WEBVTT - Single Best Idea with Tom Keene: Drew Matus and Dean Curnutt

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Single best idea, well, today's single best idea it was

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<v Speaker 2>Ira Jersey. He drives all of Bloomberg Intelligence fixed income.

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<v Speaker 2>He's truly brilliant, particularly on the short end of the market,

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<v Speaker 2>what I call the trust market, commercial paper and libor

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<v Speaker 2>and sofa and stuff. I really don't the repo market,

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<v Speaker 2>I don't understand it. But what we're doing today, we

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<v Speaker 2>had our first good conversation on the World Cup. Just

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<v Speaker 2>a window into some of the people that we talk

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<v Speaker 2>to every day. Ira Jersey is one of the giants

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<v Speaker 2>of American youth soccer, hugely involved with the New Jersey Soccer,

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<v Speaker 2>which is a hot bend of it nationwide. And we

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<v Speaker 2>talked to Ira our first good conversation on this World

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<v Speaker 2>Cup extravaganza that starts eleven, take way three in eight days,

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<v Speaker 2>so we'll see on that. Drew Mattis can do the math.

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<v Speaker 2>He's at MetLife. Drew Matis just wonderful on linking in

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<v Speaker 2>the markets into our behavioral economics. Here is true, Matis.

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<v Speaker 1>Everyone keeps arguing that, you know, it makes no sense

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<v Speaker 1>that sentiments so low because everything's so good right housing.

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<v Speaker 1>You know, if you own a home. Your home prices

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<v Speaker 1>are up, your equity prices are up. If you have

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<v Speaker 1>a job, you're doing okay. And the reality of it

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<v Speaker 1>is is like, at this stage of my life, I

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<v Speaker 1>don't really care about myself anymore. I kind of just

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<v Speaker 1>want to make sure my kids are happy. And you know,

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<v Speaker 1>they have trouble affording a home, they have trouble finding work,

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<v Speaker 1>they have trouble, you know, pretty much with everything, and

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<v Speaker 1>kind of, you know, beyond the norm for kids. Right. So,

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<v Speaker 1>I think that's what's going on in America today is

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<v Speaker 1>that you know, people are doing fine and they see

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<v Speaker 1>that their home price is going up, but you know what,

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<v Speaker 1>finding a way to kind of translate that to your

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<v Speaker 1>kids doing better is increasingly difficult, and that's why you

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<v Speaker 1>see sentiments so weak. But everyone's got money to spend,

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<v Speaker 1>so they're spending.

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<v Speaker 2>It was your Madus of met Life had two great

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<v Speaker 2>mathematic types come in today. Alicia Levine from BNY, our

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<v Speaker 2>chief investment officer, was just brilliant on some of the

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<v Speaker 2>dynamics of the market, this idea of reversion to the mean,

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<v Speaker 2>and then Dean Current showed up from Macro Risk Advisors.

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<v Speaker 2>Here's Dean kurrent On. Moving forward with the.

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<v Speaker 3>Math, there's the old saying timing in the market versus

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<v Speaker 3>time in the market. You want to be in the

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<v Speaker 3>market over a long period of time. That's when compounding

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<v Speaker 3>of returns really works. So you just don't want to

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<v Speaker 3>get yourself trading in and out. I think it's proven

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<v Speaker 3>to be largely unsuccessful, the ability to time the market.

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<v Speaker 3>You want to be risk aware. You also want to

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<v Speaker 3>understand that this bedrock of institutional portfolio is sixty forty, right,

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<v Speaker 3>sixty stocks, forty bonds. That just doesn't work the same

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<v Speaker 3>way as it used to. You know, even as I'm

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<v Speaker 3>telling you that the correlation across the stock market these

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<v Speaker 3>stocks are very uncorrelated. The correlation between the stock market

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<v Speaker 3>and the bond market is very high, and it's very

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<v Speaker 3>much linked to oil. Oil is throwing a wrench in

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<v Speaker 3>so many efforts at diversifying your portfolio because everything is

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<v Speaker 3>linked to oil, inflation expectations, the path of interest rates,

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<v Speaker 3>and so forth. So from a diversification standpoint, sixty forty

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<v Speaker 3>doesn't work as well. So you have to just recognize that,

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<v Speaker 3>and again that to me argues a little bit more

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<v Speaker 3>for being not fully invested, right now and again. I

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<v Speaker 3>think that's some combination of just having some cash on

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<v Speaker 3>the sidelines, which relative to a decade ago when there

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<v Speaker 3>was a zero percent yield on cash, now you get

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<v Speaker 3>four percent.

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<v Speaker 2>Yeh, that's not bad. Dean Kurnent there macrosk Advisors. After

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<v Speaker 2>that conversation, Paul Sweeni and I looked at bt MM,

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<v Speaker 2>which is a terminal screen with all of the short

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<v Speaker 2>term rates. It's got to be out of the top

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<v Speaker 2>of them. Had sixty statistics on that screen, and we

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<v Speaker 2>forget it's a three point six percent, even a four

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<v Speaker 2>percent market for cash and near cash equivalent. Steam currentt

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<v Speaker 2>with Macro Risk Advisors on a podcast on Apple, on Spotify,

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<v Speaker 2>on YouTube podcasts. It's single best idea.