1
00:00:17,920 --> 00:00:20,520
Speaker 1: Hello, and welcome to The Credit Edge, a weekly markets podcast.

2
00:00:20,640 --> 00:00:23,680
Speaker 1: My name is James Crombie. I'm a senior editor at Bloomberg.

3
00:00:23,640 --> 00:00:27,040
Speaker 2: And I'm Erica Adelberg, the chief mortgage backed security strategist

4
00:00:27,040 --> 00:00:31,440
Speaker 2: at Bloomberg Intelligence, the research arm of Bloomberg LP. This week,

5
00:00:31,480 --> 00:00:34,280
Speaker 2: we're very pleased to welcome Oliver Chambers, head of fixed

6
00:00:34,360 --> 00:00:38,080
Speaker 2: income mcclark Capital. How are you today, Oliver doing well?

7
00:00:38,240 --> 00:00:40,440
Speaker 3: Thank you for having me on this It's exciting.

8
00:00:41,280 --> 00:00:44,280
Speaker 2: Yeah, very very happy to have you. Oliver joins us

9
00:00:44,360 --> 00:00:47,720
Speaker 2: with over twenty five years of experience in financial markets,

10
00:00:47,800 --> 00:00:53,080
Speaker 2: including managing US investment grade strategies and structured portfolios across

11
00:00:53,159 --> 00:00:57,240
Speaker 2: multiple mandates. But he also has an extensive experience in analyzing,

12
00:00:57,280 --> 00:01:02,240
Speaker 2: managing and hedging mortgage BacT and asset backs securities. So yeah,

13
00:01:02,280 --> 00:01:04,920
Speaker 2: that's where I'll come in, hopefully with some discussions, but

14
00:01:05,000 --> 00:01:06,919
Speaker 2: for now I'm going to flip it back to James

15
00:01:06,920 --> 00:01:08,200
Speaker 2: for some of the first questions.

16
00:01:08,520 --> 00:01:10,400
Speaker 1: Thanks Erica. Great to have you on the show, Oliver.

17
00:01:10,959 --> 00:01:13,280
Speaker 1: So regular listeners of this show will know that we

18
00:01:13,319 --> 00:01:16,319
Speaker 1: do talk a lot about relative value. I where do

19
00:01:16,360 --> 00:01:18,920
Speaker 1: you find it? Given that credit spreads have been so

20
00:01:19,000 --> 00:01:21,759
Speaker 1: tight for so long everything is so expensive. A lot

21
00:01:21,760 --> 00:01:25,040
Speaker 1: of big credit investors that we've had recently have mentioned

22
00:01:25,040 --> 00:01:28,880
Speaker 1: opportunity in structured finance and asset backed debt, and they

23
00:01:29,280 --> 00:01:33,560
Speaker 1: talked about mortgages looking cheap until President Trump told Fanny

24
00:01:33,560 --> 00:01:35,679
Speaker 1: May and Freddie Mack to buy two hundred billion dollars

25
00:01:35,760 --> 00:01:39,800
Speaker 1: in mortgage bonds bonds last month. That caused a huge rally,

26
00:01:40,120 --> 00:01:44,120
Speaker 1: essentially removing the big excess spread in mortgages. So let's

27
00:01:44,120 --> 00:01:47,080
Speaker 1: start there, Oliver, is the mortgage trade over or is

28
00:01:47,080 --> 00:01:48,240
Speaker 1: there still an opportunity?

29
00:01:48,840 --> 00:01:50,680
Speaker 3: I think the big thing that you said there is

30
00:01:50,680 --> 00:01:54,240
Speaker 3: that everything's rich. So no matter what suctor you're going into,

31
00:01:54,320 --> 00:01:57,320
Speaker 3: no matter what asset class you're going into, I think

32
00:01:57,360 --> 00:02:00,760
Speaker 3: everything is rich. It really is more of fununction of

33
00:02:01,200 --> 00:02:05,840
Speaker 3: what is richest. So while mortgages have come in quite

34
00:02:05,880 --> 00:02:09,440
Speaker 3: a bit, you know, they were the cheapest sector for

35
00:02:09,560 --> 00:02:11,840
Speaker 3: a year and a half two years, and they really

36
00:02:11,840 --> 00:02:15,239
Speaker 3: looked very cheap against corporates or against basically anything else

37
00:02:15,240 --> 00:02:18,400
Speaker 3: that you could buy. But once the two hundred billion

38
00:02:18,440 --> 00:02:22,040
Speaker 3: dollar announcement came in, they did come in quite a bit.

39
00:02:22,200 --> 00:02:25,839
Speaker 3: Spreads narrowed a decent amount, and they have gotten rich

40
00:02:26,400 --> 00:02:29,240
Speaker 3: or richer. The one thing I would say, though, is

41
00:02:29,240 --> 00:02:31,320
Speaker 3: I don't think the trade is over. And the reason

42
00:02:31,320 --> 00:02:34,200
Speaker 3: I say that is that mortgages when they came in,

43
00:02:34,240 --> 00:02:36,840
Speaker 3: they hit the tightest levels they've been on an oas basis,

44
00:02:36,880 --> 00:02:39,519
Speaker 3: they hit the tightest levels they've been in the last

45
00:02:39,600 --> 00:02:42,640
Speaker 3: five years or in the last ten years roughly, so

46
00:02:42,680 --> 00:02:45,360
Speaker 3: they're in the top five percent tile of spreads in

47
00:02:45,400 --> 00:02:47,120
Speaker 3: the last ten years and the tightest they've been in

48
00:02:47,160 --> 00:02:49,840
Speaker 3: five If we take a step back and look at corporates,

49
00:02:50,120 --> 00:02:52,640
Speaker 3: there are the tightest levels they've been in twenty. So

50
00:02:53,200 --> 00:02:56,520
Speaker 3: while mortgages have tightened and are tight, I don't think

51
00:02:56,560 --> 00:03:01,360
Speaker 3: the trade is completely over yet because corporates are even tighter.

52
00:03:02,280 --> 00:03:04,280
Speaker 3: The trade probably just has to be tweaked a little bit.

53
00:03:04,840 --> 00:03:09,320
Speaker 2: I definitely understand where you're talking about with relative time frames,

54
00:03:09,400 --> 00:03:12,680
Speaker 2: but from my perspective looking at this, the one difference

55
00:03:12,720 --> 00:03:16,080
Speaker 2: maker has been also the Federal Reserve, which in that

56
00:03:16,160 --> 00:03:18,800
Speaker 2: time frame came in as kind of the buyer of

57
00:03:18,960 --> 00:03:22,200
Speaker 2: last resort in the mortgage market, which might account for

58
00:03:22,240 --> 00:03:25,720
Speaker 2: the reason that you know, they used to trade closer

59
00:03:25,760 --> 00:03:30,320
Speaker 2: to corporates and you know, a little bit tighter. The

60
00:03:30,440 --> 00:03:34,160
Speaker 2: question is is that is that play still there. Do

61
00:03:34,200 --> 00:03:36,400
Speaker 2: you think the Federal Reserve is still going to be

62
00:03:36,440 --> 00:03:39,240
Speaker 2: a buyer? Do you think the GCS make up for that?

63
00:03:39,400 --> 00:03:42,480
Speaker 2: If not, Like, what are your thoughts on that balance sheet?

64
00:03:42,680 --> 00:03:44,920
Speaker 2: Basically right?

65
00:03:45,000 --> 00:03:47,680
Speaker 3: And that that's the great unknown right now in my

66
00:03:47,800 --> 00:03:51,840
Speaker 3: mind if you look at it. Kevin worsh the who's

67
00:03:51,880 --> 00:03:55,160
Speaker 3: going to be nominated for the FLED chairman, probably will

68
00:03:55,200 --> 00:03:59,840
Speaker 3: be eventually confirmed. But that sounds like the politics going

69
00:03:59,840 --> 00:04:01,600
Speaker 3: back and forth and might take a little bit of time.

70
00:04:02,000 --> 00:04:06,280
Speaker 3: But historically he's all been about reduction on balance sheet.

71
00:04:07,000 --> 00:04:09,800
Speaker 3: He wants to look more inflation and he's really more

72
00:04:10,160 --> 00:04:13,320
Speaker 3: focused on the balance sheet more than Jerme Powell has been.

73
00:04:13,840 --> 00:04:16,560
Speaker 3: So to your question, yes, I agree with you. It

74
00:04:16,600 --> 00:04:19,279
Speaker 3: could completely flip the other way. I don't think the

75
00:04:19,360 --> 00:04:23,160
Speaker 3: Fed will look to sell out, right, but they might

76
00:04:23,200 --> 00:04:26,400
Speaker 3: not be the buyer, so they probably could take that

77
00:04:26,520 --> 00:04:31,200
Speaker 3: away a little bit. Supply really is the key to

78
00:04:31,760 --> 00:04:35,120
Speaker 3: basically every market right now. But if you really look

79
00:04:35,160 --> 00:04:37,599
Speaker 3: at where supply has been coming from and where you

80
00:04:37,600 --> 00:04:41,680
Speaker 3: know the demand is, mortgages are still yielding roughly four

81
00:04:41,680 --> 00:04:43,719
Speaker 3: and a half four point six percent somewhere in that

82
00:04:43,760 --> 00:04:48,640
Speaker 3: general area. So as a buyer coming into the market.

83
00:04:49,000 --> 00:04:51,279
Speaker 3: That still is a level for a triple A asset

84
00:04:51,560 --> 00:04:53,920
Speaker 3: that is still very strong and still a very good

85
00:04:54,040 --> 00:04:56,800
Speaker 3: level for people to be getting involved in it. We

86
00:04:56,920 --> 00:04:59,880
Speaker 3: might not see the spread tightening that we're going to

87
00:05:00,160 --> 00:05:03,080
Speaker 3: that we've seen, but if you can go in and

88
00:05:03,120 --> 00:05:05,120
Speaker 3: clip a four and a half percent coupon and just

89
00:05:05,640 --> 00:05:08,599
Speaker 3: have that with some potential for some price appreciation, if

90
00:05:08,760 --> 00:05:11,600
Speaker 3: rates do come down, I don't think the FED will

91
00:05:11,640 --> 00:05:15,880
Speaker 3: be selling, they just might not be buying. So if

92
00:05:15,960 --> 00:05:17,360
Speaker 3: we just hang out at this level, I still think

93
00:05:17,360 --> 00:05:20,119
Speaker 3: that four and a half percent is a good area

94
00:05:20,160 --> 00:05:20,560
Speaker 3: to be in.

95
00:05:22,279 --> 00:05:28,040
Speaker 2: Do you think that you mentioned the comparability to triple

96
00:05:28,080 --> 00:05:31,800
Speaker 2: A corporates, Do you think that changes at all if

97
00:05:31,920 --> 00:05:36,640
Speaker 2: Fanny and Freddie progress down the privatization route, and what

98
00:05:36,680 --> 00:05:38,280
Speaker 2: do you think the likelihood of that is.

99
00:05:40,839 --> 00:05:42,760
Speaker 3: So I do think it is possible that they come

100
00:05:42,800 --> 00:05:45,680
Speaker 3: down there. The one main thing I always keep going

101
00:05:45,720 --> 00:05:48,920
Speaker 3: back to is that there is a big focus right

102
00:05:48,960 --> 00:05:52,200
Speaker 3: now in the government to really look at home prices,

103
00:05:52,440 --> 00:05:56,080
Speaker 3: home mortgage rates, and I think that that's going to

104
00:05:56,080 --> 00:05:58,000
Speaker 3: still be a focus where they're not going to want

105
00:05:58,040 --> 00:06:00,960
Speaker 3: to disrupt that. And if we do sell, as I

106
00:06:01,040 --> 00:06:04,680
Speaker 3: mentioned previously, or if they move too quickly and privatizing them,

107
00:06:05,080 --> 00:06:07,680
Speaker 3: if you see mortgage rates jump, that's going to go

108
00:06:07,680 --> 00:06:10,560
Speaker 3: against everything that they're trying to really do. It would

109
00:06:10,600 --> 00:06:13,839
Speaker 3: hurt the affordability of housing, It would hurt everything that's

110
00:06:13,880 --> 00:06:16,960
Speaker 3: trying to be done from a governmental standpoints. I don't

111
00:06:16,960 --> 00:06:20,400
Speaker 3: think that that will happen quickly. I think it could happen,

112
00:06:20,480 --> 00:06:23,120
Speaker 3: but it'll be over time and probably take longer than

113
00:06:23,440 --> 00:06:24,359
Speaker 3: anyone expects.

114
00:06:25,960 --> 00:06:28,039
Speaker 2: I guess I have one last question before I flip

115
00:06:28,080 --> 00:06:30,039
Speaker 2: it back to James, and one of the things you

116
00:06:30,040 --> 00:06:32,839
Speaker 2: struck me right when you started was saying that everything

117
00:06:32,880 --> 00:06:36,440
Speaker 2: is rich. In that case, why aren't you just focusing

118
00:06:36,520 --> 00:06:39,520
Speaker 2: more on something like treasuries, where you know you don't

119
00:06:39,560 --> 00:06:43,040
Speaker 2: have to worry about the possibility of spread widening in

120
00:06:43,080 --> 00:06:45,240
Speaker 2: one of these other sectors if they're actually rich.

121
00:06:46,839 --> 00:06:49,560
Speaker 3: Well, I think that's the key to it is, while

122
00:06:49,560 --> 00:06:51,560
Speaker 3: everything is rich, I'm not expecting to see a lot

123
00:06:51,600 --> 00:06:54,679
Speaker 3: of spread widening in any of these sectors. The demand

124
00:06:54,760 --> 00:06:58,040
Speaker 3: coming into fixed income with all the flows is too

125
00:06:58,120 --> 00:07:02,400
Speaker 3: big across every sector. So while I do think that

126
00:07:02,440 --> 00:07:04,200
Speaker 3: we are rich, I think we stay rich for a

127
00:07:04,200 --> 00:07:07,200
Speaker 3: while and then the pure carry that you're getting. You're

128
00:07:07,200 --> 00:07:09,560
Speaker 3: getting one hundred basis points over treasuries, so if you

129
00:07:09,560 --> 00:07:11,960
Speaker 3: can get mortgages, and like I said, the trade has

130
00:07:11,960 --> 00:07:13,640
Speaker 3: to be tweaked a little bit because what you saw

131
00:07:13,720 --> 00:07:17,280
Speaker 3: is you saw the par price bonds got bought when

132
00:07:17,360 --> 00:07:19,360
Speaker 3: everyone said that there's a two hundred billion come in.

133
00:07:19,560 --> 00:07:21,640
Speaker 3: So maybe you have to tweak it a little bit

134
00:07:21,680 --> 00:07:24,240
Speaker 3: and you have to buy some higher coupon bonds that

135
00:07:24,240 --> 00:07:26,320
Speaker 3: are a little bit of a premium, or you want

136
00:07:26,320 --> 00:07:29,120
Speaker 3: to go a little bit lower and discounts, So you

137
00:07:29,240 --> 00:07:30,760
Speaker 3: might have to do a little bit of tweaking to

138
00:07:30,800 --> 00:07:33,600
Speaker 3: the trade. But if you can clip one hundred basis

139
00:07:33,600 --> 00:07:37,320
Speaker 3: points and carry over what a treasury is, I think

140
00:07:37,360 --> 00:07:40,080
Speaker 3: that right there is the key to not really moving

141
00:07:40,120 --> 00:07:43,880
Speaker 3: too quickly and not getting out of the trade. Treasuries

142
00:07:45,080 --> 00:07:47,960
Speaker 3: could be the right move, but there's a lot one

143
00:07:48,000 --> 00:07:49,880
Speaker 3: hundred basis points makes up for a lot of errors.

144
00:07:50,280 --> 00:07:53,760
Speaker 3: So if we even widen out fifteen twenty basis points,

145
00:07:54,080 --> 00:07:55,760
Speaker 3: I think you'll be met with a lot of demand

146
00:07:55,840 --> 00:07:58,040
Speaker 3: because now you're looking at yields that are in the

147
00:07:58,080 --> 00:08:01,080
Speaker 3: four and three quarter area, and that is just going

148
00:08:01,120 --> 00:08:03,320
Speaker 3: to be too enticing for people where they're going to

149
00:08:03,400 --> 00:08:05,760
Speaker 3: want to come back in, so there is a cap

150
00:08:05,800 --> 00:08:08,240
Speaker 3: on and how far they can widen out in my mind.

151
00:08:09,800 --> 00:08:13,560
Speaker 1: Sticking with mortgages, so could the government sponsored enterprises I

152
00:08:13,720 --> 00:08:17,280
Speaker 1: finally may pretty much purchase more mbs.

153
00:08:20,360 --> 00:08:25,200
Speaker 3: They could, I don't think they will. I think the

154
00:08:25,280 --> 00:08:28,280
Speaker 3: focus is going to be a considered focus. Like I said,

155
00:08:28,360 --> 00:08:30,160
Speaker 3: the FED is probably going to be winding down their

156
00:08:30,160 --> 00:08:33,240
Speaker 3: spreadsheet or balance sheets, sorry, the Feds be winding down

157
00:08:33,240 --> 00:08:36,040
Speaker 3: their balance sheets. I don't think that you're going to

158
00:08:36,080 --> 00:08:39,559
Speaker 3: see a push really to buy too many more mortgages

159
00:08:39,600 --> 00:08:41,720
Speaker 3: across anybody. I think they're going to try to have

160
00:08:41,800 --> 00:08:45,760
Speaker 3: that demand picked up by others. Now. The one thing

161
00:08:45,760 --> 00:08:47,959
Speaker 3: that you do have from a demand standpoint that could

162
00:08:47,960 --> 00:08:50,160
Speaker 3: throw all of that in and you could see Fanning

163
00:08:50,160 --> 00:08:52,920
Speaker 3: and Freddie kind of step up is if you look

164
00:08:52,920 --> 00:08:58,040
Speaker 3: at Asia, for instance, in Asia flows looking back last

165
00:08:58,080 --> 00:09:02,559
Speaker 3: year you had Japan was antre uh basically, Taiwan was flat,

166
00:09:02,640 --> 00:09:06,520
Speaker 3: China was a slid. They went down. Now that you've

167
00:09:06,520 --> 00:09:08,240
Speaker 3: had the run up in rates that we've had over

168
00:09:08,320 --> 00:09:11,400
Speaker 3: and yields over in Japan over the last two weeks,

169
00:09:12,280 --> 00:09:14,319
Speaker 3: you could see that start to reverse. I don't think

170
00:09:14,320 --> 00:09:18,360
Speaker 3: they'll be straight out sellers, but they will limit their buying.

171
00:09:18,440 --> 00:09:21,280
Speaker 3: They could see bonds roll off, and I think that

172
00:09:21,360 --> 00:09:24,080
Speaker 3: could hurt it. So there's a lot of moving parts

173
00:09:24,080 --> 00:09:25,960
Speaker 3: and mortgages right now, and I think that's one of

174
00:09:25,960 --> 00:09:28,440
Speaker 3: the reasons why it still looks decently cheap and still

175
00:09:28,520 --> 00:09:30,280
Speaker 3: are getting the yield of you know, roughly one hundred

176
00:09:30,320 --> 00:09:33,560
Speaker 3: based points over treasuries. If you go into like slight

177
00:09:33,600 --> 00:09:39,040
Speaker 3: premium bonds. By doing that, you're really there's a lot

178
00:09:39,040 --> 00:09:40,719
Speaker 3: of moving parts. Like I said, it's it's going to be,

179
00:09:40,880 --> 00:09:45,320
Speaker 3: is asia're going to drop out? Is Kevin worsh really

180
00:09:45,360 --> 00:09:47,360
Speaker 3: going to try to cut the balance sheet? What is

181
00:09:47,400 --> 00:09:49,360
Speaker 3: really going to happen? And I think that is a

182
00:09:49,400 --> 00:09:53,920
Speaker 3: tree that we won't know for probably six months. So

183
00:09:54,080 --> 00:09:56,400
Speaker 3: while that may happen, I think the smart move is

184
00:09:56,400 --> 00:09:59,000
Speaker 3: still to be in the trade for right now, take

185
00:09:59,040 --> 00:10:01,920
Speaker 3: the extra yield and really just clip the coupon over

186
00:10:01,920 --> 00:10:04,880
Speaker 3: treasuries and everything else. From a risk adjustice standpoint, it

187
00:10:04,960 --> 00:10:07,320
Speaker 3: still makes sense to be in at least for the

188
00:10:07,360 --> 00:10:09,040
Speaker 3: next six to nine months.

