Vincent Daniel of Seawolf Capital returns to Forward Guidance to share his latest thinking on bank stocks, market structure, and long/short investing.
Immortalized in “The Big Short,” Vincent’s interview with Jack and his partner Porter Collins in January 2022 can be found here:
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Timestamps:
00:00 The Current Setup
06:49 Did SVB Response Fuel Recent Stock Market Rally?
09:22 The Perils Of Shorting Stocks
13:07 Debt Ceiling Resolution
21:17 Public.com
22:21 Passive & Vol Targeting Funds
26:24 Outlook on Stocks
29:47 Importance of Stop-Losses
31:12 How Much Research Before Taking A Position?
32:33 Concentration Risk/Reward: How Many Positions?
34:10 Why Vincent (and Porter) Shorted Banks Before Silicon Valley Bank Collapse
39:31 Banks’ Moats Are Less Valuable Now, Says Vincent
42:58 Bank Run Risk Is Higher Now Than During Great Financial Crisis
44:52 Core Tier 1 Is Nonsense
54:01 Private Equity
01:02:30 Can High Debt Levels Hanlde High Interest Rates?
01:06:09 Slaying The Inflation Dragon
01:07:57 Vincent’s Views On Bank Stocks Going Forward
01:12:46 Energy Stocks
01:17:00 “The Fed Put Never Died”
01:19:19 Views On Recession Risk: “It’s Hard For Me To See A Reflationary Boom”
01:21:52 Uranium
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets….(read more)
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Vincent Daniel, a well-known investor who made a fortune by predicting the 2008 financial crisis, is now warning that the world should expect more bank failures and bailouts in the near future. Daniel, who gained fame as one of the central characters in the book and movie “The Big Short,” believes that the banking industry has not learned its lessons from the last financial meltdown and is once again heading towards a major crisis.
In a recent interview, Daniel expressed his concerns about the current state of the banking sector. He pointed out that many banks around the world are once again engaging in risky lending practices and leveraging their balance sheets to dangerous levels. This, he believes, is setting the stage for another round of catastrophic failures and the need for government bailouts to prop up the financial system.
Daniel’s warning comes at a time when many major economies are still reeling from the effects of the COVID-19 pandemic. The global recession caused by the pandemic has put immense pressure on banks, especially those with exposure to high-risk sectors such as commercial real estate and consumer lending. With interest rates at historic lows and central banks flooding the markets with liquidity, there is a growing concern that banks are taking on excessive risk in pursuit of higher returns.
The investor also criticized the regulatory authorities for not doing enough to rein in the reckless behavior of banks. He believes that the lack of stringent oversight and the absence of meaningful reforms have allowed the same risky behavior that caused the last financial crisis to resurface. In his view, the current regulatory framework is inadequate to prevent another systemic collapse in the banking industry.
Daniel’s warnings are not to be taken lightly, given his track record of accurately predicting the 2008 financial crisis. His insights into the inner workings of the financial system have earned him the reputation of being an astute observer of market trends. Many investors and industry experts are heeding his words as a cautionary tale of what may lie ahead for the banking sector.
In light of Daniel’s warnings, it is crucial for banks and regulators to take proactive measures to address the systemic risks facing the industry. Tighter lending standards, improved risk management practices, and enhanced regulatory oversight are some of the steps that can be taken to mitigate the potential fallout from a banking crisis. Additionally, policymakers need to be prepared to intervene swiftly and decisively if a major banking failure threatens to destabilize the financial system.
Ultimately, the fate of the banking sector hinges on how well it can learn from past mistakes and adapt to the changing economic landscape. If the warnings of Vincent Daniel and other financial experts are any indication, the world must be vigilant and prepared for the possibility of more bank failures and bailouts in the coming years. It is a sobering reminder that the specter of another financial crisis looms large, and decisive action is needed to prevent history from repeating itself.
Today's show is sponsored by Public.com: Get a 5.4% yield when you open a government-backed Treasury Account by going to https://public.com/forwardguidance
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. A trader made over $350k in this recession influenced market.
This guy has the cause and effect completed swapped around. Arrogant or ignorant. Proly both
incredible interview
Vinny Daniel = value/reality. Amen. Typical gen-Z investor = "price doesn't matter." A fool and his money…will soon part company.
jpow says ‘Do you feel lucky, punk?’
what is the difference between real estate with tech in their names and real estate with A.I. in their name? its hard to short an A.I company trading 25X sales and 250X earnings? i hate the chat feature but loves the 35X sales the equity trades around?
you would have a chance at a better return being a foreign owner of millions of dollars above the FDIC insurance cap? when does justice dept. start looking at NVDA for antitrust violations?
6% treasury bills would be the perfect trade?
is the bank term funding facility written into the FDIC charter or does wealthy foreign investors have priority because they OWN us? this was the third time we suspended the debt ceiling? we blew up the fucking debt to get a pipeline thru west virginia to nowhere?
Fed put lives, qe will live too
This is by far the best guest on this show. Thanks for the interview, will have to watch it twice.
12:09 I think he means they have an absolute return mandate
Jack, you keep getting better.
Great guest and great discussion.
5:00 I think the Fed was more accommodative when it started dropping rate increases from 75 bps down to 25.
16:00 MMT is complete and utter nonsense. It's not the function or responsibility of the government to use fiscal policy to keep the stock market inflated regardless of whether it hurts the economy or not,.. as it will no doubt do if not in the short term, for sure in the long term).
It's function is to provide a regulatory environment where the free market can thrive and citizens can prosper on main street as opposed to wall street.
Most states have a constituional amendments that reqire balanced budgets and most do, many have surpluses,.. and they have thriving economies.
41:00
1:04:13 Vincent is spot on again here. This MMT idea that higher debt and higher interest rates "would be stimulative" is nonsense. for the macroeconomy it would be akin to picking up nickels in front of a steam roller.
Again,, great interview. Watched again just because he was pretty much so right on everything.
According to snider, in the 80s banks didn't have a problem because they would just borrow back the deposits that were in the money market funds. Problem now is they don't have enough good collateral to do so
Interesting points of views
Insulting the bears is not cool.
I wish I could ask him if he really said "how are you f'n us?"
I remember Vincent and his partner told Jack last year that they believed the weed stocks were good value given decriminalization in the US seemed more likely. Like he said in this interview sometimes value stocks that seem cheap can get cheaper.
The idea that tax policy affects inflation can’t be ignored just because it involves Congress.
Deficit spending has an incredible amount to do with inflation and it also involves Congress.
Terrible decisions have been made with the idea that the Fed can somehow manage everything on the inflation front with nothing but psychology, rates, and QE/QT. We need to fix this somehow, even though the fix has to involve Congress.
Fantastic interview, gents. Vincent is so animated that it is a waste he didn't embark on an acting career.
Jack, you are amazing. You absolutely have the BEST long-form interview platform out there (and the best guests interviewed). Thank you (and Blockworks Macro too) for all that you do!
So…. Am I meant to care about the upper middle-class suburbanite that wants to buy a new car and how much that interest rate will cost them MORE than I care about the sav-er…?
Is that (?) his point, because … if it is… then get ready to pay higher for that new car.