Despite interest rates having bounced (albeit very modestly) in the last few days, prompting shrieks of “the lows for yields are in” once again, and hyped-up belief that ‘There Is No Alternative’ to dumping bonds and buying stocks at record highs, Hayman Capital fund manager Kyle Bass has a different view suggesting that a global re-awakening of easier-and-easier monetary policy will drive US rates to zero (and potentially beyond).
“This is insane. The Japanese are going to keep going. The Chinese print money like it’s a national pastime today. Europe is going to restart QE.”
During an interview with CNBC, Bass exclaimed:
“We’re the only country that has an integer in front of our bond yields,”
“We have 90% of the world’s investment-grade debt. We actually have rule of law and we have a decent economy. All the money is going to come here.”
For now, it appears that money is buying bonds AND stocks…
Which, Bass notes, will spark even more inequality (as ‘assetholders’ get richer – in ever more diluted dollar terms while the rest suffer from inflationary living costs)
“The unintended consequences of central bank printing are that it makes the rich even richer, it makes the middle class stay where they are and it makes the poor stay poor.“
Bass also noted that he does not think a China trade deal is anywhere in sight.
“I think Trump’s political calculus is to keep talking. If he does a deal, it will be too easy and he’ll get attacked from the right. If he does a deal that’s too difficult, they won’t sign it.”
Watch the full interview below: