, believe he has rethought his approach to the trade. For one, he focused more on the Chinese currency and its inability, in the long term, to be manipulated by the Chinese, versus shorting the Chinese stock markets.
  • JM
    Joe M.
    22 October 2018 @ 05:13
    KB dropping the jamba juice reference, he must've loved Astroworld
  • KS
    Keith S.
    22 October 2018 @ 04:49
    Video not working. Same issue as those below.
  • CG
    Christine G.
    22 October 2018 @ 04:25
    Video still not working. Only red circle of doom.
  • M.
    Milton .. | Founder
    22 October 2018 @ 04:12
    Hey folks - If you're still encountering issues with the video, please write me at milton@realvision.com or chat with me in the lower right. Thank you!
  • MS
    M S.
    21 October 2018 @ 23:53
    Can't see this vedio. Loading icon keep spins, never opens for me. All other vedios are just fine.
  • JM
    John M.
    21 October 2018 @ 23:08
    I can't get to see this video. The Druckenmiller / Sokoloff video works fine but this one won't run for me for some unknown reason..
  • GO
    Gary O.
    21 October 2018 @ 20:14
    Thank you both for your insight. There is no other place in the Matrix that you will find a show like Real Vision.
  • TK
    Taimoor K.
    21 October 2018 @ 17:16
    Kyle is a brilliant guy and a better investor than i'll ever be. However his polly-annaish, ridiculous and borderline racist views of "the evil thieving Chinese offenders" and "the noble kind Americans victims" is out of touch, delusional and advertises the ignorance of even the smartest Americans. Extremely self righteous
    • GS
      Gordon S.
      21 October 2018 @ 21:30
      Wasn't the deal "slave labor" vs tech transfer? Maybe it wasn't set up that way in the beginning, but China made it quite clear in the past few years, didn't it?
    • MS
      Matt S.
      22 October 2018 @ 08:08
      I'm sure you're smarter than him, Taimoor.
    • JG
      James G.
      22 October 2018 @ 13:51
      Everyone whose wife is giving Chinese language instructions please hold their hand up
    • MA
      Mike A.
      22 October 2018 @ 20:30
      KB always sounds smart but I'm not sure any view is better than 55/45 like many above average investors. I enjoyed the interview with Graham Allison much more than this one because he didn't inject his own biases into the analysis as much as KB seems to and I think you are being kind calling some of his views borderline. I think his gratuitous use of demeaning insults reveal his strong biases. You can disagree with many or all of China's policies and have a negative view on their economic prospects but there is no need to resort to name calling and disrespecting what they have accomplished the last 39 years. I'm surprised KB didn't support Trump considering how alike they seem to be.
    • PD
      Peter D.
      23 October 2018 @ 19:47
      This is "Hotly Debated" ....
  • EL
    Edward L.
    21 October 2018 @ 16:21
    This video and Grant and Kyle are mind expanding to a degree few other publications can excite me. I was trying (obviously inadequately) to explain some of the world economics yesterday to my daughter and I realized how much of my understanding has come from Real Vision over the past few years. I am sincerely grateful.
  • AS
    Ahan S.
    21 October 2018 @ 15:11
    Kyle, some great comments in the interview. I especially liked the ones about ethics (or lack thereof) in investing. It's disappointing to see inclusion of China in various indices so that people are forced to buy.
  • BT
    Brian T.
    21 October 2018 @ 13:03
    It's a great interview and RVTV continues to deliver outstanding content. Here's where it missed. Luke Gromen talks a lot about the Chinese buying gold and their desire to create an ability to buy food and energy with a currency they can print, like the U.S. I don't remember where I heard this, but there was a recent "rumor" that China has amassed several times 10,000 tons of gold (I think the rumor was 30,000 or 40,000 tons). Grant is a "gold guy". How does China's setup of an oil-for-RMB contract, and their importation of large quantities of gold (where the quantities are intentionally hidden by running through Hong Kong and other methods), affect Kyle's thesis? Surely this should be part of the puzzle.
    • DR
      David R.
      22 October 2018 @ 19:48
      I think it's 80K tonnes per SCMP who have some connections and boots on the ground. That's TEN time more gold than the US and more than the rest of the world, combined. China is biding its time until the monetary system blows up in the West (almost certainly in the 2020's) and the world is begging for stability. Won't come from the IMF or CB's who've helped create the problem. Rather, enter China and its gold to save the day, for a price, namely the global reserve FX and financial hegemony over the world. US will be left an irrelevant, weak has-been, in total financial ruin. This by 2032 at latest. Study the great "Forecast" Martin Armstrong's work this year about Rising Asia and the move of the global financial capital to China. Brilliant track record managing money and accurately forecasting the big picture for 40+ years.
  • LJ
    Lucille J.
    21 October 2018 @ 12:52
    I have been try for three day and email help desk and it still doesn't play
    • MM
      Mark M.
      21 October 2018 @ 16:19
      I just downloaded audio instead.
    • vt
      vadim t.
      21 October 2018 @ 19:22
      same problem
  • JV
    James V.
    21 October 2018 @ 12:35
    Can't get it to play on either an iPad or an iPhone. Real Vision Tech Dept.: please resolve.
  • MW
    Marco W.
    21 October 2018 @ 04:11
    I guess the title of the whole interview is "Emotion versus Reality", not only Chapter 4.
  • DY
    Dmytro Y.
    21 October 2018 @ 03:38
    This video plays well on a smartphone say on IPhone. iPad indeed does not play it.
  • RW
    Robert W.
    21 October 2018 @ 03:17
    Same... all other videos work fine. Bass video will not play.
    • TS
      T S.
      21 October 2018 @ 04:11
      Same ... it doesn't play for me.
  • JK
    Jan K.