189
00:10:10,000 --> 00:10:12,160
Speaker 1: Isn't that the risk across the board in credit in

190
00:10:12,200 --> 00:10:15,120
Speaker 1: the US credit that given you know, the yields are

191
00:10:15,200 --> 00:10:18,199
Speaker 1: higher in places like Japan. But also there's this big

192
00:10:18,400 --> 00:10:21,440
Speaker 1: push to if not sell America, to at least diversify

193
00:10:21,440 --> 00:10:25,040
Speaker 1: away from America. Does that not push spreads wider across

194
00:10:25,080 --> 00:10:27,520
Speaker 1: the board in credit and mortgages and everything else.

195
00:10:29,360 --> 00:10:31,560
Speaker 3: It could. The one thing I keep going back to

196
00:10:31,600 --> 00:10:34,320
Speaker 3: those if you look at it, we're pricing in credit,

197
00:10:34,320 --> 00:10:36,160
Speaker 3: for instance, you're priced in to have more than two

198
00:10:36,240 --> 00:10:39,360
Speaker 3: trillion in supply come into the market this year. You've

199
00:10:39,360 --> 00:10:42,439
Speaker 3: had some huge capex announcements over the last couple of

200
00:10:42,520 --> 00:10:47,800
Speaker 3: days from Amazon and Google off of Alphabet, and so

201
00:10:47,840 --> 00:10:50,800
Speaker 3: there's been a big concern as to who's going to

202
00:10:50,800 --> 00:10:53,520
Speaker 3: pick up the slack. However, on the other side of that,

203
00:10:53,880 --> 00:10:57,080
Speaker 3: over the last two weeks, you've had record inflows into

204
00:10:57,120 --> 00:11:01,120
Speaker 3: fixed income. We've already seen just over just under fifty

205
00:11:01,160 --> 00:11:02,679
Speaker 3: billion if you count what happened to the end of

206
00:11:02,760 --> 00:11:05,640
Speaker 3: last week, it's over fifty billion come into fixed income,

207
00:11:05,800 --> 00:11:09,360
Speaker 3: into high grade funds. When you take that and you

208
00:11:09,400 --> 00:11:11,840
Speaker 3: compare that with the supply that we had, for instance,

209
00:11:11,840 --> 00:11:14,520
Speaker 3: in credit, credit had two hundred and seventeen billion in

210
00:11:14,559 --> 00:11:17,640
Speaker 3: supply in January. But when you take out maturities and

211
00:11:17,679 --> 00:11:21,520
Speaker 3: you take out coupon payments, net supply was only fifty

212
00:11:21,559 --> 00:11:25,080
Speaker 3: one billion, which is down twenty percent year over year.

213
00:11:25,600 --> 00:11:27,280
Speaker 3: So if you look at that and really see that

214
00:11:27,280 --> 00:11:30,520
Speaker 3: net supplies fifty one billion, fixed income has in high

215
00:11:30,559 --> 00:11:33,520
Speaker 3: grade funds has seen basically fifty billion come into the market,

216
00:11:34,120 --> 00:11:37,079
Speaker 3: you're really balancing it out. So I do think that

217
00:11:37,080 --> 00:11:40,000
Speaker 3: that is an issue. But right now, because of where

218
00:11:40,080 --> 00:11:42,720
Speaker 3: yields are, there is so much money coming in, and

219
00:11:42,760 --> 00:11:44,640
Speaker 3: I think a lot of that is because as well

220
00:11:45,080 --> 00:11:49,040
Speaker 3: where equities are. Equities are near all time highs. Still

221
00:11:49,840 --> 00:11:52,240
Speaker 3: there's a lot of concern and you're seeing money start

222
00:11:52,280 --> 00:11:56,160
Speaker 3: to flow in a little bit and rebalancing happening in January.

223
00:11:56,520 --> 00:11:58,800
Speaker 3: And then you also still have to remember that we've

224
00:11:58,800 --> 00:12:03,040
Speaker 3: got eight trillions on the sidelines. If for some reason,

225
00:12:03,280 --> 00:12:05,480
Speaker 3: you know, one trillion of that comes into the market,

226
00:12:05,640 --> 00:12:07,400
Speaker 3: which I think over the next year you'll probably start

227
00:12:07,400 --> 00:12:08,920
Speaker 3: to see a little bit of that start to flow in.

228
00:12:09,720 --> 00:12:12,760
Speaker 3: That will help keep spreads across every sector in check.

229
00:12:13,320 --> 00:12:16,560
Speaker 2: So just to clarify that eight trillion dollars that you

230
00:12:16,679 --> 00:12:19,520
Speaker 2: just cited, is that in money market funds now or

231
00:12:19,520 --> 00:12:20,720
Speaker 2: where is that currently?

232
00:12:22,080 --> 00:12:24,719
Speaker 3: That that's in money market funds and eight trillions of

233
00:12:24,760 --> 00:12:28,280
Speaker 3: round number, we're right in that ballpark. But what I've

234
00:12:28,320 --> 00:12:30,679
Speaker 3: seen from some studies that are out there is that

235
00:12:31,000 --> 00:12:34,760
Speaker 3: historically money market yield money market funds have always ramped

236
00:12:34,840 --> 00:12:37,920
Speaker 3: up until the difference between the money market yield and

237
00:12:38,200 --> 00:12:42,520
Speaker 3: the corporate credit you have yields is once it hits

238
00:12:42,520 --> 00:12:44,880
Speaker 3: about one hundred basis points, you start to see money

239
00:12:44,920 --> 00:12:48,040
Speaker 3: switch inside of that. You really don't see it move

240
00:12:48,080 --> 00:12:50,640
Speaker 3: too much, which is what we've seen. If we get

241
00:12:50,679 --> 00:12:52,760
Speaker 3: the rate cuts that people are talking about, you know,

242
00:12:52,760 --> 00:12:56,120
Speaker 3: two are priced into the market right now with the potential.

243
00:12:56,160 --> 00:12:57,600
Speaker 3: You know, some people are calling for more, some people

244
00:12:57,640 --> 00:12:59,160
Speaker 3: are calling for or less. But if we just use

245
00:12:59,200 --> 00:13:02,280
Speaker 3: what the market's priced in too, that brings us down

246
00:13:02,320 --> 00:13:03,920
Speaker 3: to three and a quarter. Maybe we get to three

247
00:13:03,960 --> 00:13:06,760
Speaker 3: percent on Fed funds. Now, your money market is going

248
00:13:06,840 --> 00:13:10,160
Speaker 3: to start being close to that hundred basis points because

249
00:13:10,200 --> 00:13:11,840
Speaker 3: deals will come down slightly, but you're going to be

250
00:13:11,880 --> 00:13:14,400
Speaker 3: right around one hundred basis points. And I think by

251
00:13:14,440 --> 00:13:17,280
Speaker 3: the second half of the year that'll cause you to

252
00:13:17,320 --> 00:13:20,200
Speaker 3: start having money come out of money markets and into

253
00:13:20,280 --> 00:13:20,960
Speaker 3: fixed income.

254
00:13:23,880 --> 00:13:26,240
Speaker 2: Got it is your I mean, I know you're just

255
00:13:26,320 --> 00:13:30,520
Speaker 2: quoting the market cut to two cuts probably for twenty

256
00:13:30,559 --> 00:13:34,240
Speaker 2: twenty six priced in, But does the it kind of

257
00:13:34,240 --> 00:13:38,600
Speaker 2: begs the question does the economy itself come into play

258
00:13:38,840 --> 00:13:42,559
Speaker 2: from your perspective looking at like nbs versus corporates? Is

259
00:13:42,920 --> 00:13:47,960
Speaker 2: that you know, is that currently consideration and what would

260
00:13:48,000 --> 00:13:49,160
Speaker 2: make it more of a consideration.

261
00:13:50,559 --> 00:13:53,960
Speaker 3: So I think it definitely does if you think about it.

262
00:13:54,200 --> 00:13:57,400
Speaker 3: Mortgages are one of the best defensive sectors. Right. It's

263
00:13:57,880 --> 00:14:00,000
Speaker 3: you're never going to see bonds move out, specially agents

264
00:14:00,160 --> 00:14:02,920
Speaker 3: mortgages if you go back, you know, I always like

265
00:14:02,960 --> 00:14:05,280
Speaker 3: to quote two thousand and eight because everyone thinks in

266
00:14:05,320 --> 00:14:07,400
Speaker 3: two thousand and eight the mortgage market was terrible and

267
00:14:07,400 --> 00:14:11,439
Speaker 3: everything blew up. Agency mortgages returned almost eight and a

268
00:14:11,440 --> 00:14:14,800
Speaker 3: half percent, with corporates being negative. Now I don't think

269
00:14:14,800 --> 00:14:16,240
Speaker 3: a two thousand and eight is going to happen again,

270
00:14:16,480 --> 00:14:19,680
Speaker 3: but it does highlight how corporates are, or how mortgages

271
00:14:19,720 --> 00:14:22,880
Speaker 3: are a defensive kind of suctor. So if the market

272
00:14:22,920 --> 00:14:25,120
Speaker 3: starts pricing in a recession, or we start seeing a

273
00:14:25,120 --> 00:14:28,000
Speaker 3: lot of the data start to fall, then the move

274
00:14:28,080 --> 00:14:33,360
Speaker 3: into mortgages, especially agency mortgages, definitely becomes even more enticing,

275
00:14:33,440 --> 00:14:35,760
Speaker 3: even with them at the tight levels that they're at.

276
00:14:36,800 --> 00:14:39,840
Speaker 1: Does your more sort of dubvish outlook, or they're on

277
00:14:39,840 --> 00:14:43,200
Speaker 1: the rates side. I mean, I'm hearing today recently actually

278
00:14:43,640 --> 00:14:46,440
Speaker 1: people talking about hikes again because of inflation coming back.

279
00:14:46,840 --> 00:14:49,800
Speaker 1: But if you are that dubvish, are you therefore assuming

280
00:14:49,800 --> 00:14:51,920
Speaker 1: that the economy slows down to the extent that the

281
00:14:51,960 --> 00:14:53,760
Speaker 1: BED has to sort of jump in and try and

282
00:14:53,840 --> 00:14:54,680
Speaker 1: speed things up again.

