Julian Robertson Interview on CNBC
-”This is a horror show world-wide”
-U.S. now is like Japan in 1989, only worse. U.S. could see Japan-like collapse
-He is still “very bearish.” “We have not solved this problem”
-He hopes Congress will just pass the good/bad bank plan and then stop. The plan is crucial, however all these trillions of dollars of spending, bailouts, stimulus is bad long-term. Our children are going to have to pay for it
-He sold his Goldman Sachs. He is generally not interested in financials as a sector, but he is long Visa and Mastercard as they have no direct credit exposure
-His favorite trade (Erin called it Armageddon Trade) is purchasing a rate-cap. He is buying puts on long-term treasuries. The puts bet that rates will go up within 5 years
-Bill Gross says you can either buy his funds or TIPs to benefit from this trade. He thinks rates can go as high as 7%. Robertson thinks 7% is being conservative
-Erin says later that Julian said during the break that rates can go as high as 18% during Volcker’s reign at the Fed. “That’s what I’m talking about” he said