    21 October 2018 @ 03:07
    i have the same problems. Every 10 sec the red circle spins around and there is a break in the sound for a second.
  • DH
    Derek H.
    21 October 2018 @ 02:32
    The Kyle Bass video will not play but all other videos work fine. Anybody else have this problem? Any Resolution? Thanks
    • TS
      T S.
      21 October 2018 @ 04:12
      Yes, same here, it doesn't play. I emailed real vision and received a canned response bot mail.
    • RM
      Richard M.
      22 October 2018 @ 14:07
      I had that problem too (it wouldn't play in Windows Edge browser, but all other videos played fine). I then tried it in the Chrome browser and it played OK. Always good to have 2 browsers to help in checking various problems. :-)
  • KA
    Kevin A.
    21 October 2018 @ 02:31
    Anyone else just getting a red circle that spins around?
    • DS
      David S.
      21 October 2018 @ 17:17
      Sometimes closing the browser helps; other times I restart the computer to reset. DLS
    • NI
      Nate I.
      21 October 2018 @ 23:55
      Yes. Have cleared the browser cache, cleared cookies, etc. No help. Emailing Milton.
  • DS
    David S.
    21 October 2018 @ 01:47
    Apples and oranges. Hong Kong dollar reserves and Hong Kong dollar excess reserve quotes from Mr. Bass in the transcript with slight editing: ***“But what's lost in that dialectic is when you have a currency peg, for every US dollar, you have to have a Hong Kong dollar. For every Hong Kong dollar, you to have a US dollar if you're going to keep a peg. So, what you have to look at is what they call excess reserves. The excess reserves is kind of their war chest that they have to defend their peg. How much of their war chest do you think they've spent defending their peg since June 1st of this year? We're in September. 70% of their war chest is gone”. DLS
  • OS
    Oliver S.
    20 October 2018 @ 21:59
    Great stuff again. Grant, looking sharp!
  • DL
    Derek L.
    20 October 2018 @ 21:13
    Enjoy hearing Bass' views on the economy and China but does anyone else notice that he needs to preface his observations by expressing absolute revulsion toward President Trump before saying he is absolutely doing the right thing? Almost as if he has to apologize for giving Trump credit and reaffirm his credentials as an anti-Trumper. I guess that is how you stay in good graces with RV, agree with Raoul that Trump is to be hated no matter what. Deviation from the group-think is not allowed among the globalists.
    • AB
      Aaron B.
      21 October 2018 @ 03:35
      No groupthink on the MAGA sheeple boxcar these days...?
    • DS
      David S.
      22 October 2018 @ 18:34
      President Trump enjoys, supports and promotes invective. It leads voters to an emotional attachment pro or con. DLS
  • PD
    Peter D.
    20 October 2018 @ 21:09
    Kyle Bass gives a great interview, as always, with some out-of-the-box ideas. But bad-mouthing of China signals weakness in his arguments. Churning Mike Pence's complaints about China wanting to defend itself (China's defence budget is 1/7 that of America's), so called IP "theft," (technology transfers are perfectly legal in China) and calling Xi names (Emperor and Winnie the Pooh) are no substitute for a sound investment thesis. The way to attack China is to acknowledge its strengths and then to poke holes using facts, not rhetoric.
    • AB
      Aaron B.
      21 October 2018 @ 19:27
      I think Mr. Bass is most likely exposing his frustration in the West's view that this is a normal Western style rivalry. Imagine if we required Chinese companies to take on 50%+ USA based partners, which by default resulted in "voluntary" technology transfers, yes..voluntary in that its a requirement in doing business in the world's largest economy. I make my living importing from China, and from my experience they universally see the world as a "0 sum game".
    • PD
      Peter D.
      21 October 2018 @ 20:34
      Aaron: great point. But Mr. Bass's "frustrations," appear across-the-board one-sided and this in turn is hampering the credibility of his investment thesis. BTW America also acts in its own interests all the time: America bans Chinese companies outright from investing in the US tech sector.. At least US companies can choose whether they want to invest in China.
    • TB
      Tim B.
      22 October 2018 @ 17:02
      Re: China IP theft, not only does it happen, but seems large scale and state supported. Here's just one example: https://www.dailymail.co.uk/sciencetech/article-3893126/Chinese-J-20-stealth-jet-based-military-plans-stolen-hackers-makes-public-debut.html
    • TB
      Tim B.
      22 October 2018 @ 17:08
      FWIW, I agree with most of your other points.
  • PJ
    Paul J.
    20 October 2018 @ 20:13
    how can I get rid of the fucking time on the screen? Every fucking time the persistent timer won't fuck off!
    • jh
      janet h.
      20 October 2018 @ 21:02
      Just tap your screen and it goes away
    • DS
      David S.
      20 October 2018 @ 21:03
      Please rephrase your question in a civil manner. DLS
  • dh
    daniel h.
    20 October 2018 @ 17:38
    hmm, the assumption of US ethics being of a high order is open to doubt. As to a US naval presence in Chinese local waters being ok also suspect. Then the US in the late 1800's behaved like China today. The IP came from europe. SO lets have balance not US self interest. disappointed.
    • DW
      Daniel W.
      20 October 2018 @ 21:01
      US ethics is worth having a couple of unbiased videos on
  • rl
    roger l.
    20 October 2018 @ 15:53
    Kyle got the Hong Kong war chest amount to defend the HKD peg completely wrong and of humongous proportion. It is all public information and for one of the 'smartest' guy to get such basic info wrong is plain ridiculous!
    • DS
      David S.
      20 October 2018 @ 21:09
      Please give us your numbers including dates, so we can understand and/or see if it is a possible timing difference. DLS
    • DS
      David S.