283
00:14:56,760 --> 00:15:00,960
Speaker 3: I think the economy will, I want to say slow down,

284
00:15:01,160 --> 00:15:04,560
Speaker 3: but kind of just level out a little bit. I

285
00:15:04,560 --> 00:15:07,320
Speaker 3: think we can easily get two cuts without it having

286
00:15:07,360 --> 00:15:10,600
Speaker 3: any real impact on the market. I think we probably

287
00:15:10,600 --> 00:15:13,480
Speaker 3: do get three. And the one thing to remember too

288
00:15:13,520 --> 00:15:15,680
Speaker 3: is if we do start cutting the balance sheet, that

289
00:15:15,720 --> 00:15:18,960
Speaker 3: will offset some of the cuts. So even if we

290
00:15:19,040 --> 00:15:21,960
Speaker 3: are seeing the economy just be flat, we can actually

291
00:15:22,040 --> 00:15:24,240
Speaker 3: cut a little bit more. If the balance sheet starts

292
00:15:24,280 --> 00:15:27,160
Speaker 3: going away, they'll kind of counteract each other a little bit.

293
00:15:27,600 --> 00:15:30,720
Speaker 3: So I think I personally think we probably get three.

294
00:15:30,800 --> 00:15:32,320
Speaker 3: I don't think that there's going to be a recession

295
00:15:32,360 --> 00:15:37,360
Speaker 3: in twenty six. End of twenty seven is probably another story.

296
00:15:37,400 --> 00:15:40,240
Speaker 3: Maybe we see more slowing down, but I think we're

297
00:15:40,280 --> 00:15:43,080
Speaker 3: still a ways away from that happening. So I think

298
00:15:43,200 --> 00:15:46,040
Speaker 3: right now I think you can just really get in

299
00:15:46,080 --> 00:15:49,520
Speaker 3: a couple of cuts, maybe we get three. On the

300
00:15:49,520 --> 00:15:51,600
Speaker 3: other hand, if for some reason we would happen to

301
00:15:51,640 --> 00:15:53,720
Speaker 3: see four or five six cuts, which I don't think

302
00:15:53,760 --> 00:15:56,960
Speaker 3: will happen, then you could start seeing inflation issues. And

303
00:15:57,000 --> 00:15:59,680
Speaker 3: I think then you will see the curves deepen and

304
00:16:00,120 --> 00:16:01,560
Speaker 3: years will probably go back up to four and a

305
00:16:01,560 --> 00:16:05,160
Speaker 3: half to five percent, and we really will see an issue.

306
00:16:05,480 --> 00:16:07,320
Speaker 3: So I think there's a little bit of a leeway

307
00:16:07,400 --> 00:16:08,960
Speaker 3: here that they can do because they don't think we

308
00:16:09,040 --> 00:16:12,560
Speaker 3: are going full on recession. But they have to be

309
00:16:12,560 --> 00:16:13,640
Speaker 3: careful not to go too far.

310
00:16:16,480 --> 00:16:19,800
Speaker 1: And if they do, you know, cut too much and

311
00:16:19,840 --> 00:16:21,840
Speaker 1: to what extent in that would you be assuming some

312
00:16:21,920 --> 00:16:25,520
Speaker 1: kind of political pressure. But then how would you position

313
00:16:25,600 --> 00:16:27,440
Speaker 1: for that as a as a credit, you know, for

314
00:16:27,640 --> 00:16:28,360
Speaker 1: folio manager.

315
00:16:29,440 --> 00:16:32,560
Speaker 3: So from for folio management side, I think would happen.

316
00:16:32,680 --> 00:16:35,600
Speaker 3: And this isn't my base case because, like I said,

317
00:16:35,760 --> 00:16:39,880
Speaker 3: I'm taking I've always believed that actions speak louder than words.

318
00:16:40,080 --> 00:16:42,440
Speaker 3: If you really look at what Kevin worsh has done

319
00:16:42,520 --> 00:16:46,200
Speaker 3: over his career, he is about balance sheet and he's

320
00:16:46,200 --> 00:16:50,200
Speaker 3: about inflation. So I'm taking him at what he's done

321
00:16:50,280 --> 00:16:53,000
Speaker 3: historically that he's really going to watch inflation, so we

322
00:16:53,040 --> 00:16:55,400
Speaker 3: aren't going to get too many cuts, and we might

323
00:16:55,440 --> 00:16:57,560
Speaker 3: see the balance sheet reduced, which, like I said, will

324
00:16:57,600 --> 00:17:01,440
Speaker 3: offset some of this, but if for some reason it happens,

325
00:17:02,760 --> 00:17:04,640
Speaker 3: it really is something to monitor because then you will

326
00:17:04,640 --> 00:17:07,000
Speaker 3: see credit spreads go wider. Then you will want to

327
00:17:07,000 --> 00:17:09,440
Speaker 3: move into treasuries, or you would want to move into

328
00:17:09,720 --> 00:17:14,080
Speaker 3: mortgages for instance, uh, just because those will outperform in

329
00:17:14,119 --> 00:17:17,880
Speaker 3: that general in that scenario. The one thing I would

330
00:17:17,960 --> 00:17:21,440
Speaker 3: definitely move away from then is you know, lower level,

331
00:17:21,480 --> 00:17:24,560
Speaker 3: lower credit, how yield would underperform. If that does happen,

332
00:17:25,440 --> 00:17:28,240
Speaker 3: and you really become more of a bond pickers market

333
00:17:28,320 --> 00:17:31,959
Speaker 3: than anything else. The last we'll call it two three years,

334
00:17:32,400 --> 00:17:34,359
Speaker 3: it really didn't matter as much as to what you

335
00:17:34,400 --> 00:17:36,119
Speaker 3: were buying, you were going to make money off it.

336
00:17:36,720 --> 00:17:39,480
Speaker 3: We are moving more into a bond pickers market where

337
00:17:39,520 --> 00:17:40,919
Speaker 3: you have to pick the right credits. You have to

338
00:17:40,920 --> 00:17:43,280
Speaker 3: really watch what you're doing and really make sure that

339
00:17:43,359 --> 00:17:47,320
Speaker 3: you're not going into names that are not you know,

340
00:17:47,760 --> 00:17:50,320
Speaker 3: software for instance, maybe stay away from software names and

341
00:17:50,440 --> 00:17:52,600
Speaker 3: you know, really make sure you're you're not going into

342
00:17:52,720 --> 00:17:55,640
Speaker 3: names that could hurt you in those scenarios.

343
00:17:57,000 --> 00:18:00,520
Speaker 1: So the you also keep low duration, you try and

344
00:18:00,520 --> 00:18:03,280
Speaker 1: get floaters or inflation links or something like that in credit.

345
00:18:04,280 --> 00:18:06,080
Speaker 3: I do think that. I mean, we've done some work

346
00:18:06,119 --> 00:18:08,680
Speaker 3: on it, and I think the biggest thing is that

347
00:18:08,760 --> 00:18:11,640
Speaker 3: intermediate part of the curve. I think the five year

348
00:18:11,760 --> 00:18:14,320
Speaker 3: part will kind of be your pivot point. And what

349
00:18:14,400 --> 00:18:18,199
Speaker 3: we've noticed if you go back twenty years, the way

350
00:18:18,240 --> 00:18:20,600
Speaker 3: I always look at fixed income is fixed income is

351
00:18:20,640 --> 00:18:24,280
Speaker 3: not something where you're going to move it around. Historically,

352
00:18:24,320 --> 00:18:26,359
Speaker 3: you know, you buy it, you hold it, you do

353
00:18:26,440 --> 00:18:30,320
Speaker 3: trains within it, but you hold the overall allocation. And

354
00:18:30,840 --> 00:18:33,800
Speaker 3: if that's your idea and you go back ten fifteen years,

355
00:18:34,560 --> 00:18:37,440
Speaker 3: buying duration has never really worked out from a long

356
00:18:37,480 --> 00:18:39,880
Speaker 3: term perspective. You have to time it perfectly, and if

357
00:18:39,880 --> 00:18:42,320
Speaker 3: you don't time perfectly, you lose on it. So we've

358
00:18:42,359 --> 00:18:45,359
Speaker 3: always thought, you know duration, you keep that or in

359
00:18:45,600 --> 00:18:47,560
Speaker 3: the intermediate part of the curve and really think that

360
00:18:47,560 --> 00:18:51,040
Speaker 3: that's where you see it, because the curve will rotate

361
00:18:51,040 --> 00:18:54,359
Speaker 3: along that five year part of the curve. So if

362
00:18:54,400 --> 00:18:58,320
Speaker 3: we do see it being a little bit more the

363
00:18:58,400 --> 00:19:00,760
Speaker 3: economy weakening a little bit, maybe we'd do go from

364
00:19:00,880 --> 00:19:03,560
Speaker 3: you know, out to seven years a little bit and

365
00:19:03,880 --> 00:19:06,480
Speaker 3: maybe extend a little bit of duration because we would

366
00:19:06,480 --> 00:19:09,480
Speaker 3: expect rates to come down, but right now, I really

367
00:19:09,520 --> 00:19:11,120
Speaker 3: don't think you're going to see that, and I don't

368
00:19:11,160 --> 00:19:13,880
Speaker 3: think you're going to see rates come crashing down, So

369
00:19:14,040 --> 00:19:16,840
Speaker 3: it really doesn't make sense to take on too much duration.

370
00:19:17,560 --> 00:19:20,639
Speaker 3: From a portfolio management side, I think you can really

371
00:19:20,760 --> 00:19:24,920
Speaker 3: just clip the coupon and really worry about the excess

372
00:19:24,920 --> 00:19:26,880
Speaker 3: carry that you get, even though that excess carry has

373
00:19:26,960 --> 00:19:29,600
Speaker 3: been significantly reduced. Cool.

374
00:19:29,680 --> 00:19:31,159
Speaker 2: I mean, as long as you're on the topic of

375
00:19:31,240 --> 00:19:33,720
Speaker 2: security selection, might as well get in the weeds a

376
00:19:33,760 --> 00:19:37,080
Speaker 2: little bit. For MBS. You mentioned that, you know, maybe

377
00:19:37,119 --> 00:19:40,240
Speaker 2: as the buy programs from the GCS are targeted on

378
00:19:40,320 --> 00:19:43,879
Speaker 2: current coupons, maybe look a little bit up in coupon

379
00:19:44,040 --> 00:19:47,240
Speaker 2: or down in coupon. I guess from my perspective, with

380
00:19:47,520 --> 00:19:53,240
Speaker 2: up in coupon, there seems to be rising free payment

381
00:19:53,400 --> 00:19:56,880
Speaker 2: risk with loan sizes increasing, and you know, the non

382
00:19:56,960 --> 00:20:00,159
Speaker 2: bank the large non banks who are particularly good at refinancing,

383
00:20:00,920 --> 00:20:04,600
Speaker 2: you know, taking over a larger market share. What if anything,

384
00:20:04,640 --> 00:20:07,280
Speaker 2: are you thinking about there and how to adjust for

385
00:20:07,359 --> 00:20:08,520
Speaker 2: those risks.

