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CNBC Exclusive: CNBC Transcript: Hayman Capital Management Founder Kyle Bass Speaks with CNBC’s David Faber on “Squawk on the Street” Today

WHEN: Today, Tuesday, September 15th

WHERE: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Hayman Capital Management Founder Kyle Bass on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000420981, http://video.cnbc.com/gallery/?video=3000420953 and http://video.cnbc.com/gallery/?video=3000420992.

All references must be sourced to CNBC.

DAVID FABER: MY NEXT GUEST CAN'T SEEM TO KEEP HIMSELF OUT OF NEWS EVEN WHEN HE DOESN'T COME ON CNBC. HE IS KYLE BASS OF HAYMAN CAPITAL MANAGEMENT. OF COURSE A FREQUENT GUEST OF MINE THROUGH THE YEARS. MOST RECENTLY, HE'S BEEN IN THE NEWS BECAUSE HAYMAN HAS BEEN CHALLENGING WEAK PATENTS IN THE PHARMACEUTICAL INDUSTRY THAT IT FEELS DO NOT DESERVE TO BE ENFORCED AND HAS BEEN USING A MECHANISM TO DO THAT THAT WAS DEVELOPED A FEW YEARS AGO IN A PARTICULAR COURT AND GETTING AN AWFUL LOT OF BLOWBACK FOR THE EFFORT. KYLE BASS JOINS US FROM SAN FRANCISCO. LET'S START THERE, IF WE CAN, KYLE, BECAUSE AS I HAVE SAID, YOU HAVE GOTTEN A LOT OF ATTENTION, EVEN THOUGH YOU HAVE NOT SPOKEN PUBLICLY ABOUT THIS. AND IN FACT, ARE ABOUT TO DO SO FOR THE FIRST TIME. WHY YOU ARE CHALLENGING THESE PATENTS? YOU'VE ALREADY LOST TWO – THE FIRST TWO THAT YOU HAVE CHALLENGED. MANY SAY YOU'RE NOT GOING TO WIN ANY OF THEM.

KYLE BASS: WELL, IF I LISTEN TO MANY THROUGHOUT MY LIFE, I WOULD HAVE NEVER FOUND ANY OF THE SUCCESSES THAT I FOUND SO FAR. SO NUMBER ONE, I DON'T LIKE LISTENING TO THE MANY. SECOND OF ALL, WHEN YOU UNDERSTAND HOW THE PHARMACEUTICAL BUSINESS WORKS, AND HOW YOU REALLY LOOK INTO HOW DRUG PRICING WORKS, IT REALLY GOT UNDER MY SKIN WHEN I MET MY PARTNER, ERICH SPANGENBERG IN DALLAS, IT BASICALLY CAME TO THE POINT WHERE THERE ARE PLENTY OF PHARMACEUTICAL COMPANIES THAT INNOVATE. WE ARE FILING CHALLENGES ON THOSE DRUGS THAT ALLEGE INNOVATION, THAT JUST MIGHT BE A DOSING CHANGE OR THAT MIGHT BE A MICRO TABLET DELIVERY SYSTEM OR THINGS THAT ARE SILLY THAT SHOULDN'T BE BACKED BY THE U.S. PATENT OFFICE TO ENABLE THESE COMPANIES TO HAVE MARKET BASED MONOPOLIES WITH THE GOVERNMENT'S BACKING. AND SO, WE HAVE STATED PUBLICLY IN A FILING WITH CONGRESS THAT WE ARE GOING TO FILE ON LESS THAN 1% OF THE DRUGS THAT EXIST, BUT THE ONES THAT WE ARE AFTER ARE KIND OF EGREGIOUS EXAMPLES OF EVERGREENING, WHICH END UP COSTING THE PUBLIC AT LARGE TENS OF BILLIONS OF DOLLARS OF YEAR IN PRESCRIPTION DRUG PRICES.

FABER: OF COURSE YOU CALL YOUR EFFORT THE COALITION FOR AFFORDABLE DRUGS, A NICE NAME. YOU FORMED A SEPARATE FUND OF COURSE AS YOU SAY WITH THE PARTNER YOU JUST MENTIONED TO RAISE THE MONEY TO INVEST HERE AND TO PAY ALL OF THE FEES THAT ARE NEEDED AS WELL, KYLE. BUT MANY SAY THIS IS NOT AN ALTRUISTIC UNDERTAKING. YOU'RE SHORTING THE STOCKS IN QUESTION, OF COURSE, POTENTIALLY BENEFITING IF THESE PATENTS ARE DISALLOWED BY THE ENTRANCE OF A GENERIC COMPETITOR TO THE PATENT FOR WHICH HAS BEEN DISALLOWED. WHAT DO YOU CARE ABOUT WHETHER DRUG PRICES ARE HIGHER OR LOWER? THIS IS SIMPLY ABOUT MAKING MONEY FOR YOUR INVESTORS, ISN'T IT?

BASS: GOSH, I DON'T KNOW WHERE TO START WITH THIS. I HOPE THE IRONY IS NOT LOST ON ANYONE THAT THE DRUG COMPANIES AND THEIR LAWYERS ARE ALLEGING THAT I HAVE A PROFIT MOTIVE. YOU KNOW, IT SHOULD BE AXIOMATIC THAT VERY FEW PEOPLE ARE GOING TO UNDERTAKE A CRUSADE LIKE WE HAVE WITHOUT A PROFIT MOTIVE. I'M SURE THERE ARE FEW, BUT THEY ARE FEW AND FAR BETWEEN. WHEN YOU LOOK AT THE, LET'S SAY THE ALLEGATIONS THAT WE ARE JUST TRYING TO PROFIT IN THE DRUG COMPANIES DEMISE, I MEAN, WE HAVE BEEN IN A FIGHT WITH CELGENE. REVLIMID HAS ANNUAL SALES OF $5 BILLION A YEAR. IT IS A DRUG THAT HAS BEEN AROUND FOR A COUPLE OF DECADES AND SHOULDN'T BE UNDER PATENT IN OUR OPINION. THEY HAVE RAISED THE PRICE OF THAT DRUG, YOU KNOW, 400%, 500% IN THE LAST SEVERAL YEARS. AND YET, THEY HAVE THE ABILITY TO DO SO BECAUSE THE GOVERNMENT ENABLES THEM TO DO THIS THROUGH AN EVERGREENING PATENT PORTFOLIO. AND WE'RE CHALLENGING WHAT WE THINK ARE THE WORST PATENTS IN THE SYSTEM. AGAIN, THERE ARE 3500 DRUGS IN THE SYSTEM, THEY ARE 11,000 PATENTS IN THE ORANGE BOOK. WE ARE GOING TO FILE ON LESS THAN 1% OF THE DRUGS IN THE SYSTEM. AND THE FACT THAT WE HAVE A PROFIT MOTIVE IS KIND OF A TRUTHFUL IRRELEVANCY, DAVID. IF WE WIN, IT BENEFITS THE PUBLIC AT LARGE, BOTH THE PUBLIC AND THE GOVERNMENT. AND OTHERWISE, WHAT HAPPENS IS THE DRUG COMPANIES, WHEN THEY FIGHT BETWEEN A GENERIC AND A BRANDED DRUG COMPANY, WHAT YOU SEE IS THEY END UP SETTLING ALL THE TIME. NINE TIMES OUT OF TEN THERE'S A SETTLEMENT WHERE THEY JUST EITHER AGREE TO SHARE MONOPOLY PROFITS OR THERE'S A PAY FOR DELAY FOR GENERIC ENTRY. WHAT WE ARE DOING IS IF WE WIN, WE ENABLE GENERIC ENTRY OF DRUGS IN VERY HIGH PRICED SCENARIOS, WE BRING THE PRICES DOWN ON AVERAGE 80% OR 90% IF A GENERIC IS ALLOWED INTO THE MARKET WITH SAY FOUR OR FIVE GENERICS READY TO GO.

FABER: YOU KNOW, KYLE, YOU'VE LOST YOUR FIRST TWO CHALLENGES. NOW, I'VE READ SOME LEGAL ANALYSIS IN WHICH PEOPLE QUESTION THE THINKING BEHIND THE PATENT TRIAL AND APPEAL BOARD, SO CALLED PTAB, IF YOU WILL, THAT WAS SET UP TO REVIEW THESE INTERPARTY REVIEWS AND MOVE THIS PATENT PROCESS ALONG MORE QUICKLY AND PERHAPS DISCOURAGE SO-CALLED PATENT TROLLS. BUT YOU'VE LOST THE FIRST TWO. AND YOU ARE FACING A FUSELAGE OF CRITICISM FROM THE PHARMACEUTICAL INDUSTRY, WHICH IS EXTRAORDINARILY WELL FUNDED. YOU ARE A FIDUCIARY. WHY NOT JUST SAY OK, YOU KNOW WHAT, MAYBE WE'RE TAKING ON SOMETHING THAT IS SIMPLY TOO BIG HERE. NOT WORTH MY TIME. LET'S JUST FOLD IT ALL UP, RETURN THE MONEY TO INVESTORS AND GO HOME.