      21 October 2018 @ 01:55
      Hong Kong dollar reserves and excess Hong Kong dollar reserves are apples and oranges. Please check the transcript. DLS
    • DY
      Dmytro Y.
      21 October 2018 @ 03:35
      David, sorry for my ignorance, could you please explain the difference? It is public info in HKG that FX reserves made USD 426 billion as of 05 Oct. the peak early 2018 was about usd 445 bln. So only about 5 percent were this spent this year of the total reserves. The search for "excess" did not show any results at all.
    • RD
      Ravi D.
      21 October 2018 @ 09:01
      I was perplexed with the numbers he quoted - no way FX reserve is that low...
    • KJ
      Keith J.
      21 October 2018 @ 10:22
      Would also be interested to know your source for saying he’s wrong.
    • rl
      roger l.
      21 October 2018 @ 10:58
      Kyle has mixed up the USD that has flowed into the HK banking system which had reversed this year with the reserve which the HK Monetary Authority holds . This figure is completely different from the reserve the HKMA holds which can be use to defend the HKD peg
    • DS
      David S.
      21 October 2018 @ 17:25
      Dmytro Y, - I am glad to help with slight editing. "But what's lost in that dialectic is when you have a currency peg, for every US dollar, you have to have a Hong Kong dollar. For every Hong Kong dollar, you to have a US dollar if you're going to keep a peg. So, what you have to look at is what they call excess reserves. The excess reserves is kind of their war chest that they have to defend their peg. How much of their war chest do you think they've spent defending their peg since June 1st of this year? We're in September. 70% of their war chest is gone”. DLS
    • CS
      C S.
      21 October 2018 @ 22:05
      David: https://www.hkma.gov.hk/eng/key-functions/monetary-stability.shtml From page 6 of 12 on Monetary Stability: "to improve the transparency of the Currency Board Account, a specific portion of exchange Fund assets has been allocated to back the Monetary Base since october 1998. the Backing Ratio (defined as the Backing Assets divided by the Monetary Base) moved within a narrow range of 106.3–107.5% during 2016, without touching the upper or lower trigger level. the ratio closed at 106.7% on 31 December (Chart 5). under the leRS, while specific exchange Fund assets have been designated for the Backing portfolio, all exchange Fund assets are available to support the Hong Kong dollar exchange rate. in the event of abrupt shocks, the sizeable amount of financial resources of the exchange Fund provides a powerful support to Hong Kong’s monetary and financial stability." Here https://www.hkma.gov.hk/eng/key-functions/exchange-fund.shtml is a description of Exchange Fund assets. "the total assets of the exchange Fund reached HK$3,618.7 billion at the end of 2016."
    • MB
      Mo B.
      21 October 2018 @ 22:44
      @CS: If I understand this correctly, does this mean that they can use the whole $426B to support?
    • MB
      Mo B.
      21 October 2018 @ 22:47
      P.s. I am this as this sounds counter to what Bass said about the war chest which I believe I understood.
    • DS
      David S.
      22 October 2018 @ 01:13
      C.S. - In the transcript Mr. Bass believes that to keep the peg stable, you need one $US for each $HK. Any amount in excess is available to defend the peg. I am just trying to make sure that we are talking about the same thing - reserves verses excess reserves. Hong Kong is in the middle of the trade war as the major re-export partner of China. I do not know what will happen if Hong Kong falls below 1:1 on its peg, but this tariff war will certainly test it. DLS
    • CS
      C S.
      22 October 2018 @ 02:17
      Hi Dave (thanks for the discussion, btw), I think we both have a rough grasp as to Kyles meaning, ie, 'weight for weight', ie, 1 USD for each 7.8 HKD, this is The Peg, the object of protection. Funds available to defend are currency in excess. What I would like to ask Kyle, is this basic understanding of what he said correct? He said 2 other things, a month ago I might add, that funds for defense have depleted by 70% in 3months from June 1st. That suggests a length for any devaluation fuse (30% giving you approximately another 6 weeks of defense). Is his view, in that case, that a deval could happen (given its 6 weeks post Sept 1st) at any time? He said he would be fully committed to a Yuan (HKD?) deval at the time the interview was recorded. On the HKMA website however, and as I quoted above, it suggest "under the leRS, while specific exchange Fund assets have been designated for the Backing portfolio, all exchange Fund assets are available to support the Hong Kong dollar exchange rate. in the event of abrupt shocks, the sizeable amount of financial resources of the exchange Fund provides a powerful support to Hong Kong’s monetary and financial stability." This suggests our (you and I) understanding of the imminence of the move according to Kyle is wrong. They also mention on their website they can engage in currency swaps as another stablising tool, though I doubt the Fed would cooperate purely to defend the HKD peg. It would be nice if someone could confirm this with Kyle. I'm considerably exposed to this situation.
    • rl
      roger l.
      22 October 2018 @ 03:13
      https://www.scmp.com/business/companies/article/2138536/hong-kongs-us1835-trillion-reserve-stockpile-so-big-its-actually An article I just saw for reference
    • rl
      roger l.
      22 October 2018 @ 03:45
      https://www.hkma.gov.hk/eng/key-information/press-releases/2018/20181005-3.shtml The above is latest release from HKMA regarding latest foreign currency assets. It state that the 5th Oct total foreign currency reserve assets of US$426.4 billion represent about seven times the currency in circulation. If one goes back on the release over the last couple of months, the reserve was basically stable at about seven time currency in circulation.
    • PM
      Philip M.
      22 October 2018 @ 07:50
      I’m an HK resident, so Kyle’s HKMA Excess Reserve number sounded quite alarming. I’m finding US$426.4b in reserves as of October 2018 (not US$11b), quoted on TradingEconomics.com, as well as the SCMP. Otherwise enjoyed his analysis. Am I wrong?
