tv Keiser Report RT January 28, 2020 3:30pm-4:01pm EST
guys are this is the kaiser report you for that expression poop floats. reminds me in davos. at the top of the world are a bunch of billionaires floating stating. fact there are 2153 billionaires and they hold more than 4600000000 people combined that came out right when 119 of those billionaires close to 10 percent were meeting up and down last week and not much happened there to warrant their getting so much attention but we're going to pay some attention to that the founder of world's largest hedge fund says cash is trash as the dow soars to records says world economic forum 2020 investor should be buying this market rather than seeking safety in cash that's it right dahlia says yes ok should be pointed
out that rebellious almost lost money last year he was open to one quarter of one percent of generating a losing year his expertise as a money manager is in question so i'm not sure why anyone would listen to raid elio for the 1st point i'd like to make 2nd of all if he thinks cash is trash. then why is warren buffett 120000000000 in cash i come form buffett putting the money to work so but warren buffett has a track record is quite vastly superior to ray ballio so i i don't understand why he thinks we're interested in this thoughts he's obviously trying to justify his low returns last year the nasdaq was up 40 percent the stock markets were up in general about 25 percent he himself his is investors only received 0.25 percent i don't know if that even covers all the fees they have to pay him and his crew but he lost money but maybe now he's capitulating that could be a sign of his capitulating is like. going to jump into this market maybe he didn't
believe in it because a lot of people are intellectualising this and the fed can't control everything the fed can't do this the fed can't do that what he was trying to do perhaps was fight the fed a lot of people try to fight the fed peter schiff tries to fight the fed everybody tries to bite the fed and the fed loses or the fed wins until it will suddenly lose i just don't understand why how can so migrate dahlia in a market that's between 25 and 40 percent and not even make one half of one percent thanks all genuine amount of skill to underperform on the level you know it's a money market fund even at the worst one a market offering rates in any bank in the country did better than rebel yell last year this is he almost underperformed negative yielding bones maybe he is the hedge fund because ray dally of course is worth like $10000000000.00 listen connecticut has bridgewater capital capital which has tens of billions under management maybe he's the hedge fund that the repo market is bell yeah nobody knows why the fed is
intervening in the repo market they did suggest while davus was going on that they might actually start lending cash directly to hedge funds maybe he's he's the guy maybe that's the quid pro quo for him that's why he's up there saying don't fight the fed people don't do it i mean i lost you know like maybe he's up there now championing the fed telling people to get into this market at all time highs and you know he's changed his tune well he wrote a book because last year called principles and in this book he list like a 100 or 150 of his principles of how he became so successful as a money manager. yielding virtually 0 results and so i think the 1st principle anyone should understand when talking about ray dahlia is don't listen to rate deleo that's principle number one if you buy his book you could use it as a doorstop or maybe can. linwood but it has no practical value as
a source of information it's a plagiarizing aristotle from 2700 years ago for one thing and it's just a lot of verbiage i mean if you it's a lot of words it's a word salad meaning nothing well you know who do does get celebrated by the market by market commentators by the likes to see n.b.c. is jack welch now jack welch of course ran general electric from 1901 to 2001 the stock price increased by 4000 percent under him but it was a one time trick everybody is now trying to copy him of course what he did is just hollow out general electric general electric used to being an amazing american corporation that built this country turned us into an industrial powerhouse amazing engineering well he came up with a clever idea of getting rid of all the expertise getting rid of technology getting rid of manufacturing getting rid of all the stuff that germany now controls essentially and just turning the brand in the value of the company turning it into
a derivative essentially hollowing out the company turning into a financial organization instrument and of course the stock to go up 4000 percent and now it's down down down down down. but many of the people at boeing. i learned are also they were trained by jack welch so we look at these planes falling out of the sky and you look at this nonstop disaster after disaster they keep on revealing about how the 737 max just can't be brought back into operation and probably never will because apparently it's not even designed to fly only the software enables it to fly anybody who has a computer at home or a smartphone why would you ever want to stress software i don't know if flies have a simulator on a videogame but it doesn't fly with real planes going through space junk into the sky yes right so you want to get on a physical plane a boeing physical plane to get to what point a to point b.
because the software is only good for video game is good for your kiddos the video gaming device but it's not for humans to be in a plane that's a you know there are a lot of people the left general electric to want on to become executives other companies with that philosophy of just got the company as much as you can to make yourself as rich as possible you know that's why they call general election jacks but droste it's jackson a droste that was is a little school of thievery over at their general electric in fact david calhoun the new c.e.o. of boeing was trained under jack welch so here we're going to look at a headline from wall street dot com after blowing 43000000000 dollars on share buybacks in 6 years boeing scrambles to borrow 10000000000 on top of the $9500000000.00 credit line in october to fund its 737 max fiasco the 1st thing to know about boeing's mad scramble to line up $10000000000.00 or more a new funding by a loan from a consortium of banks on top of the 9500000000 credit line it obtained in october
last year efforts to somehow get through its cash flow nightmare caused by the 737 max fiasco is that the company blew wasted and incinerated $43400000000.00 to buy back its own shares since june of 2013 having become a master of financial engineer. ring instead of aircraft engineer ng so the jack welch acolytes who were brought in to boeing since 2011 which was when they were alerted to let me explain this to me that proffer 2nd uses ok so boeing boeing becomes a passer mechanism right so they buy back their own stock with cheap money from the fed and it goes through the company ostensibly to help the company but as stott it's disenfranchising the company and then on the other side of the executives who are getting that money from the fed directly into their pocket they use the company as a pastor mechanism and what happens is it leads to incredible malinvestment so boeing now is no longer a viable company so bad in fact that and the debts are so onerous in fact that even
money at 0 percent is not going to help them recapitalize this this this garbage company now boeing that's worthless essentially it's insolvent and so what do you do now because there are a lot of companies in the s. and p. $500.00 zombie companies that are like this the executives stole all the equity through a pass through of cash from the fed at 0 percent interest rates this guy's a stock buybacks and now they're just a walking zombie and it's all fun and games are no victims according to eric holder but if you're in a ball in play and you fall out of the sky now you're dead eric holder i would say that's a victory so i'm going to compare it to charts here's general electric this is about when jack welch was brought in this is what he did remember back in the ninety's you'll remember him on the front of all those fortune forbes he was hailed as the great savior merit he is the the champion he was like as great as warren buffett he was like the man right and this is the company ever since and they've
received bailout after bailout they received bailouts during the 2008 financial crisis here's boeing. 2011 you know this is when they brought in the 737 max as a response to air bus out competing them here is when vesper starter rewarding them for turning into financial engineering. from 2016 to 2017 they fired 8000 employees at the company including 1332 engineers and look what of course happened to the stock price investors tell ya keep doing this get rid of those engineers they cost too much it's too slow we want results this day to day within the hour we want the stock price to keep on going up and of course it didn't keep on going up but eventually of course if you don't have engineers then you can't design and engineering a plane to fly in the sky right the barbarians and the vandals have penetrated the enterprise that was once called the united states of america and they can't print
this garbage fee money quick enough just like the roman empire started clipping their silver coins and they couldn't afford to pay their soldiers anymore and you had a collapse of the empire you want into the dark ages america is clipping coins by printing money to give the barbarians the executives at boeing and general electric and the s. and p. $500.00 inflated workless money so they can go out and live somewhere else overseas not in the future it collapsed shell of a country once known as america and this is not going to end well this is just the beginning boeing used to be at least over 7 percent of u.s. exports so they're very important to us now it's a shambles and you mention the debt the 2nd thing to know about boeing's mad scramble to borrow another $10000000000.00 is that it already has a huge amount of debt and other liabilities that its total liabilities $136000000000.00 exceeds its total assets of $132000000000.00 by about
$4000000000.00 as of september 29th teen meaning that it has negative net equity that the share buybacks have destroyed its equity which is what share buybacks due to the balance sheet passed through free money goes to the executives. empathy is collapse under shell of its own debt right it's what we saw philip green do it with top shop in the u.k. 5 or 6 years ago he loaded a company up with a 1000000000 took it out it lives in monaco and topped off down right this is lettuce is invented by the leveraged buyout in england you know 50 years ago and now it's the end game yet but that's just clothing this is retail here is the heart of any giant industrial power is manufacturing is this to have that technological know how to get rid there's 1332 engineers that were fired disappeared what are they doing now they're probably working in china and building china's new
competitor to boeing because. if you don't have the technological know how financial engineering cannot replace that and that's why you know rest of the debt is out that the debt exceeds the equity they're technically insolvent they stock is 0 today it's worth 0 if you went out there trying to sell boeing today you would get nothing for it's worth nothing but it's kept alive by the central bank who is in the service of feel odd currency. terrorists right in my view these are the terrorists as i've said many times i mean people would argue with me but give me your arguments and i will shoot them down because you're wrong and we've got take a break when we come back much more coming your way after this. world is driven by.