BASS: NUMBER ONE, I'M NOT A QUITTER. NUMBER TWO, WE FILED 36 CHALLENGES SO FAR, DAVID. THE FIRST ONE, THE PATENT OFFICE THREW OUT ON A TECHNICALITY AND BASICALLY ASSERTED THAT SOME POSTER BOARDS THAT EVIDENCED PRIOR ART AT VARIOUS NEUROLOGICAL CONFERENCES WEREN'T SUFFICIENTLY DOCUMENTED AND PUBLICLY AVAILABLE. AND YET, WITHIN A COUPLE OF WEEKS, THE PTAB ALSO ASSERTED THAT AN OBSCURE RUSSIAN THESIS THAT EXISTS IN ONE PLACE IN RUSSIA WAS SUFFICIENTLY PUBLICLY ACCESSIBLE TO BE DEEMED PRIOR ART. IN OUR OPINION, NUMBER ONE, THEY HOLD US TO A HIGHER STANDARD THAN THEY DO THE REST OF THE MARKET, WHICH IS EXPECTED. IN THE SECOND ONE THAT WE LOST WITH BIOGEN'S TECFIDERA, THE PATENT OFFICE JUST GOT IT WRONG. THEY SIMPLY SAID THAT A PHASE TWO CLINICAL TRIAL THAT THE FDA DIDN'T CONSTRUE PRIOR ART, AND THAT IS IN DIRECT CONTRAVENTION TO WHAT THE U.S. COURT OF APPEALS AND SUPREME COURT HAS SAID IN THE PAST. SO THEY JUST GOT IT WRONG. UNFORTUNATELY, YOU KNOW, MICHELLE LEE, THE DIRECTOR OF THE PATENT OFFICE, SEEMS TO BE – WE THINK THAT SHE COULD BE INFLUENCING THE JUDGES THERE AND PLAYING A POLITICAL GAME AND NOT ALLOWING OUR CHALLENGES TO GET HEARD ON THE MERITS ALONE. THEY WOULD LIKE TO HAVE OUR CHALLENGES THROWN OUT. BUT WE REFILED THE FIRST TWO AND TWO MORE ON ACORDA AND WE ARE REVIEWING OUR OPTIONS IN TECFIDERA. IN THE END, WE ARE GOING TO FIGHT THIS FIGHT. WE'RE WELL FUNDED AND WE HAVE ALL THE TIME IN THE WORLD THE WAY THAT WE HAVE THIS SET UP. AND WE WANT OUR CHALLENGES HEARD ON THE MERITS. AND IF WE WIN, DRUG PRICES GET LOWERED FOR EVERYONE. SO IT'S A FUN FIGHT SO FAR. AND LOOK, LIKE YOU SAID, PHARMA HAS SPENT $3 BILLION LOBBYING CONGRESS IN THE LAST 14 YEARS. THEY'RE NUMBER ONE AND IT IS GOING TO BE A BIG FIGHT.

FABER: THEY'RE NUMBER ONE AND IN FACT, KYLE, THEY'RE TRYING TO GET CONGRESS TO BASICALLY EXCLUDE, IF YOU WILL, THIS DRUG PATENT REVIEW. THE KIND OF ONES THAT YOU'RE SENDING TO THE PTAB, THEY'RE TRYING TO GET THEM BARRED. I MEAN, THEY MIGHT BE SUCCESSFUL IN THAT GIVEN THE SUCCESS THAT THEY HAVE HAD IN THE PAST. THAT WOULD SEEMINGLY THEN END YOUR PURSUIT.