    • CS
      C S.
      22 October 2018 @ 09:07
      So Kyle, if you're out there, there seems to be some confusion as to what you mean (<2 weeks left to HKD deval?).
  • T~
    Tshort63 ~.
    20 October 2018 @ 15:43
    Love watching Kyle break down his process and how he collects and interprets data, always a thrill. RealVision delivering amazing content at an incredible price point. The value in the last year -relative to the subscription cost- is now a ten bagger.
  • DY
    Dmytro Y.
    20 October 2018 @ 15:43
    Unfortunately Kyle did not go into more specific details about HKG. As of 05 Oct 2018 official FX reserves of Hong Kong are USD 426 billion. It's Billion with B and its in US Dollars. Not sure what USD 10 Bln excess reserves he referred to (HKD 80 is about USD10). Second, though Hibor doubled and indeed stock market is very vulnerable HK banks only increased mortgage rates ones for o.125 pct thus far (!) and let's not forget down payments are much higher than in US posing far less risk to banking system than in US or Australia. Yes risks are high and exist but his numbers do not align with actual stats and facts here. I live in HKG.
    • DS
      David S.
      21 October 2018 @ 01:43
      Mr. Bass's sequential quotes from transcript about excess reserves. --- “But what's lost in that dialectic is when you have a currency peg, for every US dollar, you have to have a Hong Kong dollar. For every Hong Kong dollar, you to have a US dollar if you're going to keep a peg. So, what you have to look at is what they call excess reserves. The excess reserves is kind of their war chest that they have to defend their peg. How much of their war chest do you think they've spent defending their peg since June 1st of this year? We're in September. 70% of their war chest is gone”. Apples and oranges. DLS
    • CS
      C S.
      21 October 2018 @ 03:43
      A comment from Raoul Pal on Twitter March 21st 2018 https://twitter.com/RaoulGMI/status/976548539114377221 , Raoul: "Also, $HKD Hong Kong Dollar is really under pressure... this is not talked about much. Libor spreads are effecting this too..." Commenter: "I’m not sure what the big deal is here. HKMA will just reduce liquidity to keep the band intact." Raoul: "I get that... its more to understand the causes of the move to the top of the band." This indicates Raoul's thinking was different, limited risk to HKD-USD peg.
    • DS
      David S.
      24 October 2018 @ 14:26
      C.S. - I saw Mr. Bass in a CNBC 12/24 video proposing the elimination of any investments in the Texas Universities Portfolio in companies that do not comply completely with all US sanctions. This seems like a continuation of the full-court press on forcing China to devalue its currency that Mr. Bass has been proposing and positioned for many years. Another side of Mr. Bass's full court press is to back the president's use of tariffs on China to force them into more financial difficulty. This is a good example of "my enemy's enemy is my friend" as Mr. Bass does not hesitate to show he is not a supporter of the president. This continued full-court press may finally bring about a major decline in the value of the Yuan, but it will certainly cause major disruptions in the FX markets. I would be very careful in Yuan or $HK positions as this will have a life of its own if China is cornered. DLS
  • TT
    Trenton T.
    20 October 2018 @ 15:08
    After building a greenfield plant 'in" [or is that "for"] China in 2007 and watching the real estate market until 2011, I made a gentleman's bet on what I saw was the imminent decline of the Chinese residential real estate market over a case of Dom Perignon 2003 with a former Centaurus trader who will remain unnamed as he did not agree to any publicity around the bet. He had a bead on the Fed and other CB flows sloshing around and ending up in the Chinese real estate market and I handed over a case of Dom. Shorting the Chinese banking system (or HK or Sing parents as some suggest) is a fool's errand as it is not separate from the Sovereign. If the HKD peg does not break within the next quarter (or two), that means the Sovereign has more staying power than Kyle thinks and the whole thesis is broken. I am glad to see Kyle is looking well. I was a bit worried for his health after the last interview. Japan is the old bank and can make anyone's hair fall out - I don't hear Kyle talking about Japan anymore. Great think piece in any case, especially when viewed in succession with certain pieces referencing SDRs and how the next crisis and the massive trade imbalances that have only worsened since 2008 will be "handled" using the IMF clearing house. Thanks Grant for both interviews.
    • DY
      Dmytro Y.
      20 October 2018 @ 15:44
      Zero hedge writes he lost 19 percent in 2017 by betting against Yuan. Maybe he is simply angry? :)) some political remarks of him better be put off. We better not mix up politics moral and investment here.
    • AG
      Adam G.
      21 October 2018 @ 15:22
      Yep : beware... Bass is brilliant and has not made returns for a very long time.
    • KS
      Kathleen S.
      26 October 2018 @ 13:07
      You can be right like Kyle is --- but you can't predict how far power will go to keep insolvent system going -- and that is something that I think has suprised alot of people. I mean are negative interest rates even possible -- of course not, but in this non reality we are living in anything is possible.
  • RD
    Ravi D.
    20 October 2018 @ 14:20
    i am not sure how he got to the $11bn FX reserves.. seen no reports to this at all??
    • DS
      David S.
      21 October 2018 @ 01:57
      See interview transcript. DLS
  • RP
    Roberto P.
    20 October 2018 @ 12:38
    Swift is one thing and trading with yours partners outside Swift is another. Would be interesting to check how much China trade outside Swift. By the way, market share of oil contracts in cny has risen very fast.
  • TS
    Tamás S.
    20 October 2018 @ 11:51
    "Kyle Bias", anyone being non US and nor Chinese can see how skewed his views are. I have the sensation he is just angry at China. Just two examples: -39:55 "evil china takes ppl into concentration camps, but ppl buy their bonds" -> counting on the ethics of bond markets WTF? -36:50 "to oppose US in the south china see" This second one really gives it away, it's them against "US". Those ugly Chinese... Kyle will teach them a "Short" lesson :) Being angry at the market is probably not a good idea.