you know move on with that idea. again showed up to move this because of almost anything going to be a good show most of the time we must. is not so much of a thing as i was it is a tons of it because you know. welcome back to the kaiser report imax kaiser time not to go to market morgan creek capital he's one of the earliest if not the earliest money manager to get his clients into
bed client mark welcome back all thanks for having great to be with you all righty i'm going to ask you some porton market related questions here since you're such an expert on what not the new york senate has been intervening in the repo market sense the 4th quarter of last year what do you think is going. q e 4 ever even a hash tag for it q e 4 number 4 ever they don't they don't call it q e but it is in the government is monetizing debt too much debt no demand people are selling debt around the world. people are buying it as much in the u.s. so they've got to you got to be a buyer buyer last resort the fed so the fed is doing everything they can buy in t. bills intervening the repo market and the big problem of the repo market is there's a supply demand problem right they've got these funds that are all levered up and they're the only ones buying equity right now so if they don't provide them with
the juice the equity market would go down which is that's just not allowed today because really people say the economy's not the market there's a thought now that maybe the market is the economy i mean you know if you're going to do that that's an a fascinating point now you're a money manager and did you know that the biggest buyer of negative yielding european bonds are american pension funds who are passively buying these things in there for a one k. plans without even knowing it such a great stat such a great stat and you know the tweeter in chief right our president was in davos saying that he could get used to negative interest rates they've negative straits might be might be the worst creation in the history of finance. probably some of the things that are bad if you're going to balance confiscation clearly with dollars f.d.r. did the whole confiscation yes this is they could quibble into that in the financial eyes world or not on the gold center and or so they don't take gold away
because it's not part of the economy as it once was but they do negative interest rates as another way to do wealth confiscation to feed the plutocrats at davos who are basically wrong ca's right they're just cleaning the creaming the top consistently and that's how you have this enormous wealth gap but. i want to get back to this q.e. idea because you say repo markets the repo market is q.e. by any other name it's q a now this is very interesting because talk about donald trump for a 2nd does he understand that the repos expansion of the last few months is quantitative easing and it is the fed being expansive because he's criticized criticize the fed it says they know they need to lower rates because the dow be 10000 points higher so this is cognitive dissonance he doesn't understand really that the dow at 30000 is a the last 20000 points have been because the fed expansion correct ok and q.e. 4 is fed expense
a repro market is fed expansion abs so is it is he is he playing stupid or is he stupid yes. version i think he is playing but i actually think he has to look for math is hard and most of these guys have no idea how to do math and they can't make it all pieced together but the one thing the put across of the kleptocrats as i like to refer to them one thing they do understand is the game needs if they're forced to actually pay the debt so the only way to support a ballooning debt caused by a trillion. again with a t trillion dollar every 2nd for 31710 years that's a lot of money and a dollar every 2nd that is expanding our national debt every year by that amount because our deficits a trillion dollars so the only way you can service that amount of debt whether it's
in the us europe or japan 3 developed markets is by lowering interest rates to their natural extreme which is 0 but then you can actually go further to negative interest rates and confiscate wealth to pay off that debt and basically what you're doing to your point is creating wealth inequality which is the whole dictator playbook right get to the top you and your cronies take the wealth the bulk of assets i think 85 percent of the u.s. stock market is owned by the top 10 percent of people 49 percent people own 0 stocks say don't care that the dow's up to 30000 has no impact on their life the people at the top really like it and then you slowly devalue the currency which upin is done which europe has done and now the u.s. will eventually do and ultimately what rises in that environment is the substitute for fia krypto let's get back to a point made there 2nd ago about is it the economy is the versus the stock market
who's driving who really is the tail wagging the dog so i take it your feeling is that the stock market now is the economy it's the tail wagging the dog of the economy is the stock market and they follow that up with what you were just saying about this debt that's in the economy it makes a difference or only makes a difference when it has to be paid off correct but so in a financial eyes economy as you point out as multi multi trillion dollar financial eyes economy the 0 percent interest rates my positive thing i posit and curious what you think about this is that the this this is a scheme where these are. percent interest rates on the stock buybacks which used to be illegal in is that an effectively those plutocrats or private equity firms are taking the entire stock market private yes so they're they want ever have to pay off those debts because they are essentially pulling the plug on the stock market in 5 or 10 years time they might have a few future stocks traded here and there but the s. and p.
500 will by and large be gone a lot of things to talk about their one on buybacks just more q.e. right stealth q.e. basically the government ok the fed can't buy stocks it's against the law they can do it in switzerland swiss national bank can do it in japan bank in japan basement in 75 percent of all the ts in japan are crazy so they're allowed to do that can't do in the u.s. so what do they do the administration goes to big corporations boeing apple it cetera and says here's the deal we're going to cut your taxes going to cut corporate taxes in exchange you can't hire any new people you can't invest in r. and d. you can't put any money into the economy you have to buy back stock. hundreds of billions of dollars of buybacks and stock at higher prices with boeing boeing down 33 percent since the buying back stock crazy stuff well not only got in the 1st line because boeing started buying back their stock and they cut back on r. and d.