BASS: I KNOW. I MEAN, THINK ABOUT HOW FUNNY IT IS THAT AN INDUSTRY CAN PAY ENOUGH ON BOTH SIDES OF THE AISLE OF CONGRESS AND THE SENATE TO SAY, YOU KNOW WHAT? THERE'S THIS INTELLECTUAL PROPERTY LAW THAT WAS PASSED IN THE UNITED STATES. WE WANT IT TO APPLY TO EVERYBODY ELSE, ALL THE OTHER INDUSTRIES EXCEPT OURS. AND THE FACT THAT THE SENATE WAS EVEN CONSIDERING THAT WAS, I THINK, SILLY. AND THEN WHAT YOU HEARD WAS THE CBO SCORED IT. AND THE CBO SAID, WELL, ON THE MINIMUM IT IS GOING TO COST TAXPAYERS 1.3 BILLION. AND ON THE UPPER END IT IS GOING TO COST 93 BILLION. WE JUST DON'T KNOW BECAUSE WE DON'T KNOW HOW THESE CASES ARE GOING TO ROLL THROUGH THE PATENT OFFICE. SO IN A PAYGO, IF YOU LOOK AT CONGRESS AND THE SENATE TODAY, WE ARE ON A PAYGO. IF THE CBO SCORES 1.3 BILLION ON THE LOW END, THEY ARE GOING TO HAVE TO FIND 1.3 BILLION OF BUDGET CUTS, WHICH AS YOU KNOW THEY CAN'T DO. SO I DON'T THINK THEY ARE GOING TO BE ABLE TO EXCLUDE THEMSELVES FROM THEIR INTELLECTUAL PROPERTY LAWS.

FABER: WELL KYLE, IT'S A CONVERSATION OF COURSE DUE A LOT MORE TIME. BUT WE HAVE A LOT MORE OTHER THINGS WE WANT TO GET TO INCLUDING A NEW THESIS YOU'VE DEVELOPED ON CHINA AND THE EMERGING MARKETS. WHY DON'T WE TAKE A BREAK, AND THEN WE CAN COME BACK AND FOCUS WITH KYLE BASS OF HAYMAN ON CHINA, ON FX RESERVES, AND WHAT EXACTLY HE THINKS MAY ACTUALLY TAKE PLACE OVER THE NEXT COMING MONTHS. WE'RE BACK ON "SQUAWK ON THE STREET" AFTER THIS.

FABER: LET'S GET BACK TO KYLE BASS FROM HAYMAN CAPITAL MANAGEMENT, FOUNDER AND MANAGING PARTNER, JOINS US FROM SAN FRANCISCO. AND KYLE, YOU'VE DEVELOPED A NEW THESIS INVOLVING CHINA, OF COURSE THE SLOWDOWN IN THAT COUNTRY. THE IMPACT IT'S HAVING ON ITS FOREIGN RESERVES. BUT AS EVEN MORE IMPORTANTLY THE IMPACT ON BANKS, BOTH WITHIN CHINA AND IN THE EMERGING MARKETS AND ON THE RESERVES THAT THEY HAVE AS WELL, TELL US EXACTLY WHAT IT IS YOU'RE TARGETING AT HAYMAN AND WHAT YOU THINK WILL HAPPEN.