    • JW
      Johnny W.
      20 October 2018 @ 23:53
      He knows something about China most ppl don't know. The consentrate / re-education camps for example, if you don't kown anything about it, do some study and you will find the answer, and reaccess Kyle's view or your view on China.
    • PD
      Peter D.
      21 October 2018 @ 09:29
      America puts tens of millions of people into re-education camps too. Except we call them "public schools."
    • GS
      Gordon S.
      21 October 2018 @ 21:48
      Then the US also funds states like Saudi Arabia (no comment here) and Turkey (which probably has "concentration camps" for their Syrians) and promotes slavery in Sub-Saharan Africa (Lybia).
    • NA
      N A.
      25 October 2018 @ 08:10
      @Johnny W.: KB knows as much about China as any US expert, that is, far less than he should. Fund managers in Asia laugh at these cowboys coming out here trying to make a buck with their iron clad view of the world. Where "good" always trumps "evil" and good is everything that falls in line with the US. Unfortunately KB is smart, but does not know enough about China. I know people shorting China and they are much better. I also know people who are long, people who are L/S, they know much more, and additionally are making a killing. They are usually based in Asia, not the US. It's like saying an HK based manager can run a great US hedge fund, maybe, but probably the guys in the US are better.
  • SP
    Sat P.
    20 October 2018 @ 10:56
    Awesome insights, especially around the link to working capital from abroad running negative. I will have to watch it again to take more notes!
  • CS
    C S.
    20 October 2018 @ 09:29
    Anybody else working and living in Hong Kong? In '98 they defended the peg and let asset prices take the hit. It makes sense for them to ultimately take an adjustment in the currrency this time. I've been concerned about the HKD for a while as I have savings in that currency. Switching to USD or other currencies is one measure. But how about HK banks? Would it be wise to move funds to a bank in another country eg, Singapore (Australian banks are dodgy),? Just thinking out loud. I dont know any financial types socially. And have another 18months to go before I consider leaving HK.
    • DY
      Dmytro Y.
      20 October 2018 @ 13:45
      I live in HKG. Pls write me to dyinvest2017@gmail.com if you like to chat and meet up.
    • CS
      C S.
      21 October 2018 @ 03:25
      Hi Dmytro, I've sent an email to your address today. Titled 'Hi/RV' (check your spam acct). Cheers.
  • BM
    Beat M.
    20 October 2018 @ 08:50
    So, do I understand it right, HKD would weaken 30% to peg with mother China, to let’s say 1:10, at the same time stocks would appreciate (in HKD), the opposite SNB play? Thats one for trading ideas, no? How to play best?
  • WC
    Wilson C.
    20 October 2018 @ 07:19
    apologies, i just posted and even though i had spacing and paragraphs, everything got jumbled together when it posted, totally understand if people don't read it :-) it's messy
  • WC
    Wilson C.
    20 October 2018 @ 07:17
    Interesting discussion, have been w/ RV since the beginning, and started following Kyle Bass since the GFC. Grant is such a great and balanced interviewer, and it did come across that Kyle had a very strong opinion on China/China thesis that went beyond the data (analysis), ie, his personal opinion (nothing wrong, just to be aware). Some thoughts to share: - talks about monitoring flows, current account deficits, USD shortage. all makes sense.. but betting against a country & central bank? in US, it was trade ahead of the Fed and not against (no matter what you thought of QE or economy), not trading against the JCB, and I would think same applies here re: RMB/Central Bank. - someone mention his Japan thesis (last 10 years?) on Yen devaluation / Bug in search of a windshield, all supported by the data but then you have the JCB / Govt Policies... how long do you want to trade against someone who can print money :-) the same apply to RMB/China? - on China as the bad actor. IP theft. paying for their military, letting china into the WTO. Seems to be the common press narrative that Kyle is articulating. Hmmm... ... IP Theft. What type? Military espionage? pretty sure every country is doing to to every other country. Industrial espionage? Same, companies been doing it to each other for eons. Unfair Trade policies? ie you need to share your trade secrets or partner w/ a local chinese company in order to do business/sell in China (probably this one?). Well, we can always say no, and walk away i don't need your business (or let avarice take over). This reminds me of companies between a rock and hard place selling to Walmart, if you sell, you mess up your pricing in the market with your other customers (as Walmart will sell it at the cheapest price everywhere) but you have volume, or you don't and Walmart goes with your competitor (so you have less market share and may be bankrupt anyways as customers go for the cheaper brand). Damn if you do, and damn if you don't... kinda like China market? Sour grapes much? ... I like how Grant remind Kyle the funding (bonds?) for chinese military is not hidden, it's transparent if you do due diligence, but most investors are greedy and going for the investment return and don't care enough to find out... no evil empire intent i think ... China in WTO, interesting spin. I don't know much about this, but I don't think China was in WTO from "goodness of heart", didn't it make it easier for multi-nationals to leverage (I won't use language like exploit haha) the cheap labor, land, electricity lack of concern on standards/safety/environment in China? then China grew up and costs and standards got expensive. ... i saw another article somewhere that China already files as many patents as USA? and if you go to china at least once/year, you can see the innovations are surpassing the world, be it the bullet trains, or wepay/alipay, services, etc esp in the big cities. They've taken ideas/tech and improved on it. No different from the Japanese in the 70'/80's, the Korean's in 90's/20's and now Chinese. and in the future, maybe Vietnam or India etc... the virtuous cycle continues... - interesting take on HK. I live in HK last 20 years. I don't think the general population would agree that last 10 years was the best in HK, except if you own a few properties post GFC. thus, the Occupy Central angst, the young restless against China/mainlanders flooding into HK making everything expensive and taking jobs, life is not getting better when you have to pay $750K USD for 300sqft condo (27 sqm)... wonder how regularly Kyle travels to HK as I'm sure he would get a different perspective. In short, I thought Grant had the more balanced view (esp since he lives in Singapore), Kyle shared some fascinating data points on China (for another interview, search for Leland Miller one) and his thinking process, but I'm more inclined to think this may be similar to his Japan/Yen is a bug in search of a windshield thesis.... still waiting for that one to drop. thanks for reading
    • DY
      Dmytro Y.