386
00:20:09,080 --> 00:20:10,879
Speaker 3: I think if you go up in coupon, I think

387
00:20:10,920 --> 00:20:14,000
Speaker 3: you have to buy specified pools. I don't think you

388
00:20:14,040 --> 00:20:17,160
Speaker 3: can just go up in coupon because prepaid speeds will

389
00:20:17,359 --> 00:20:19,680
Speaker 3: move up. I think you have to be looking at

390
00:20:19,800 --> 00:20:23,680
Speaker 3: loan balance, and those have still gotten rich. They're trading

391
00:20:24,240 --> 00:20:27,480
Speaker 3: close to or above their theoretical values the payoffs. But

392
00:20:28,240 --> 00:20:30,800
Speaker 3: that being said, if you look at them from just

393
00:20:30,840 --> 00:20:36,399
Speaker 3: a pure oas perspective, you can still pick you know, ten, fifteen,

394
00:20:36,440 --> 00:20:38,960
Speaker 3: twenty oas above. If you go into five and a halves,

395
00:20:38,960 --> 00:20:43,960
Speaker 3: say above, where you get fours through fives, those are

396
00:20:44,040 --> 00:20:46,439
Speaker 3: just really been the bonds that everyone's bought, assuming that

397
00:20:46,480 --> 00:20:49,560
Speaker 3: the park price bond is going to be what gets

398
00:20:49,560 --> 00:20:54,320
Speaker 3: bought by the government. I'm not saying to go up

399
00:20:54,320 --> 00:20:56,000
Speaker 3: to like six and a halves or anything like that,

400
00:20:56,119 --> 00:20:57,960
Speaker 3: but if you move up to five and a halves,

401
00:20:58,440 --> 00:21:00,919
Speaker 3: for instance, you know, for one to one and a half,

402
00:21:00,960 --> 00:21:02,679
Speaker 3: when you're adding the payoff, you're probably at one oh

403
00:21:02,720 --> 00:21:04,840
Speaker 3: two and a half one oh three, and you can

404
00:21:04,840 --> 00:21:07,920
Speaker 3: pick a decent amount of oos and spread that will

405
00:21:08,119 --> 00:21:10,360
Speaker 3: kind of counteract some of those prepaid speeds.

406
00:21:11,240 --> 00:21:13,280
Speaker 2: I mean, I guess you know one follow up question.

407
00:21:13,840 --> 00:21:16,520
Speaker 2: I think you and I both have mentioned how obviously

408
00:21:16,600 --> 00:21:18,959
Speaker 2: the government's putting the thumb on the scale for overall

409
00:21:19,000 --> 00:21:23,639
Speaker 2: mortgage rates to try to improve those and therefore tightening

410
00:21:23,640 --> 00:21:27,000
Speaker 2: and correct coupon spreads. But some of the other policies

411
00:21:27,040 --> 00:21:29,520
Speaker 2: that have been bandied about might be a little less

412
00:21:29,520 --> 00:21:33,440
Speaker 2: friendly to the NBS market, like cutting guarantee fees, lowering

413
00:21:33,440 --> 00:21:37,320
Speaker 2: a loan level of pricing adjustments mortgage insurance premiums for fhas.

414
00:21:37,720 --> 00:21:39,800
Speaker 2: Do you think the market's pricing that in and do

415
00:21:39,840 --> 00:21:41,560
Speaker 2: you think the market should be pricing in that in

416
00:21:41,720 --> 00:21:44,320
Speaker 2: or do you think that's just kind of people talking

417
00:21:44,800 --> 00:21:46,720
Speaker 2: about the radical ideas.

418
00:21:48,440 --> 00:21:50,880
Speaker 3: I think we're getting a lot of theoretical ideas right

419
00:21:50,880 --> 00:21:55,120
Speaker 3: now across the board on everything. I think the goal

420
00:21:55,280 --> 00:21:58,320
Speaker 3: to me, I mean, in reality, the two hundred billion

421
00:21:58,400 --> 00:22:02,680
Speaker 3: is not going to move the needle on morege rates significantly.

422
00:22:03,119 --> 00:22:06,239
Speaker 3: I think we're trying to get headlines in a lot

423
00:22:06,280 --> 00:22:09,640
Speaker 3: of ways and to talk about theoretical things to try

424
00:22:09,640 --> 00:22:13,240
Speaker 3: to make housing a little bit more affordable. And it

425
00:22:13,320 --> 00:22:14,719
Speaker 3: did work a little bit, right. I mean, we were

426
00:22:14,720 --> 00:22:17,960
Speaker 3: sitting at mortgage rates themselves, we're bouncing between six and

427
00:22:17,960 --> 00:22:21,240
Speaker 3: a quarter and six three a six and a half,

428
00:22:22,000 --> 00:22:24,399
Speaker 3: and then the two hundred billion was announced and we

429
00:22:24,440 --> 00:22:27,280
Speaker 3: came right into right around six percent. We've now since

430
00:22:27,280 --> 00:22:31,240
Speaker 3: backed up a little bit since then. I don't know

431
00:22:31,320 --> 00:22:33,240
Speaker 3: if you know, the two hundred billion or any of

432
00:22:33,240 --> 00:22:35,560
Speaker 3: this other stuff that we talk about can really bring

433
00:22:35,600 --> 00:22:39,960
Speaker 3: it under six percent mortgage rates significantly and down to

434
00:22:40,000 --> 00:22:42,800
Speaker 3: five seventy five. If we do that, that's on the

435
00:22:42,840 --> 00:22:44,800
Speaker 3: margins to me. So that kind of goes back to

436
00:22:44,800 --> 00:22:47,480
Speaker 3: your other question about pre paid speeds too, as I'm

437
00:22:47,520 --> 00:22:51,080
Speaker 3: not expecting us to go see five percent mortgage rates,

438
00:22:51,400 --> 00:22:55,159
Speaker 3: So I still think prepaid speeds are probably gonna be

439
00:22:55,200 --> 00:22:57,080
Speaker 3: a little more muted than what some of the models

440
00:22:57,119 --> 00:22:59,600
Speaker 3: or what some people are looking at. I think there's

441
00:22:59,600 --> 00:23:04,280
Speaker 3: a lot of talk about making housing more affordable, and

442
00:23:04,560 --> 00:23:06,440
Speaker 3: when it comes down to it, it's a supply issue

443
00:23:06,440 --> 00:23:09,000
Speaker 3: in my mind over anything else. I mean, what was

444
00:23:09,000 --> 00:23:11,000
Speaker 3: it last week week before you just had them come out,

445
00:23:11,000 --> 00:23:13,119
Speaker 3: and you know, there's been some talk about Trump homes

446
00:23:13,119 --> 00:23:16,800
Speaker 3: and it's making the hundred I'm sorry, the one million

447
00:23:16,840 --> 00:23:19,280
Speaker 3: in homes. I think it was like Lenarre and one

448
00:23:19,320 --> 00:23:21,800
Speaker 3: other builder started talking about, you know, we could start

449
00:23:21,800 --> 00:23:24,000
Speaker 3: building these homes and they could be subsidized, and there's

450
00:23:24,000 --> 00:23:27,240
Speaker 3: a lot of things that we can do, right now

451
00:23:27,280 --> 00:23:29,760
Speaker 3: housing is anywhere. Some of the Esthmens are two to

452
00:23:29,840 --> 00:23:32,960
Speaker 3: five billion or two to five million too small. In Esmen,

453
00:23:33,040 --> 00:23:36,160
Speaker 3: we need to build that many houses. So even if

454
00:23:36,160 --> 00:23:38,240
Speaker 3: we got a million, you're still not fixing the problem.

455
00:23:39,040 --> 00:23:40,679
Speaker 3: It really is going to be tough to move the

456
00:23:40,720 --> 00:23:43,960
Speaker 3: needle in my mind, because it is a supply issue

457
00:23:44,400 --> 00:23:47,280
Speaker 3: more than anything else, and that's not really improving a

458
00:23:47,280 --> 00:23:47,920
Speaker 3: lot right now.

459
00:23:48,359 --> 00:23:50,639
Speaker 1: How the GS is actually hedging any of these purchases,

460
00:23:50,680 --> 00:23:51,320
Speaker 1: does that matter?

461
00:23:51,880 --> 00:23:54,439
Speaker 3: No, not a lot. And the interesting thing is they're

462
00:23:54,480 --> 00:23:56,520
Speaker 3: starting to do some things. I mean they've gone and

463
00:23:58,119 --> 00:24:00,960
Speaker 3: historically they've never really hedged out to much, and it

464
00:24:01,040 --> 00:24:04,840
Speaker 3: does matter a little bit. But again I don't think

465
00:24:05,000 --> 00:24:07,320
Speaker 3: I think the headlines about all of these are bigger

466
00:24:07,359 --> 00:24:10,760
Speaker 3: than what's actually going to happen. I don't think it's

467
00:24:10,800 --> 00:24:13,840
Speaker 3: going to move the needle significantly on any of these.

468
00:24:13,880 --> 00:24:17,400
Speaker 3: I think mortgages are going to stay rich. That's why

469
00:24:17,400 --> 00:24:19,000
Speaker 3: I say move out to curvel or move out the

470
00:24:19,000 --> 00:24:21,800
Speaker 3: coupon stack a little bit, because what did become rich

471
00:24:22,160 --> 00:24:23,760
Speaker 3: is probably going to cheapen up and come back a

472
00:24:23,800 --> 00:24:28,320
Speaker 3: little bit. Same thing with credit. All of these, anything

473
00:24:28,359 --> 00:24:32,720
Speaker 3: that's going on about supply, anything that's going on about

474
00:24:33,119 --> 00:24:36,440
Speaker 3: buying bonds, buying anything, or the balance sheet. I think

475
00:24:36,440 --> 00:24:38,240
Speaker 3: there's a lot more talk right now and not a

476
00:24:38,280 --> 00:24:41,600
Speaker 3: lot of actual, hard, solid plans, and I don't expect

477
00:24:41,600 --> 00:24:43,840
Speaker 3: those plans to come in until the second half of

478
00:24:43,840 --> 00:24:46,800
Speaker 3: this year. I don't think there will be any significant

479
00:24:46,840 --> 00:24:49,160
Speaker 3: plans until we get near the end of the year,

480
00:24:49,640 --> 00:24:53,240
Speaker 3: when you do see an actual confirmation and you do

481
00:24:53,320 --> 00:24:55,800
Speaker 3: see what happens the first couple of FED meetings and

482
00:24:56,040 --> 00:25:00,040
Speaker 3: where do they actually take it. Until that happens, I

483
00:25:00,040 --> 00:25:01,520
Speaker 3: think there's just going to be a lot of talk,

484
00:25:01,680 --> 00:25:04,880
Speaker 3: and there's a lot of headlines, and obviously the market

485
00:25:04,920 --> 00:25:07,359
Speaker 3: could get whipped around on that. That's why for the

486
00:25:07,440 --> 00:25:10,440
Speaker 3: last two years I've been saying I can't be managing

487
00:25:10,440 --> 00:25:13,360
Speaker 3: the headlines. My whole goal is to manage to December

488
00:25:13,400 --> 00:25:15,080
Speaker 3: thirty first, you know, I manage a one year out.