BASS: I THINK THAT WHEN YOU LOOK AT WHAT'S HAPPENED FOR THE LAST DECADE, AS YOU'VE SEEN FLOWS INTO EMERGING MARKETS, YOU HAVE SEEN DEVELOPED NATIONS RUN BIG CURRENT ACCOUNT DEFICITS, AND YOU'VE HAD A SEA OF NATIONS ESSENTIALLY RUN GIANT CURRENT ACCOUNT SURPLUSES AND THAT HAS BUILT FX RESERVE PILES IN THE EMERGING MARKETS. WHAT WE'RE SEEING NOW, FOR THE FIRST TIME IN A LONG TIME, IS A HUGE FX RESERVE DRAIN. I THINK YOU HAVE TO THINK ABOUT THIS CONCEPTUALLY FROM THE TOP. IN 2009, WHEN THE GLOBAL FINANCIAL CRISIS WAS AT ITS PEAK, KIND OF Q1 OF '09, WHAT YOU SAW IS THE CHINESE BANKING SECTOR GREW EXPONENTIALLY. IT ADDED 50% OF GDP IN '09, 50% OF GDP IN 2010. IN FACT, CHINESE BANK ASSETS SINCE 2007 ARE UP 400%. LET'S TALK DOLLARS. THEY'RE AT $31 TRILLION AGAINST AN ECONOMY THAT'S GOT 10 TRILLION OF GDP. SO THE CHINESE BANKING SECTOR IS 310% OF GDP OF ASSETS. WHEN YOU RUN A BANK EXPANSION THAT AGGRESSIVELY, THAT QUICKLY, YOU ARE GOING TO HAVE SOME LOSSES. AND OUR ASSERTION IS THAT YOU'RE JUST ENTERING THE NONPERFORMING LOANS CYCLE IN ASIA. AND THE SCARY THING ABOUT THAT IS, LET'S FORGET ABOUT CHINESE STOCKS FOR A MINUTE. IF YOU HAVE 30 TRILLION IN YOUR BANKING SECTOR AND YOU LOSE LET'S SAY 10% OF ASSETS, WHICH WE THINK IS LIKELY, YOU ARE GOING TO LOSE $3 TRILLION. WELL, WHEN YOU BREAK DOWN THE FX RESERVE PILE, IT'S KIND OF A ELUSORY THAT THEY ARE GOING TO HAVE TO USE A LOT OF THAT MONEY, THEY WILL HAVE TO SELL SOME MORE BONDS AND RAISE SOME MORE DEBT TO RECAP THEIR BANKING SYSTEM. AND THAT HOLDS TRUE PAN ASIA. SO IF YOU LOOK AT NON JAPAN ASIA, YOU LOOK AT COUNTRIES LIKE MALAYSIA, THAT HAVE ALMOST 700% OF GDP IN THEIR BANKING SYSTEM AND IT'S RUN BY SOMEONE THAT HAS MAGICALLY FOUND ALMOST A BILLION DOLLARS OF MONEY FROM HIS SOVEREIGN WEALTH FUND SITTING IN HIS PERSONAL ACCOUNT, AND HE IS ARRESTING PEOPLE – JOURNALISTS THAT ACTUALLY COVER THIS STORY – IT'S BECOMING PROBLEMATIC ALL OVER ASIA WITH FX RESERVE DRAINS AND THE SIZE OF HOST COUNTRIES' BANKING SYSTEMS TO THIS PROBLEM. THE COMMODITY COLLAPSE IS CAUSING THESE BANKING SYSTEMS TO HAVE STRESS. AND NOW YOU ARE SEEING INDUSTRIAL PRODUCTION HOOKING LOWER ALL ACROSS ASIA. YOU ARE SEEING DOUBLE DIGIT DECLINES IN INDUSTRIAL PRODUCTION. SO I THINK THOSE THAT ARE WATCHING WHETHER CHINESE STOCKS GO UP OR DOWN AREN'T PAYING ATTENTION, IN MY OPINION, TO WHAT IS THE REAL PROBLEM. AND THE PROBLEM IS THE LOANS THROUGH IN THIS BANKING SECTOR.

FABER: ALRIGHT, BUT TO YOUR POINT THEN, KYLE, EVEN THOUGH CHINA OF COURSE MAY SUFFER FROM THIS, GIVEN THEY DO HAVE 3.56 TRILLION IN RESERVES STILL, DO YOU BELIEVE THAT SOME OF THE SMALLER ECONOMIES YOU'VE ALSO DESCRIBED ARE MUCH MORE AT RISK? AND IF SO, HOW DO YOU GO ABOUT BENEFITING AS A HEDGE FUND MANAGER?

BASS: WELL, YOU KNOW, OUR JOB IS TO ACT AS A PRUDENT FIDUCIARY AND INVEST APPROPRIATELY AROUND THE WORLD. LET'S SAY IN THE PAST OUR STRENGTH HAS BEEN SPOTTING ANOMALOUS SITUATIONS AND HEDGING THEM AND THEN INVESTING AROUND THEM. AND IN THIS CASE, I THINK WITH EMERGING MARKETS BEING 42% OF GLOBAL GDP, WHAT I'M TELLING YOU IS GLOBAL GDP IS GOING TO SLOW DOWN MORE THAN PEOPLE THINK IT IS. NOW, THAT DOESN'T MEAN THAT THE U.S. MARKET IS AT SERIOUS RISK. I THINK THE U.S. MARKET AND THE U.S. MAY GROW INSTEAD OF A ONE TO TWO, IT MAY GROW – OR INSTEAD OF TWO TO THREE, IT MAY GROW ONE TO TWO. BUT IN EMERGING ECONOMIES LIKE THE ONES I AM TALKING ABOUT, THINK ABOUT SOUTH AFRICA FOR EXAMPLE. SOUTH AFRICA RUNS A 4.5% CURRENT ACCOUNT DEFICIT OF 4.5% FISCAL DEFICIT AND THEY HAVE 34 BILLION OF FX RESERVES. JUST A COUPLE OF MONTHS OF IMPORTS. SOUTH AFRICA IS COMPLETELY BROKE, AND WHEN YOU TALK TO THE RATINGS AGENCIES' ANALYSTS ABOUT SOUTH AFRICA, THEY SAY, WELL BECAUSE IT IS A LARGE PART OF EMERGING – EM – THEY HOPE THAT PORTFOLIO FLOWS PLUG THESE HOLES BECAUSE THEY HAVE FOR THE LAST 20 YEARS. WELL, THAT'S NOT – HOPE IS NOT THE PROPER INVESTMENT STRATEGY. FOR THOSE THAT ARE RESERVE MANAGERS AND THOSE PEOPLE THAT INVEST IN EMERGING MARKETS, YOU BETTER PAY ATTENTION TO THE SIZE OF THEIR BANKING SYSTEMS, AND YOU BETTER THINK ABOUT WHAT THE LOSSES ARE GOING TO BE WHEN THEY RUN A REGULAR NONPERFORMING LOAN CYCLE THROUGH THEIR BANK. SO, WHAT WE'RE LOOKING AT ARE THE COUNTRIES AROUND THE WORLD THAT RUN TWIN DEFICITS. THE COUNTRIES AROUND THE WORLD THAT HAVE TO DEVALUE THEIR CURRENCY IN ORDER TO COME BACK TO SOME LEVEL OF COMPETITIVENESS WITH THE REST OF THE WORLD. AGAIN, WE TALK ABOUT THIS RACE TO THE BOTTOM AND THIS CURRENCY WAR. WELL, IT'S HAPPENING AS WE SPEAK AND CHINA JUST LITEREALLY JUST STARTED WITH ITS DEVALUATION PROCESS. WAIT UNTIL YOU SEE WHERE THAT GOES.

