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bill do i have it right that you were short treasuries heading into the sell-off we've seen over the past five to six weeks you do have a right uh you know i'm not always right but um you know i i anticipated uh the possibility at least of the 10-year selling off and it has by 30 to 35 basis points i mean um you know at this point the crb is up 40 over the past six to nine months um you know inflation itself in terms of uh the dollar dollars down ten percent uh fiscal stimulation at two trillion plus we had an import price index number this morning that really is eight percent annualized and uh household income is uh going gangbusters and so there's no reason to expect that inflation at least uh not necessarily treasuries but inflation at least will be screaming higher over the next several months and that's what some investors are anticipating well they certainly are and they'll be more interested in the term you just used screaming higher commodity price inflation inflation through the ppi feeding into what screaming higher means exactly what well you know a 40 rise in uh commodities doesn't necessarily um translate into a uh three or four or five percent increase in terms of the cpi but um a decline of 10 percent in the dollar uh and the import intake index which is related it was highly influential and um you know you have to know or we all know that fiscal stimulation has been substantial in the past a lot of it has been saved some of it may be spent and we've got 2 trillion or more to come as well as an infrastructure bill that most investors are assuming will pass and so you know there's significant demand that is is stored up um power that is stored up that it can be unleashed if if consumers want to go in that direction and i think to a certain extent they will i mean to 100 that is the broad question that's what chairman powell tomorrow i assume we'll talk about how much will be saved how much will be spent but in any case inflation uh you know currently below two percent now is not going to be below two percent in the next few months i i see a three to four percent number ahead of us bill there is no recent history in fed policy certainly not since paul volcker of letting inflation run hot for the sake of jobs and for the sake of growth do you think jay powell will have the stomach for it once he sees prices rising meaningfully faster than two percent a year well that's a great question uh of course he said in the past that there's a lot to make up that because inflation has been below two percent and in some cases below zero um that he can live with two percent plus inflation for a relative period of time that's the question that you've asked me and that's the questions that the markets are asking how long will that be will be 3 6 12 months right now the the short end of the market the euro dollar market is anticipating a march 2022 first increase and that's something that jay powell i think would deny certainly the dots on the dot the dot plan by the fed would would belie that as well but i i think um you know three to six to 12 months at uh three to four percent plus inflation uh will give him pause in terms of his current policy of course the talk of the bond market is that the fed policymakers will be forced to tighten sooner than they're planning uh and of course if that in fact does happen there's the potential for a taper tantrum how real is that potential well i think it is i mean the the deficit is uh you know three to four trillion dollars the fed is financing uh perhaps half of that and other central banks are financing perhaps half of that and so it's up to the uh the rest of us uh you know the vigilantes or the hedge funds or whoever uh you know to fill the gap i i had a hunch that um you know what was known as operation twist in the late 40s after world war ii and and the fed trying to keep interest rates down by buying tens and uh longer bonds that operation twist may be in our future where the um the fed is limited to you know perhaps a trillion or so in terms of outright spending but they begin to spend more on tens and 20s and 30s in order to keep those long-term interest rates down you know the 10-year is influential on mortgage rates mortgage rates are influential and housing and so um i think we have operation twists in our future we might even have had operation twist in the last two weeks i don't know that it smells a little bit smells a little bit eric because we've got up to 165 or 70.
it was a panic type of mode and all of a sudden we're back down to 160 but that's just conjecture on my part are you still short treasuries and if so where on the curve yeah i'm sure the you know the 10 year future which is a seven year uh six year piece of paper um i'm short long bond to a certain extent um you know there's an interesting uh thought and i'm sure you've uh maybe even interviewed scott menard from oppenheimer or not he um guggenheim yes guggenheim sorry um he basically isn't necessarily a bear or a bull but he suggests that it remains to be proven whether a bear market is in our future because um the ten year and the third year are in these long term uh downtrend channels that started in 87 and 86 and the 30-year bond at 250 basically is at the top of that range and the 10-year at about two is at the top of that range and so he basically says that until proven otherwise until breaking those channels we're still in this down trend i disagree with that but it's an interesting proposition i i just while i still have time i want to ask you about this i i also heard that you made a tidy sum uh trading game stop in the january short squeeze tell me about that sure um well i got in too early um you know i got in with options like a good robin hood trader i guess and uh selling options not buying options selling calls right around the 150 200 dollar level it went to 400.
there's an attitude by bernard baruch way back when it said sell to the sleeping point well i i wasn't selling to the sleeping point but i did manage to overcome my insecurities and hold on and um write it all the way back down in terms of getting out i'm back in uh i'm still selling uh call options at uh 250 and 300.
the volatility is super high eric and uh that promotes an ability to uh to make some money if uh so you're effectively still short gamestop yeah not a lot i mean um i mean through the options market it's not like you've got a short position a borrow and a short position on in the cash market but um well it well it sort of is if the option um uh comes due if the expiration comes due and you are forced to short shares but uh you know right now the borrowing rate on uh shorted shares for gamestop is only one and a half percent which indicates no real squeeze or no real pressure and so with volatility at 400 percent annualized it's it's really you know you need a a doubling and a doubling in order to to start to lose money and uh i i think this is a perfect opportunity for options sellers not buyers uh to take advantage how much have you made on those trades so far um well i was in the hall by about 10 million but i'm about the same amount above ground now very quickly what else are you active in right now what are your deepest conviction long and shorts well um about six to 12 months ago i got into natural gas pipeline stocks they were very cheap buffett was getting into them at the same time they were yielding 13 and 14 tax deferred because their partnerships and um you know i i caught the ride uh on on energy i didn't really forecast the current oil price but i thought that those yields which are again partnership tax deferred were extraordinary and so that's my main focus 40 percent of
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