489
00:25:15,880 --> 00:25:18,119
Speaker 3: I don't want to try to hear the headlines that

490
00:25:18,160 --> 00:25:21,200
Speaker 3: are going on because we don't know enough right now

491
00:25:21,280 --> 00:25:24,439
Speaker 3: and we won't know for probably six months as to

492
00:25:24,560 --> 00:25:26,600
Speaker 3: what the FED really is and what they're going to do,

493
00:25:27,119 --> 00:25:29,720
Speaker 3: So really, to me just makes more sense to kind

494
00:25:29,760 --> 00:25:33,800
Speaker 3: of stay where you are, stay kind of clipping extra coupon,

495
00:25:33,920 --> 00:25:36,800
Speaker 3: getting the extra yield. Historically four and a half to

496
00:25:36,880 --> 00:25:39,879
Speaker 3: five percent yields are still strong, and they're stronger than

497
00:25:39,880 --> 00:25:41,639
Speaker 3: what we have seen for quite a while, for an

498
00:25:41,640 --> 00:25:44,119
Speaker 3: extended period of time. So I think that's really the

499
00:25:44,119 --> 00:25:47,280
Speaker 3: smart play to do, is that we won't get moved

500
00:25:47,320 --> 00:25:51,160
Speaker 3: around quickly, we won't get pushed down. Rates aren't going lower,

501
00:25:51,200 --> 00:25:55,120
Speaker 3: Housings not going up significantly. I just don't see speeds

502
00:25:55,440 --> 00:25:57,680
Speaker 3: outside of blips from this little move that we had

503
00:25:58,560 --> 00:26:04,320
Speaker 3: being prepaid b sustained higher. But again, you can you

504
00:26:04,359 --> 00:26:06,640
Speaker 3: can minimize some of those if that is what you think.

505
00:26:06,720 --> 00:26:08,399
Speaker 3: You know, if you're going to twenty your mortgages or

506
00:26:08,840 --> 00:26:11,359
Speaker 3: you go into lower coupon, where it would help a

507
00:26:11,359 --> 00:26:14,160
Speaker 3: few if speeds move up. So I just think there's

508
00:26:14,200 --> 00:26:17,840
Speaker 3: a lot more rhetoric and we need a way to

509
00:26:17,840 --> 00:26:19,160
Speaker 3: see what the actions really are.

510
00:26:19,640 --> 00:26:21,080
Speaker 1: I think a lot of other people doing the same

511
00:26:21,080 --> 00:26:24,399
Speaker 1: as you are in terms of just sitting tight and investing. Really,

512
00:26:24,960 --> 00:26:26,480
Speaker 1: you know, there is a lot of money flowing into

513
00:26:26,480 --> 00:26:29,400
Speaker 1: the market. There isn't much supply, but there is this

514
00:26:29,440 --> 00:26:31,240
Speaker 1: sort of stroke of the pen risk. You know that

515
00:26:31,400 --> 00:26:33,239
Speaker 1: the president may wake up somewhere and do something that

516
00:26:33,400 --> 00:26:36,359
Speaker 1: does move spreads dramatically, like in the MBS market. So

517
00:26:36,960 --> 00:26:39,720
Speaker 1: is there any any way you can mitigate that or

518
00:26:39,920 --> 00:26:41,800
Speaker 1: work that or you just ignore it.

519
00:26:43,200 --> 00:26:44,760
Speaker 3: I think you almost have to ignore it. If you

520
00:26:44,800 --> 00:26:47,040
Speaker 3: go back a year. We had that risk right when

521
00:26:47,160 --> 00:26:50,960
Speaker 3: tariffs came in and you saw the spread's gap out

522
00:26:51,240 --> 00:26:54,520
Speaker 3: fifteen twenty basis points, twenty five basis points, and within

523
00:26:54,600 --> 00:26:56,040
Speaker 3: a month they were right back to where they were.

524
00:26:56,119 --> 00:26:57,400
Speaker 3: Month and a half they were right back to where

525
00:26:57,440 --> 00:27:02,000
Speaker 3: they were. So that risk is there, but I think

526
00:27:02,200 --> 00:27:04,960
Speaker 3: chasing the risk is probably the worst way to manage

527
00:27:04,960 --> 00:27:08,159
Speaker 3: a portfolio. You're going to get it right once in

528
00:27:08,200 --> 00:27:09,399
Speaker 3: a while, but you're not going to get it right

529
00:27:09,440 --> 00:27:12,359
Speaker 3: all the time. And the way the amount of money

530
00:27:12,359 --> 00:27:15,080
Speaker 3: that's sitting out there, and it's beneficial to MBS, it's

531
00:27:15,080 --> 00:27:19,159
Speaker 3: beneficial to credit, it's beneficial to high yield. Until you know,

532
00:27:19,160 --> 00:27:21,560
Speaker 3: we start getting a recession, which is still probably at

533
00:27:21,640 --> 00:27:25,040
Speaker 3: least a year and a half two years away, until

534
00:27:25,080 --> 00:27:28,760
Speaker 3: you start seeing deterioration in the numbers. The goal really

535
00:27:28,800 --> 00:27:31,840
Speaker 3: should be in my mind to not get caught up

536
00:27:32,000 --> 00:27:34,879
Speaker 3: in some of these moves, because you will get whipsoed.

537
00:27:35,680 --> 00:27:37,400
Speaker 3: Like I said, go back a year, if you had

538
00:27:37,400 --> 00:27:40,119
Speaker 3: started selling when we had Liberation Date come in and

539
00:27:40,119 --> 00:27:43,040
Speaker 3: spread started gapping wider, you would have missed coming right

540
00:27:43,080 --> 00:27:46,160
Speaker 3: back down. And that, to me is the biggest focus

541
00:27:46,160 --> 00:27:49,680
Speaker 3: that you can't miss. So you just have to buy now,

542
00:27:50,119 --> 00:27:53,520
Speaker 3: hold on to it, and assume, like I'm assuming that

543
00:27:53,560 --> 00:27:55,760
Speaker 3: by the end of the year, we're basically where we

544
00:27:55,800 --> 00:27:58,960
Speaker 3: are now. Rates are probably a little bit lower, spreads

545
00:27:58,960 --> 00:28:01,800
Speaker 3: are maybe a little bit wider, but net net, we're

546
00:28:01,880 --> 00:28:04,760
Speaker 3: probably exactly where we are now from a yield perspective.

547
00:28:05,119 --> 00:28:07,960
Speaker 3: And so if that's the view, and that's where we

548
00:28:08,200 --> 00:28:10,840
Speaker 3: see it, and we think mortgage you'll stay the same,

549
00:28:10,880 --> 00:28:13,639
Speaker 3: we think credit you'll stay roughly the same, it really

550
00:28:13,720 --> 00:28:16,919
Speaker 3: is then just about managing for that end of the

551
00:28:17,000 --> 00:28:21,479
Speaker 3: year time frame even now, and really just staying invest

552
00:28:21,560 --> 00:28:24,320
Speaker 3: fully invested, and getting the best return you can for

553
00:28:24,359 --> 00:28:27,760
Speaker 3: the risk of just for for risk. I think that's

554
00:28:27,840 --> 00:28:29,399
Speaker 3: really got to be the goal going forward.

555
00:28:30,000 --> 00:28:33,080
Speaker 2: I mean, I guess the one you know, one question

556
00:28:33,280 --> 00:28:36,840
Speaker 2: I have, Yeah, you didn't want to sell into that widening,

557
00:28:37,600 --> 00:28:40,720
Speaker 2: but you know, aren't you missing an opportunity by not

558
00:28:40,800 --> 00:28:45,160
Speaker 2: buying into that widening back in you know, Liberation date.

559
00:28:45,200 --> 00:28:48,440
Speaker 3: Era, if you if you don't have the cash. If

560
00:28:48,480 --> 00:28:50,440
Speaker 3: you don't have the cash, then yes, you are missing

561
00:28:50,440 --> 00:28:54,560
Speaker 3: out on that. But that's also where if cash just

562
00:28:54,640 --> 00:28:56,560
Speaker 3: keeps flowing in the way it has been and we

563
00:28:56,720 --> 00:28:59,560
Speaker 3: keep seeing the inflows into the market, that's where you

564
00:28:59,640 --> 00:29:02,680
Speaker 3: do it. Have constant inflows coming in where you can invest,

565
00:29:03,040 --> 00:29:05,920
Speaker 3: and when the market does back up, you can invest

566
00:29:05,960 --> 00:29:08,000
Speaker 3: and take advantage of the yields that are even a

567
00:29:08,000 --> 00:29:10,280
Speaker 3: little bit higher at that point. And I think that's

568
00:29:10,280 --> 00:29:13,600
Speaker 3: why the biggest thing to this market above all and

569
00:29:13,640 --> 00:29:16,000
Speaker 3: what will hold it in are the inflows into it,

570
00:29:16,600 --> 00:29:19,520
Speaker 3: and that's fixed income in general. If the flows into

571
00:29:19,520 --> 00:29:23,360
Speaker 3: fixed income slow, that's when we might have issues. Until

572
00:29:23,400 --> 00:29:26,720
Speaker 3: that happens, I don't see there being any real issues

573
00:29:27,040 --> 00:29:29,320
Speaker 3: because if we do get the backups, there is so

574
00:29:29,400 --> 00:29:31,880
Speaker 3: much money coming in that we'll be able to invest,

575
00:29:31,960 --> 00:29:33,640
Speaker 3: we'll be able to take advantage of it, and we'll

576
00:29:33,640 --> 00:29:35,680
Speaker 3: be able to grind tighter right back where we were.

577
00:29:36,800 --> 00:29:40,160
Speaker 3: It's not to me about supply coming in this market.