FABER: WELL YOU KNOW KYLE, OUR VIEWERS ARE WELL ACCUSTOMED TO WHAT ARE WELL RESEARCED AND WELL ARTICULATED THOUGHTS FROM YOU, BUT I CAN REMEMBER HAVING A CONVERSATION ABOUT YOUR VIEWS ON JAPAN, FOR WHICH YOU FORMED A FUND FOUR YEARS AGO IN THE BELIEF THAT INTEREST RATES WOULD RISE DRAMATICALLY THERE. THAT HASN'T HAPPENED. I MAKE THE POINT SIMPLY BECAUSE EVEN THOUGH AN IDEA CAN SOUND ON PAPER LIKE A VERY SOUND ONE, IT DOESN'T ALWAYS PAN OUT. WHAT GIVES YOU THE CONFIDENCE IN THIS CASE THAT YOU ARE GOING TO BE RIGHT?

BASS: YEAH, SO LET'S REVISIT JAPAN, DAVID.

FABER: WE DON'T HAVE A LOT OF TIME TO DO THAT, SO –

BASS: THERE WERE TWO VALVES IN JAPAN. ALRIGHT. QUICKLY, THERE WERE TWO VALVES IN JAPAN. ONE IS THE CURRENCY, ONE IS RATES. AND WHAT WE DID WAS WE POSITIONED THREE QUARTERS OF OUR MONEY ROUGHLY IN CURRENCY AND A QUARTER IN RATES. WE WERE WRONG ON RATES. WE WERE VERY RIGHT ON THE CURRENCY. IT WENT FROM 82 TO 125. A MASSIVE DEVALUATION OF THE YEN ENDED UP BEING VERY PROFITABLE TO US IN THAT FUND. WHAT GIVES ME THE CONFIDENCE TO LOOK AT NONPERFORMING LOANS AND THE SIZE OF THOSE COUNTRIES' BANKING SYSTEMS IS THE PROOF IS IN THE PUDDING. YOU CAN SEE IN MANY COUNTRIES THE DATA AND YOU CAN STUDY THESE BANKING SYSTEMS. IN CHINA ALONE, LOANS GREATER THAN 90 DAYS PAST DUE GREW 167% IN THE FIRST HALF OF 2015. IT IS HAPPENING AND WE ARE ALREADY HERE. SO NONPERFORMING LOAN CYCLES TAKE ROUGHLY 10 TO 12 QUARTERS TO HIT THEIR PEAK. I THINK WE ARE KIND OF ONE OR TWO QUARTERS IN AND THE NEXT TWO YEARS ARE GOING TO BE TOUGH. BUT, THAT DOESN'T MEAN THE END OF THE WORLD. THAT JUST MEANS YOU BETTER PAY ATTENTION IF YOU HAVE A BIG EM PORTFOLIO.

FABER: WE WILL BE DOING THAT, KYLE. ALWAYS INTERESTING TO HEAR THINGS THAT WE DON'T TYPICALLY HEAR ABOUT AND VERY MUCH APPRECIATE YOU JOINING US. KYLE BASS FROM HAYMAN CAPITAL JOINING US FROM SAN FRANCISCO. THANK YOU, KYLE.

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