      20 October 2018 @ 13:47
      Great response. If you live in HKG pls write me to dyinvest2017@gmail.com if you like to chat and exchange ideas. Thanks
    • PD
      Peter D.
      20 October 2018 @ 21:12
      Geez I wish RV allowed paragraphs....
    • MW
      Marco W.
      21 October 2018 @ 12:36
      Great observations on the ground. Grant could have a new interview with Simon Ogus, who In my opinion knows the deepest and best on China/Hong Kong.
  • MT
    Mark T.
    20 October 2018 @ 06:24
    52.39 time stamp I disagree with Grant . The Golden Carrot is not important. The concept of Chinese ethics and moral foundation being entirely alien to ours will, in retrospect, be seen as the overarching factor determining outcomes. I am frightened to think that my president and Congress have too little awareness of this as they prosecute policy on my behalf.
    • TT
      Trenton T.
      20 October 2018 @ 15:42
      The best way to insulate the United States against a Chinese financial implosion is to crank up the tariffs and cut ties/restrict trade flows to the extent possible. The downside is that it increases the risk of a hot war. The pivot on N. Korea has been impressive and if anyone thinks that did not put immense pressure on China, they are ignoring reality. I spent ~4 years in S Korea as a civilian but closely acquainted with US military and diplomatic concerns. This outcome was unthinkable at that time. Basically, at any time since the June 25, 1950 until the pivot actually occurred.
    • DS
      David S.
      21 October 2018 @ 02:08
      Trenton T. -- I believe the real pivot was between South Korea and North Korea. I hope something will come of it, but it is very difficult as South Korea will have to pay the bill like East Germany. The US attempt was just for show. China will be the largest player in this game, as China would like to have the US out of South Korea. DLS
  • JB
    Jason B.
    20 October 2018 @ 04:31
    Fantastic interview! And I didn't hear any of the background noise that was warned about beforehand!
  • SB
    Stephen B.
    20 October 2018 @ 03:34
    Priceless. An amazing hour.
  • rr
    rlw r.
    20 October 2018 @ 03:19
    Epic chat. Thanks Kyle & Grant for your many valuable insights.
  • HO
    H2 O.
    20 October 2018 @ 03:00
    Well, KB still doesn't understand Chinese politics and how policymakers respond to these kinds of situations. It has cost his firm tons of money. The CNH shorts are piling on, and before the currency craters, PBOC will jack up CNH Hibor again (as they have done numerous times) and the slaughter will recur. There are a lot of trades here, but this doesn't make sense of them. Instead of cheer leading, ask the simple question of where has money been made on China trades, and where has money been lost.
  • CN
    Charles N.
    20 October 2018 @ 01:32
    With so much content (noise) in the world today, an interview like this illustrates why RV is head and shoulders above anyone else in financial media. If only every day was a Friday!
  • JL
    John L.
    20 October 2018 @ 00:47
    Just went back to my notes on Kyle's interview with Raoul last year.....He was "Spot on" with so many of his macro calls.
  • LK
    Lyle K.
    20 October 2018 @ 00:22
    Kyle Bass the master of thinking of the unfathomable. He nailed 07-08 GFC by seeing something that 99.9% of the world missed. His thoroughness always amazes me, it is no wonder why he is one of the best on earth at what he does.
  • CG
    Chase G.
    19 October 2018 @ 22:41
    Dear RV team being able to play these videos streaming in the background on an apple device or better yet do picture in picture in the background would be super chill. Thx, great interview!
    • MF
      Matt F.
      22 October 2018 @ 20:46
      I agree with Chase - it would be nice to be able to multi-task while watching your videos on an apple device. If I back out of the app, or open something else, the audio stops - sometimes I just need the audio... thanks!
  • SS
    Sam S.
    19 October 2018 @ 21:41
    I'm far more encouraged to hear Washington is well aware of the situation with China, as many of us feel Washington has lost it's way in protecting America/citizens. No question much of our country has been sold down the river and maybe the flow of funds buying influence will be drying up to those doing the selling? I have some of those nickles Kyle talked about in a former interview years back and still worth at least a nickle. Principle protected. Rest of the drama around the world might be a distraction to the real action/risk coming from China/Asia.
  • CC
    Christopher C.
    19 October 2018 @ 21:25
    One of the biggest macro differences I have noticed amongst the lion's share of the Titans that RealVision has interviewed, and those great men, whose interviews I have watched closely over the years in other places, is the willingness by the self-made to discuss morality, and the implications of morality at all levels of finance, government, and personhood, etc. A person that makes himself something from nothing, or with little or no advantage to start in life, knows something about himself that someone who has held high station, in part or whole by birth, can never possess. Some fewer can even observe and reflect on the matter dispassionately.
    • PC
      Peter C.
      20 October 2018 @ 03:44
      What are you saying?
    • CC
      Christopher C.
      21 October 2018 @ 14:54
      What I am saying Peter C. Though I surely did not say it first, is that given an important enough "why" any "how" is possible. That being said it is critically important to be correct about our "whys?" when inspecting the words and actions of ourselves and other folk's "whys?" when inspecting theirs.
  • GC
    George C.
