Dear Hedgeye Nation,
We just hosted nine of the sharpest investing minds on HedgeyeTV for a 3-day bonanza of world-class interviews. During our semiannual Hedgeye Investing Summit, Hedgeye CEO Keith McCullough was joined by Ben Hunt, Founder of Second Foundation Partners & lead author of the Epsilon Theory blog.
Below is a brief excerpt and transcript from the interview. You can access the entire hour-long interview, as well as the 8 other financial market webcasts, by registering here.
* * *
In this clip from Hedgeye’s Investing Summit, Keith McCullough and Ben Hunt rip into Fed policymakers over not only Rosengren and Kaplan's daytrading activities, but their blatant lying and lack of guilt.
“You can’t both be the regulator and taking vast sums of money from the people you are regulating,” notes Hunt. “It offends me, the mendacity behind it to say, ‘Oh no, it’s all fine. It’s all good.’”
“That’s what really pisses people off. It’s the guilty have no guilt. CNBC didn’t say one effing word on this for real,” exclaims McCullough.
McCullough: The easiest thing to see is what you would have expected. The hardest thing to see is that actual change; you and I having this discussion, I think is part of that change. But you know what's sad and pathetic?
When I see Kaplan, Rosenberg and Clarida, it isn't about these people, but it's what you would have expected them to be able to get away with.
And I don't know if they're so upset. I mean, I don't know the guy, so I don't hate him. But Kaplan was a senior executive at Goldman Sachs, and he didn't even say '"I'm sorry" about it.
There's no like there's no accountability at that level either. I think he said that he was distracted or that or that his trading his actions could be a distraction.
Hunt: That's part of it. Right. I mean, I often describe our leaders today (and I don't just mean political leaders or Fed leaders) as high functioning sociopaths. I mean that in a purely political sense; the people who do this, they don't think they're doing anything wrong. These are the rules as they see them, as they understand them. And so why wouldn't they? It is something that I think, again, is is much more pervasive than a few bad eggs.
It's a system that rewards sociopathic behavior, frankly. It's a system that rewards the ability to compartmentalize, so that you can tell yourself and believe what you're telling yourself, that this is fine.
They trade e-minis at a million dollars a pop as a member of the FOMC. Or Rosengren wanting to trade in and out of mortgage rates when his organization is the one determining the performance of mortgage rates almost exclusively. So, you know, it's that sort of thing. And I think this is what gets people; it's what, frankly, makes me angry.
A junior analyst at Citi who traded her pay her personal account in the same way that Rosengren or Kaplan traded their personal accounts would be fired and blackballed from from the industry.
Right? I mean, if you're a registered person in financial services, you can't have a black mark against your name in your records.
Yet these guys are like that. All right. Rosengren: "I'll retire for health reasons." Kaplan as well. "I'm sorry. I was a distraction. I'll go back to day trading my, you know, millions."
And look, I'm all for people being rich.
I really am. I'm a capitalist. I I want to be rich; I want us all to be rich. Trade your freaking account after your in government, but not while you're there setting the policy. And but look, it's it's it's true everywhere.
It is true for not-for-profits. Look at our current treasury secretary. She took eight hundred thousand dollars from Citadel alone.
She took eight hundred thousand dollars for three speeches from Citadel. Between the time when she was Fed chair and when she was named Treasury secretary. I mean, again, look, you want to cash in, more power to you.
Ben Bernanke is getting whatever millions he's getting a year from friends that have been out. God bless. Right. But you can't be both in government.
You can't both be the regulator and taking vast sums of money from the people you're regulating.
It offends me, the mendacity behind it to say, ‘Oh no, it’s all fine. It’s all good.’”
McCullough: That last part which you hit on multiple times, I think that's what really pisses people off.
I mean, they sadly expect that. But when they see it, they're like, yeah, of course. The guilty have no guilt. I mean, CNBC didn't say one effing word about this.