578
00:29:40,240 --> 00:29:42,600
Speaker 3: It's not about housing supply. It's not about mortgage supply,

579
00:29:42,720 --> 00:29:45,000
Speaker 3: or not about MBS supply. It is about housing supply.

580
00:29:45,080 --> 00:29:47,600
Speaker 3: It's not about mortgage supply. It's not about credit supply.

581
00:29:48,040 --> 00:29:51,840
Speaker 3: It really is the demand side in bonds. So as

582
00:29:51,880 --> 00:29:55,600
Speaker 3: long as we keep seeing record inflows into investment grade

583
00:29:55,640 --> 00:29:58,080
Speaker 3: and even into which flows into high yeld just not

584
00:29:58,120 --> 00:30:02,040
Speaker 3: as much, you're going to continue to see spreads that

585
00:30:02,200 --> 00:30:04,360
Speaker 3: just don't back up sustained back up.

586
00:30:05,960 --> 00:30:08,200
Speaker 2: But isn't there I mean, I guess you're right about

587
00:30:08,440 --> 00:30:11,000
Speaker 2: the cash sitting on the sidelines, But isn't there a

588
00:30:11,080 --> 00:30:14,840
Speaker 2: risk that if spreads get too tight or investors get nervous,

589
00:30:15,920 --> 00:30:19,400
Speaker 2: that we see a twenty twenty two style outflow era.

590
00:30:19,600 --> 00:30:21,520
Speaker 2: I mean, there is a lot of outflows in twenty

591
00:30:21,520 --> 00:30:24,400
Speaker 2: twenty two. It is certainly, you know, at anomalist period,

592
00:30:24,480 --> 00:30:26,920
Speaker 2: but it was pretty distinct.

593
00:30:27,160 --> 00:30:29,320
Speaker 3: Sure. The one thing I think is the big thing

594
00:30:29,360 --> 00:30:31,840
Speaker 3: to remember about this market is it's very It has

595
00:30:31,880 --> 00:30:35,320
Speaker 3: been a changing market. And what you're seeing is is

596
00:30:35,480 --> 00:30:38,120
Speaker 3: the retail investors become a bigger and bigger part of

597
00:30:38,160 --> 00:30:42,160
Speaker 3: the market. Institutional investors, yes, I agree, they could be

598
00:30:42,160 --> 00:30:44,880
Speaker 3: in and out. When you start looking at that and

599
00:30:44,920 --> 00:30:46,680
Speaker 3: you start looking at kind of the different segments of

600
00:30:46,680 --> 00:30:49,360
Speaker 3: the market, you now have a very large part of

601
00:30:49,400 --> 00:30:51,880
Speaker 3: the market that doesn't look at spreads and it's all

602
00:30:51,880 --> 00:30:55,360
Speaker 3: about yields, and so I think that yes, you could

603
00:30:55,360 --> 00:30:59,280
Speaker 3: have some pullback, but what you're seeing is the yields

604
00:30:59,280 --> 00:31:02,040
Speaker 3: are If the yields day consistently here, you are going

605
00:31:02,080 --> 00:31:04,560
Speaker 3: to see money continue to come in because you're sitting

606
00:31:04,560 --> 00:31:06,719
Speaker 3: at yields that are four and a half to five percent,

607
00:31:07,360 --> 00:31:09,200
Speaker 3: and there's a lot of money that can then come

608
00:31:09,240 --> 00:31:12,520
Speaker 3: in in two. What happened right is we saw them

609
00:31:12,560 --> 00:31:14,720
Speaker 3: move up in yields, So you had a lot of

610
00:31:14,720 --> 00:31:19,040
Speaker 3: outflows because everyone started moving out. They saw values going down,

611
00:31:19,240 --> 00:31:20,960
Speaker 3: and everyone there's a little bit of a panic in

612
00:31:21,000 --> 00:31:24,440
Speaker 3: those same investors. Well, now I don't anticipate there being

613
00:31:24,520 --> 00:31:28,760
Speaker 3: higher yields, anticipate us being in roughly the same area.

614
00:31:29,280 --> 00:31:32,120
Speaker 3: And in that even if spreads go out twenty five

615
00:31:32,200 --> 00:31:35,520
Speaker 3: thirty basis points, well, the overall yield is still going

616
00:31:35,560 --> 00:31:37,360
Speaker 3: to be generally here because you probably see treasuries come

617
00:31:37,360 --> 00:31:39,480
Speaker 3: in a little bit. But even if it's fifteen base

618
00:31:39,520 --> 00:31:42,840
Speaker 3: points higher yield, that's still not enough to make people

619
00:31:42,880 --> 00:31:45,640
Speaker 3: go out. That's going to bring in even more people.

620
00:31:45,680 --> 00:31:48,840
Speaker 3: I think. I think that is the big difference to

621
00:31:48,840 --> 00:31:50,800
Speaker 3: the fixed income market is that there's just such a

622
00:31:50,920 --> 00:31:54,960
Speaker 3: large portion of it today versus ten, fifteen, twenty years ago.

623
00:31:55,520 --> 00:31:58,560
Speaker 3: That doesn't look at spreads that it is all about yields.

624
00:32:00,160 --> 00:32:02,200
Speaker 1: A lot of that flow, though, I would argue, is

625
00:32:02,240 --> 00:32:06,240
Speaker 1: also you know, supported by the belief that the FED

626
00:32:06,320 --> 00:32:09,400
Speaker 1: will bail you out if things get really bad, like

627
00:32:09,440 --> 00:32:12,320
Speaker 1: they have done in the past, even in the you know,

628
00:32:13,080 --> 00:32:15,960
Speaker 1: risky end of the market when they bought ETFs in

629
00:32:16,000 --> 00:32:18,520
Speaker 1: twenty twenty. So to what extent do you think there

630
00:32:18,600 --> 00:32:21,720
Speaker 1: is this idea still about the FED put and now

631
00:32:21,800 --> 00:32:25,720
Speaker 1: might that change underw wash?

632
00:32:25,800 --> 00:32:29,680
Speaker 3: That's a great question. And the scary part about that

633
00:32:29,880 --> 00:32:33,000
Speaker 3: is that there's a lot of investors right now that

634
00:32:33,240 --> 00:32:37,200
Speaker 3: know nothing else. All they know is the government buying them,

635
00:32:37,240 --> 00:32:39,640
Speaker 3: are helping them out. And I think that is a

636
00:32:40,080 --> 00:32:44,480
Speaker 3: time and you know, go back to six o seven ohait,

637
00:32:44,640 --> 00:32:49,080
Speaker 3: that mentality was never there, and now that mentality is

638
00:32:49,120 --> 00:32:51,480
Speaker 3: the only one that kind of drives the market. And

639
00:32:51,560 --> 00:32:54,280
Speaker 3: I think at some point you will see it back

640
00:32:54,360 --> 00:32:56,840
Speaker 3: up significantly. You will see it blow up a little bit.

641
00:32:56,840 --> 00:33:00,640
Speaker 3: I don't think worsh is going to push to prove

642
00:33:00,640 --> 00:33:02,480
Speaker 3: the balance sheet if he doesn't have to, or increase

643
00:33:02,520 --> 00:33:06,000
Speaker 3: the balance sheet unless he has to. I think we're

644
00:33:06,000 --> 00:33:08,040
Speaker 3: getting to a point of going back to what we

645
00:33:08,120 --> 00:33:11,200
Speaker 3: looked like in called two thousand and two thousand and five,

646
00:33:11,600 --> 00:33:14,560
Speaker 3: where balance sheets are lower and the FED really is

647
00:33:14,600 --> 00:33:18,320
Speaker 3: just signing rates. They're not bailing everyone out, but you're

648
00:33:18,320 --> 00:33:22,680
Speaker 3: gonna need to see something probably blow up before the

649
00:33:22,720 --> 00:33:24,960
Speaker 3: majority of the market, who has never seen anything but

650
00:33:25,960 --> 00:33:29,560
Speaker 3: the FED bail everybody out. The Fed's gonna have to

651
00:33:29,560 --> 00:33:32,280
Speaker 3: not bail someone out before the market turns. And I

652
00:33:32,360 --> 00:33:34,719
Speaker 3: just don't see that happening. I don't see any blow ups.

653
00:33:34,760 --> 00:33:36,280
Speaker 3: I don't see the FED being put in that position

654
00:33:36,880 --> 00:33:39,680
Speaker 3: for a while. And so that's why I'm kind of

655
00:33:39,720 --> 00:33:42,400
Speaker 3: leaning towards it's I think at some point that does happen,

656
00:33:42,880 --> 00:33:45,320
Speaker 3: but I think the timing of that is still probably

657
00:33:45,920 --> 00:33:47,400
Speaker 3: you know, maybe it's a couple of years away, maybe

658
00:33:47,400 --> 00:33:50,200
Speaker 3: it's more. And I think that's the key, is that

659
00:33:50,560 --> 00:33:54,640
Speaker 3: by not being invested and not being fully invested, you

660
00:33:54,840 --> 00:33:57,280
Speaker 3: miss out on those two years. And I think you

661
00:33:57,400 --> 00:33:59,080
Speaker 3: really have to watch that, and you don't have the

662
00:33:59,120 --> 00:34:02,840
Speaker 3: timing right perfectly, but you can't miss out on two

663
00:34:02,960 --> 00:34:05,960
Speaker 3: years of kind of clipping the coupon status quo, which

664
00:34:05,960 --> 00:34:07,880
Speaker 3: I think is what we're the position. We're in right now.

665
00:34:10,080 --> 00:34:12,440
Speaker 1: So we assume then the demand just remains really solid

666
00:34:12,480 --> 00:34:15,320
Speaker 1: across the board for fixed income. Looking just at credit,

667
00:34:16,280 --> 00:34:18,479
Speaker 1: you know you mentioned the net supply being very tight.

668
00:34:18,600 --> 00:34:20,440
Speaker 1: It's been like that for years. That has I think

669
00:34:20,520 --> 00:34:23,880
Speaker 1: kept spreads very tight. But there is the likelihood that

670
00:34:24,000 --> 00:34:27,720
Speaker 1: AI investment technology all that you know, they have multi

671
00:34:28,080 --> 00:34:29,799
Speaker 1: you know, many hundreds of billions of dollars that they

672
00:34:29,840 --> 00:34:33,040
Speaker 1: need to raise in the in the debt markets, and

673
00:34:33,080 --> 00:34:34,880
Speaker 1: then you pile on the M and A that's going

674
00:34:34,920 --> 00:34:36,600
Speaker 1: to come back to what extent do you think that

675
00:34:36,680 --> 00:34:41,440
Speaker 1: might flip the balance towards a much much more you know,

676
00:34:41,760 --> 00:34:45,160
Speaker 1: a surplus of supply even after all this demand, and

677
00:34:45,160 --> 00:34:46,440
Speaker 1: how might that change spreads?

