The Big Short Partners Reunite: Rates, AI, Gold and Two Stock Picks | The Real Eisman Playbook Ep 75

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Steve Eisman (1:01)

Hey, it's Steve Eisman and welcome to another episode of The Real Eisman Playbook. So when this podcast got started April of last year, one of the first guests were my former partners, Vincent Daniel, Porter Collins and Danny Moses. We had this really great conversation. And since last April, I mean, to say that the world has changed sounds stupid. It's just so incredible how much things have changed. And sometimes it's a good idea not to interview someone, but to sit down with some old friends and hash things out. So that's what we're going to do today.

Porter, Vincent, welcome back. Good to be here.

Vincent Daniel (1:38)

Thanks for having us.

Steve Eisman (1:39)

So let's start. I mean, where could we start? We could start with anything. Let's start with Scott Bessent. Okay.

We'll do like a lightning round. Like, Porter, what do you think about what the hell's going on with Scott Bessent and the Treasury Department buying long-term treasuries?

Porter Collins (1:57)

This is our old sandbox, right? This is the Fed. This is monetary policy. This is the Treasury. I think they're screwed.

They're at a point where they have to try these extraordinary measures because they're out of things to do. And they're trying to keep a lid on yields, but inflation is a problem. It's still high. And, you know, Warsh is doing his little dance, but they can't do anything. And at this point, you know, I see it as interest expense plus entitlements is a hundred and called 10% of tax receipts. There's nothing you can do. You can't cut interest unless you...

Steve Eisman (2:39)

Well, you certainly can't cut interest. You can't, in theory, cut entitlements, but no one is even talking about it.

Porter Collins (2:45)

We've been talking about this for how long, Steve? And they haven't done anything.

Steve Eisman (2:49)

A long time.

Porter Collins (2:50)

And so, I don't know what you do. You either got to raise taxes a lot, which...

Steve Eisman (2:55)

That's not going to happen. Not with this administration.

Porter Collins (2:57)

Print.

Vincent Daniel (2:58)

Right. Yeah, we've got to print.

Porter Collins (2:59)

And so, you can see why I think I've had as much conviction in this precious metals trade as I've had in anything in a long, long time.

Steve Eisman (3:09)

So explain to viewers who are not familiar with precious metals, what is the relationship between, on the one hand, what you're talking about, interest rates, and on the other hand, precious metals? Because it's not intuitively obvious to most people that they're connected. So explain it to people. Why do you think owning precious metals is the result of everything you just talked about with respect to interest rates?

Porter Collins (3:35)

Well, it goes back, you got to take a little history lesson. But in terms of central banks used to own assets, right?

When you own debt, you're owning a little liability, right? Even US government bonds, I know it's an asset, but it's someone else's liability, right? And so gold is an asset, and that's why you've seen central banks all over the world, including China, buy more and more of it, right? And so I think you've crossed or close to crossing, depends on the gold price, obviously, as between gold and treasuries, which is bigger as a percent of central banks' balance sheets.

Steve Eisman (4:13)

So you're talking mostly about gold?

Porter Collins (4:14)

Gold, yes, gold. And, you know, gold's nothing. It's just an asset, but it's an asset. It doesn't have any debt, doesn't, you know, just sits there, right? And so it's a rock. It's a rock.