    19 October 2018 @ 20:24
    At 51 minutes, Kyle hits on a major point but it doesn't get due time or attention (perhaps because it is contrary to the narrative that it's white hats vs the black hats). In any case, as usual Kyle informs and stimulates thinking. Hope there is a subsequent interview covering investments topics putting China to the side.
  • AK
    Ai K.
    19 October 2018 @ 20:21
    I don't understand why he is using aggressive words like "stealing" or "China makes people go away". Please keep the talk professional, not propaganda. This is Realvision, not Trumpvision. I know Kyle Bass has been wrong about China for many years. China may be going through a tough time in the short term, but they can come out ahead in the long run.
    • AK
      Ai K.
      19 October 2018 @ 20:28
      China is not stealing. China is funding American's privileged lifestyle by buying US Treasury with their citizen's high saving rate. Come on!
    • MK
      Michael K.
      20 October 2018 @ 01:56
      While I agree with you that Kyle could use a little courtesy with respect to the Chinese, ie calling Xi Winnie the Pooh per the cartoon meme. Despite that, doesn’t make him wrong. Sounds like you’re getting sensitive by the envelope than the actual letter content.
    • DR
      De R.
      20 October 2018 @ 06:21
      please lay out your reasons on how China can maneuver through this situation. I'm all ears.
    • JW
      Joe W.
      20 October 2018 @ 23:07
      Uhmmm. Chinese do steal and they do make people disappear. You have not been to China or be in tap of the news on way thr central deals with issues. Kyle is spot on using those terms.
  • DS
    David S.
    19 October 2018 @ 19:46
    Is it reasonable to believe that the drop in Hong Kong reserves will drive Hong Kong to drop the dollar peg, which no longer makes sense, and peg to the Yuan? Is this playing into the Chinese hands or is it part of China's strategy to merge Hong Kong into China proper? How many Hong Kong banks have branches or head offices in Singapore? DLS
  • DS
    David S.
    19 October 2018 @ 19:19
    The real Bank of China is the Chinese Government that controls all the levers of China's financial assets. What would happen if you factored in all of its financial resources to make your calculations on risk? DLS
  • TP
    Tucker P.
    19 October 2018 @ 18:48
    One of the most intelligent conversations unpacking an incredibly complex subject I have ever seen. Kyle's broad perspective is matched only by his knowledge of granular detail. Great job Grant.
  • DD
    Daniel D.
    19 October 2018 @ 17:55
    It seems like Kyle is becoming a one trick pony (China). This topic is getting a little long in the tooth. If his thesis is correct (and I'm not saying it is or isn't) and it takes a decade to play out, will he be able to say he was was right? I can tell you it will rain in the desert, tell you for years how and why it will and when it does eight years from now everyone will think I'm so smart? It seems he's been on RV and other places forever pontificating this story. Again, nothing whatsoever against him or his convictions.
    • TS
      Tyler S.
      19 October 2018 @ 19:18
      I guess the only difference between you two is the amount of money you each manage/have
    • MV
      Mark V.
      20 October 2018 @ 01:14
      Not true.He's been banging on about how Japan is going to go bankrupt for 10 years.
    • DR
      De R.
      20 October 2018 @ 06:23
      Because he doesn't tell you how he size his position. He can afford to be wrong for longer than you can.
  • BM
    Beth M.
    19 October 2018 @ 17:17
    Fantasic...always appreciate (to the Nth degree) Kyle's insights...shining lights on doors that we continue to see opening and being able to understand why certain doors are opening! Thank you
  • BP
    Bryce P.
    19 October 2018 @ 16:47
    I’d have to watch this first but I can’t imagine I’m going to agree with Kyle on his China thoughts. I just think he’s dead wrong on China. I like Kyle and enjoy listening to him but he’s just dead wrong on China pure and simple.
    • DS
      David S.
      19 October 2018 @ 18:22
      It would be wiser to listen to the interview first. It may not change your mind, but please give Mr. Bass the courtesy of listening first. You may find information that confirms your position which would be interesting for all of us to know. DLS
    • PB
      Patrick B.
      19 October 2018 @ 18:22
      Hi Bryce: Can you share your reasons? I'd be interested in hearing a counterargument!
  • MC
    Minum C.
    19 October 2018 @ 16:16
    This interview comes across as being too politically biased for me to place any weight on what is actually being said. I down voted it. It seems fitting for Grant to be wearing red socks for an interview on China. Perhaps it will bring him good fortune in the gold market in the coming years.
    • TP
      Tucker P.
      19 October 2018 @ 18:52
      Politically biased how? Kyle doesn't like Trump's character, but says he's right on China. I think Kyle's perspective appears to look at the political battle from 10,000 feet above.
  • GF
    George F.
    19 October 2018 @ 16:10
    " China to ascend in the WTO in 2001. We lost 4 million jobs " 2001 something else happened that year. Oh, The Forever War started. Is it possible that China agreed to the whole craziness in exchange for a favorable commerce environment? BTW, how is it that you never hear anyone talking about the forever war as driving finance and the economy. Hong Kong. I never have been there but I loved the movies. Did China destroy the HK film industry? "I think they know more about the bigger picture than we'll ever know" Conspiracy theory? " one of the preeminent thinkers in the hedge fund community" I think some humility is due, search on [kyle bass nickels] for details.
  • JG
    John G.
    19 October 2018 @ 15:44
    Thank you, Grant and Kyle for the illuminating update on China.
  • PR
    Pedro R.
    19 October 2018 @ 15:06
    Great interview one of best narrators of China problem. It should be a two hours interview. My only criticism is that probably I will have to wait another year to see a new interview with Kyle in Real Vision.
  • ZH
    Zayd H.