they cut back on safety they cut back on engineers they cut back on basic business standards yes and people started falling out of the sky and die and they re engineered engine for a different plane to go on a $737.00 that everyone told them wouldn't work and turns out it didn't work they tried to fix a software which didn't work how is that not negligent homicide what is ok i would agree that it is they don't get to have to get out of the courthouse because they said they contribute a lot of money to the administration and that's how it all works said of the pay to place of ario works really really well you know it's kind of like the whole warren buffett never would think sees the nice benevolent grandfather well really he plays the system he makes huge contributions he gets things that he wants he gets pipelines delayed so his tankers can carry oil he gets you know deferred taxes on his very nice structure so there are
a lot of things that people do in this pay to play world that you and i couldn't get away with right we didn't up until but they get not only is the economy bifurcated between the haves. nots and the have yeah yeah oh i love that right but so do you know that is so to the rule of law there's 2 sets of lost there's laws for of course the private equity group there's laws for everyone else i was immature different countries and was being taken private was pretty money from the fed yes the other people are the infant mortality rate is higher life expectancy is dropping yes and we have a sensually a return to medieval times one can even go further with the hope you would crisis we create products at the top by paying off the people who should be looking at the safety net casea of those drugs those opioids but now 40000 so that number sink in for 2nd 40000 people a year in the us die from opioids that's more soldiers than we lost in vietnam
absolutely so if we're killing a vietnam sort of americans every 2 years to make one family the sackler family in connecticut billionaires billionaires who then contribute back to people who get elected so let's talk about ray dahlia for a 2nd so he's a contemporary right yes all those little more successful i as a bigger fund but in the same business yes man is a big funds last year he had a very poor ecology very challenging here i think it was less than a point 25 a quarter of a percent ok the market by the way was up 25 percent nasdaq was up 40 percent and he's just come out and said basically that cash is trash and he doesn't understand because unlike peter schiff doesn't respect quine so he say i'm going to buy gold instead because i don't i wrote a book called principles or whatever the title was which is like him when jing for 500 pages about stuff that you could read in aristotle from 2700 years ago that's
you know raising reprint plagiarizer yes but his performance stinks and he won't spend 10 minutes to understand because it sound all that he says by gold your thoughts he said cash is trash. in 2018. within i think a week we had the vol spike and you know pretty significant crash when the fed really started to intervene back in 18 to try to bail us out 1000 still was a lousy year down 6 percent in the markets. and so then we had the flash crash at the end of the year and i think the problem for ray right now is the key is in a phone if he's got this giant fund and he's trying to play in markets basically levering stocks and bonds it's a balanced portfolio of stocks among bonds levered called risk i mean risk parity challenges if long bonds are a preteen and stocks are up 31 how do you go a point $25.00 you must not be actually doing what you say you're doing that would be the 1st is the level of assets under management where expectations for
performance are diminished with the bigger the fund in other words he's so big guys is the enemy of alpha always has bizarre money is. being performance so why doesn't he just understand that obvious point in his book of principles and break it up into 10 different fonts to get some alpha because he's boring everyone to tears with his winching and going on these principles but is performance thanks but here's the thing the principles book aside it's great but your point just aristotle you reimagined or plagiarized i like the word i love that but the problem too is to say cash is trash misses the whole point right if if you think about warren buffett highest cash level he's ever had his history. people are usually the most famous you know best investors well why would he have the most cash in history if ray says this trash why would ray say buy gold when you could have the advantage of gold as
a store of value in digital form because when because you understand your point and spend time on the same reason that charlie munger warren buffett says it's right and peter schiff well here's a whole different animal right peter is going to go down with his bullion ship you know to the bottom of the ocean like a spanish galleon because he's just stubborn right he actually came on pomps web i mean how i talk and i try to peterson to my pick when it's on dollars exam his house in connecticut i 1st miss day and he's like allergic to this he's i mean i've got to go take a break come back thank you for being on this segment thank you that's going to do for this edition of the kaiser for with me max kaiser stacy ever like i asked mark hughes co of morgan creek capital if you can resist on twitter it's guys are important. trade and investment to become metrics bills to come to economic development. most
people think about trade they think about the goods and services being exchanged between countries and the investor a chapter of a trade agreement is a post something very different but won't when investment leads to toxic manufacturing that destroys sacred something into the environment. that means local communities that are being poisoned if they object if they do anything that the company feels is interrupting their profits they can be certain. the nationals are taking on the whole nation philip morris is trying to use i.s.t.'s to stop tour of the way from implementing new tobacco regulations aimed at cutting domestics my. a fringe company. egypt egypt not among. democratic choice.
donald trump and the israeli prime minister have unveiled what they call the deal of the century a peace plan to end the israeli palestinian conflict with their vision has already been denounced by the palestinian leader who groans at the flap of the century. french firefighters strike turns ugly in the capital paris where riot police resort to tear gas and water color. hillary clinton lashes out at facebook's mark zuckerberg for quote intending to reelect donald trump while keeping everyone but heard so self accountable for 2016 u.s. president.