US Markets

Kyle Bass: Stock valuations 'make a lot of sense' if vaccine or treatment found by end of year

Key Points
  • Hedge-fund manager Kyle Bass told CNBC on Friday that the stock market's valuation is sensible, if a vaccine or potential treatment for Covid-19 is found by the end of 2020.
  • "I hope that we get to a vaccine before year end, and I hope we find medicines that are effective," Bass said on "Closing Bell." "If we don't, then the market's way ahead of itself."
  • The Hayman Capital founder also said "there's no better time" for the U.S. to crack down on Chinese companies such as Huawei. 
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Kyle Bass on U.S.-China relations

Hedge-fund manager Kyle Bass told CNBC on Friday that the stock market's valuation is sensible, if there's a vaccine or potential treatment for Covid-19 by the end of 2020.

"I hope that we get to a vaccine before year end, and I hope we find medicines that are effective. And if we do, then these valuations actually make a lot of sense," Bass said on "Closing Bell." "If we don't, then the market's way ahead of itself."

Bass noted the challenges in producing a vaccine so quickly — some experts say 12 to 18 months, at the earliest — and said that right now, the market seems to be richly valued. But he said he believes that "human ingenuity" and the U.S.' scientific prowess may prevail. 

President Donald Trump, while downplaying the potential need for one, on Friday announced an enhanced effort to expedite vaccine development and distribution, with the goal of having hundreds of millions of doses of an effective vaccine available by the end of the year. 

A number of high-profile investors this week have called into question the market's valuation following its strong rally from coronavirus-driven laws in late March, among them billionaire hedge-fund investor David Tepper, billionaire entrepreneur Mark Cuban and Stanley Druckenmiller, chairman and CEO of the Duquesne Family Office.

Bass' comments Friday came shortly before the stock market closed, with the major averages closing slightly higher on the day. However, the indexes recorded significant weekly losses as additional economic data emerged, illustrating the devastating impact the coronavirus pandemic has had on the U.S.

Wall Street also was grappling with rising tensions between the U.S. and China as the Trump administration moved to block semiconductor shipments to Chinese company Huawei.

Some, such as CNBC's Jim Cramer, have argued the U.S. should not be trying to escalate tensions in the middle of a pandemic that has significantly hampered its economy. 

Bass, a noted China hawk, said it is actually an advantageous time to "do what we should have done long ago," even if it may impair GDP by "another couple of points." 

"I think there's no better time for the president," argued Bass, founder and CIO of Hayman Capital Management. "The West holds all the cards here. What we need to do is get China to play by the global rules," he added.