    19 October 2018 @ 13:48
    Kyle/Grant - great interview. I was hoping the interview was going to be more about Kyle's take on his interview with Graham Allison. Instead it seemed more of a well-reasoned argument as to the bear case for RMB. My interpretation of Kyle's thoughts in this interview here, as it pertains to the USA / China Thucydides Trap, is that the likely outcome is war. This is based on statements by Kyle such as "we are funding Chinese warships", "we will seek reparations for IP theft", etc. But that is just me tee'ing up what I hope is an addendum interview with Kyle...
  • CR
    Carmen R.
    19 October 2018 @ 13:37
    Kyle is great. But Grants interviewing skills are second to none!
    • BM
      Beth M.
      19 October 2018 @ 17:19
      Agreed...Grant always does a great job.
  • XP
    X P.
    19 October 2018 @ 13:24
    This interview is Gold!
  • RS
    Ruben S.
    19 October 2018 @ 13:16
    Very interesting interview, and as always with Mr Bass very detailed analysis. i m just surprised that you focus so much into Current account shrinkage to justify the timing of the Chines bobble burst without mentioning the "risk" that they could get their Dollars through the capital account. And being such a big economy (enough to be it only in terms of size) you have A LOT of dollars willing to get there just to match portfolio exposure to share of global GDP. Hence, don't you think the Chines could delay the burst quit a lot if they open completely the capital account ?
    • DR
      De R.
      20 October 2018 @ 06:31
      The reason why they are afraid to open their capital account now is due to money rushing to flow out of China, not into, if you look at the average offshore/onshore investment ratio per capita, Chinese are under invested in overseas markets by a huge margin, ask any doable chinese business man in China, there are huge demand for outbound investment and this is what Beijing fears the most at current situation, hence they're trying to jockey more big funds inclusion to pour money into China in hope to neutralize that outflow, so then the question is timing, can they bring in huge sum in a short time?
  • JS
    John S.
    19 October 2018 @ 12:07
    Excellent
    • RS
      Ruben S.
      21 October 2018 @ 11:02
      Agreed on the « timing » issue. But the chinese reserves are here to buy some time dont you think?
  • AR
    Abishek R.
    19 October 2018 @ 11:43
    Very well moderated discussion by G Williams. However, in the China vs. USA coverage, Real Vision is almost only covering one side of the story for the past year, so while useful its not the complete picture. How about somebody like Kiril Sokoloff / G Williams travelling to Beijing or Shanghai with a Chinese interpreter and speaking with Chinese economists about their view of the situation and why they feel this will ultimately end with USD crashing or USA unable to finance itself.
    • MK
      Michael K.
      19 October 2018 @ 11:49
      I believe 13d has such an interview on their website
    • tC
      thomas C.
      19 October 2018 @ 12:32
      Checkout Kiril’s interview with Ronnie Chan. Was posted on RV in June I believe
    • AR
      Abishek R.
      19 October 2018 @ 12:52
      @Thomas That was a great interview, but not on this trade war subject.
    • AR
      Abishek R.
      19 October 2018 @ 13:01
      Also I dont think you can ask a businessman like Ronnie Chan to be publicly critical of the USA in the way you cannot get Tim Cook to give his real assessment of China.
    • JW
      Joe W.
      20 October 2018 @ 23:15
      You do understand the Chinese manages everything right? You can interview all the Chinese economist all you want. I bet my life they all share the same exact opinion. For a proper view on China you can only look around and make best guess. Because everything internal that are published is managed and fudged.
  • Nv
    Nick v.
    19 October 2018 @ 10:57
    You put a duty on an imported product, priced in USD. The US company tells you it will pass this price increase on the imported good onto consumers. You believe it will cause no price increase for US consumers. Riiiiiight
    • AR
      Abishek R.
      19 October 2018 @ 12:06
      I think Kyle’s point is that the US cos won’t need to hike prices because China will devalue their currency, effectively cancelling out tariffs.
    • DS
      David S.
      19 October 2018 @ 18:37
      Abishek R. - One of the administration reasons for tariffs is a surrogate border tax to raise revenue while promoting further its isolationist policy. You are correct that the Chinese have play the game of lower its currency to offset, but there will be destabilizing consequences worldwide with gains for China politically. There are real trade issues. I am not sure that this will lead to the correction of intellectual property theft or other trade practices. DLS
    • SJ
      Scott J.
      20 October 2018 @ 07:41
      I bet you the US ties the value of tariffs to the exchange rate after the deval.
    • DS
      David S.
      21 October 2018 @ 17:36
      Scott J. - It is better to never tie your own hands. The tariffs will only harden Chinese resolve. This is just simple human nature. DLS
  • CM
    Carlos M.
    19 October 2018 @ 10:45
    great interview!!! only one question I know China has invested for over a decade in EM countries in order to have better access to raw materials, if their main problem is the CA turning into a deficit and not having USD to finance China inc, isnt it possible that they start a parrallel market in CNY to buy Oil for example from the saudi, iran russia venezuela, etc? This particularly so when Trump has given a clear message of World trade as a 0 sum game and every man for himself. Is it just an unfeasible task to replace the dollar as the commodities denominator?
    • CM
      Carlos M.
      21 October 2018 @ 20:34
      No need for an answer it is already happening “And in even better news for China, Saudi Arabia (the world’s largest oil exporter) is expected to start accepting the CNY as payment for oil exports to China soon.” so clearly that’s “trumps” the theory of China needing dollars to function
  • CL
    Charles L.
    19 October 2018 @ 10:43
    Speachless...Grant, you bring out the best of those you interview. Outstanding. P.S: wonderful socks!!
  • JS
    John S.
    19 October 2018 @ 10:11
    Superb
  • EA
    Eldon A.
    19 October 2018 @ 09:06
    Great interview