What’s the Best Trade In The Twilight Zone? (w/ Kyle Bass) | Interview | Real Vision™


There are a little over 180 recognized nations
in the United Nations, and China is the largest trading partner of more than 100 of the 180. So when I think about China moving through
a difficult period of time, I can’t imagine that that’d be positive for EM. And when you look at EM, EM vol is underneath
US NASDAQ vol for the first time ever. And just– we kind of live in the twilight
zone, right? I mean, we live in an environment where we
have– European junks lower than treasuries. We have European junk lower than 10-year treasuries. We have EM vol inside of NASDAQ vol. We have crazy people lobbing missiles in different
places. We have a rising power threatening a ruling
power. All of these things are happening all at the
same time. I wake up each day and say, I don’t even realize
which world I’m living in anymore. And yet, equities march higher, vol continues
to come lower, and the world is moving from active to passive like there isn’t a bump
in the road right in front of us. And I feel like there’s a pretty material
bump in the road. There could be a pothole that we might fall
in in the near term, and yet we’re speeding along at 100 miles an hour. And so there are these– yeah. There’s a dissonance in the world today that
I actually have a hard time putting my finger on. So that makes you– that’s making you more
risk averse than you would be. Yeah. I think as you probably know me, you know,
maybe I’m cursed, but I’m skeptical by nature. I think all good macro people have to be,
because that’s the game. But when you think kind of eight years into
one of the biggest bull markets in the history of time, it is not the time to be adding risk. It’s not the time to be going from active
to passive. It’s not the time to be piling onto what’s
been working. Because I think, you know, inevitably– again,
not the end of the world. But inevitably, we could see some really big
gaps, right? We could see some air pockets if all of the
sudden everyone thinks they can reduce exposure so quickly, and they can’t. So I think in the next 12 months, we’re going
to see pretty elevated vol levels. I think vol’s the cheapest asset class in
the world.

5 thoughts on “What’s the Best Trade In The Twilight Zone? (w/ Kyle Bass) | Interview | Real Vision™”

  1. does he mean "emerging markets volatility" when he says what sounds like "…. e m vol……"?
    apologies in advance for dumbass question 😉

  2. I'm a bit embarrassed to ask such a simple question, but if ya don't know – ya gotta ask. When he says 'vol' does he mean volatility or volume ?

  3. Vol ( volatility ) is tricky / hard to buy. Vol ETF 'costs' could be expensive if it doesn't swing in the short term.
    I believe Kyle is right about the 'bump' in the road but specifically what to do about it is to difficult answer.
    We know 'risk on' investments are where we should NOT be, but at the same time it is painful to watch stocks continue to rise while our value is stored. Once the bump arrives then our 'stored value' will enable us to buy cheap.
    'When ?' is the ba-zillion dollar question. The Central Banks are so powerful that their monetary policy could drag this economic fantasy out for a long time.

  4. The problem with debt is it is not the amount of debt you have but the interest rate and thus the payment you make. Also if inflation exceeds your increase in debt your debt burden really goes down. What is the true inflation? The money supply change.

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