678
00:34:46,960 --> 00:34:49,759
Speaker 3: The definitely could hurt them. I mean as Smith's for

679
00:34:49,840 --> 00:34:52,400
Speaker 3: this year one point seven to two point two trillion,

680
00:34:53,239 --> 00:34:55,760
Speaker 3: and a lot of that is because of AI needs.

681
00:34:56,280 --> 00:34:57,880
Speaker 3: And you really look at a couple of companies and

682
00:34:58,120 --> 00:34:59,880
Speaker 3: you can see what the market did as they've started

683
00:34:59,880 --> 00:35:02,360
Speaker 3: to to announce what they're going to do. Everyone was

684
00:35:02,400 --> 00:35:05,240
Speaker 3: worried about Oracle being downgraded and becoming a high company.

685
00:35:05,680 --> 00:35:07,560
Speaker 3: Well they came out and said that they're going to

686
00:35:07,640 --> 00:35:10,040
Speaker 3: be you know, they're coming with twenty five billion, and

687
00:35:10,120 --> 00:35:11,560
Speaker 3: that's basically what they're going to do for the year,

688
00:35:11,560 --> 00:35:13,120
Speaker 3: and the rest of their funding needs they're going to

689
00:35:13,160 --> 00:35:16,720
Speaker 3: get outside of the market, and you saw credit spreads

690
00:35:16,760 --> 00:35:20,000
Speaker 3: tightened by twenty five basis points. Then you also, on

691
00:35:20,040 --> 00:35:22,880
Speaker 3: the other in the market did very well those few days.

692
00:35:23,040 --> 00:35:27,080
Speaker 3: But then you had Amazon and Google Alphabet come out

693
00:35:27,120 --> 00:35:29,399
Speaker 3: and announced that their capex were going to be two

694
00:35:29,480 --> 00:35:31,399
Speaker 3: hundred billion and one hundred and seventy five one hundred

695
00:35:31,400 --> 00:35:34,360
Speaker 3: and eighty five billion, which is way above you know,

696
00:35:34,400 --> 00:35:37,680
Speaker 3: it's forty fifty billion above what the market was expecting.

697
00:35:39,040 --> 00:35:43,640
Speaker 3: But what you are seeing, for instance, today Google's out

698
00:35:43,680 --> 00:35:46,279
Speaker 3: with a bond deal and they're looking fifteen billion plus

699
00:35:46,280 --> 00:35:48,680
Speaker 3: They've got some overseas, so it's probably gonna be about

700
00:35:48,680 --> 00:35:51,799
Speaker 3: twenty billion. They probably upside it a little bit, but

701
00:35:53,480 --> 00:35:56,080
Speaker 3: demands still about four or five times above where it

702
00:35:56,160 --> 00:35:58,920
Speaker 3: is as of now. So there still is so much

703
00:35:58,960 --> 00:36:01,279
Speaker 3: demand that I think they frontload a lot of this.

704
00:36:02,080 --> 00:36:04,960
Speaker 3: There are people just waiting for it, and I think

705
00:36:05,320 --> 00:36:08,680
Speaker 3: the market has priced in, you know, call it two

706
00:36:08,760 --> 00:36:11,759
Speaker 3: trillion in issuance, and you'd have to get above that

707
00:36:11,840 --> 00:36:15,520
Speaker 3: before it really starts being an issue. But it's also

708
00:36:15,560 --> 00:36:17,680
Speaker 3: why that's one of the sectors that I'm not really

709
00:36:18,200 --> 00:36:21,160
Speaker 3: a huge fan of tech. I mean, you've got software

710
00:36:21,200 --> 00:36:23,600
Speaker 3: has been beat up just because of the whole AI trade.

711
00:36:23,600 --> 00:36:25,840
Speaker 3: I'm not really a fan of that, and even tech

712
00:36:27,120 --> 00:36:30,600
Speaker 3: because of this, and because of the Capex buildouts, and

713
00:36:30,800 --> 00:36:34,200
Speaker 3: there's a lot of issues that there's too many unknowns,

714
00:36:34,239 --> 00:36:35,640
Speaker 3: so I go back to the unknown. I don't like

715
00:36:35,640 --> 00:36:38,960
Speaker 3: investing in things where there's so many unknowns, and with

716
00:36:39,080 --> 00:36:42,960
Speaker 3: supply being an unknown, it really is an issue. It's

717
00:36:42,960 --> 00:36:46,239
Speaker 3: one of the sectors I don't like. That. Being said,

718
00:36:46,280 --> 00:36:49,319
Speaker 3: if six months from now, supply doesn't manifest to the

719
00:36:49,360 --> 00:36:52,840
Speaker 3: extent that the market is pricing in, it could be

720
00:36:52,880 --> 00:36:54,800
Speaker 3: a great buy. It could be one of those that

721
00:36:54,800 --> 00:36:56,880
Speaker 3: because they're starting to look cheap, and tech has always

722
00:36:57,000 --> 00:36:59,439
Speaker 3: historically been a little richer, it has been a little

723
00:36:59,440 --> 00:37:03,719
Speaker 3: more defensive. It's been a great story that way, but

724
00:37:04,480 --> 00:37:08,680
Speaker 3: that's kind of changing and just seeing where it kind

725
00:37:08,680 --> 00:37:10,879
Speaker 3: of settles down, and it's not worth owning right now

726
00:37:11,080 --> 00:37:13,799
Speaker 3: until it really settles down, until we figure out how

727
00:37:13,880 --> 00:37:15,840
Speaker 3: much supply there really is going to be. From that

728
00:37:16,000 --> 00:37:18,080
Speaker 3: from the tech market, from suctor.

729
00:37:19,960 --> 00:37:22,799
Speaker 2: You know, one of the things that the largest services

730
00:37:22,880 --> 00:37:25,080
Speaker 2: like Rocket are talking about is just how much they're

731
00:37:25,160 --> 00:37:29,640
Speaker 2: using AI now to speed up their refinancing is and

732
00:37:29,760 --> 00:37:35,000
Speaker 2: even origination loans for purchases. You see that as a

733
00:37:35,080 --> 00:37:37,080
Speaker 2: risk More importantly, do you see that as a risk

734
00:37:37,160 --> 00:37:40,080
Speaker 2: that's currently priced in. How much of a difference maker

735
00:37:40,200 --> 00:37:40,520
Speaker 2: is that.

736
00:37:41,239 --> 00:37:44,200
Speaker 3: I think it could be a pretty big difference Maray.

737
00:37:44,200 --> 00:37:47,200
Speaker 3: It'll turn on your turnaround times will come way down,

738
00:37:47,239 --> 00:37:52,520
Speaker 3: which will be huge and help. But those those types

739
00:37:52,560 --> 00:37:54,920
Speaker 3: of lenders have always been that way a little bit,

740
00:37:55,440 --> 00:37:57,600
Speaker 3: they're gonna be able to do it quicker. They've always

741
00:37:57,600 --> 00:38:00,000
Speaker 3: been the ones that if your twenty five basis points

742
00:38:00,080 --> 00:38:02,160
Speaker 3: the money, you get flipped, and then again if you're

743
00:38:02,160 --> 00:38:04,640
Speaker 3: another twenty five basis points, you get flipped. So those

744
00:38:04,719 --> 00:38:07,160
Speaker 3: lenders have always kind of been at the cutting edge

745
00:38:07,880 --> 00:38:11,320
Speaker 3: of technology at the time in order to take advantage

746
00:38:11,480 --> 00:38:15,759
Speaker 3: of you know, the marginal the marginal UH borrower and

747
00:38:15,800 --> 00:38:17,800
Speaker 3: be able to you know, kind of flip those mortgages

748
00:38:17,960 --> 00:38:21,520
Speaker 3: and refinance them quickly. I think, you know, if you

749
00:38:21,560 --> 00:38:25,279
Speaker 3: go back fifteen years, twenty years, you saw the same thing.

750
00:38:25,440 --> 00:38:27,200
Speaker 3: You know, once you started bringing on the internet and

751
00:38:27,280 --> 00:38:30,560
Speaker 3: you could bring everything down and just started moving the

752
00:38:30,560 --> 00:38:33,000
Speaker 3: the turnaround time a little bit faster, and this is

753
00:38:33,040 --> 00:38:35,800
Speaker 3: just the next iteration of that. So the market probably

754
00:38:35,800 --> 00:38:39,279
Speaker 3: doesn't have it completely priced in. But I also don't

755
00:38:39,320 --> 00:38:43,880
Speaker 3: think it's going to hurt the market too much. I

756
00:38:43,920 --> 00:38:46,000
Speaker 3: think you might see you know, blips here and there

757
00:38:46,320 --> 00:38:49,879
Speaker 3: where it is, you know, prepaid speeds jump a month

758
00:38:49,960 --> 00:38:52,480
Speaker 3: or two before people think they will just because it

759
00:38:52,480 --> 00:38:55,600
Speaker 3: has moved quicker, But then the timing will get adjusted

760
00:38:55,640 --> 00:38:59,400
Speaker 3: and everyone will kind of come in line. I really

761
00:38:59,440 --> 00:39:03,759
Speaker 3: don't think more than marginally it'll really do too much

762
00:39:03,800 --> 00:39:04,320
Speaker 3: to the market.

763
00:39:05,920 --> 00:39:09,239
Speaker 2: Yeah, and I guess the programs I'm concerned about from

764
00:39:09,280 --> 00:39:12,560
Speaker 2: a convexity standpoint is just the ones where they're now

765
00:39:12,640 --> 00:39:19,440
Speaker 2: able to target borrowers down to every last detail to

766
00:39:19,560 --> 00:39:23,000
Speaker 2: perhaps pull in even more. Refinancing is going forward.

767
00:39:25,840 --> 00:39:27,560
Speaker 3: So on the other side of that that would be

768
00:39:27,680 --> 00:39:29,560
Speaker 3: kind of a way to look at it too, is yes,

769
00:39:29,680 --> 00:39:32,880
Speaker 3: refinancings could go up, and I totally agree with you

770
00:39:32,960 --> 00:39:35,879
Speaker 3: that will happen more, which is why I think if

771
00:39:35,880 --> 00:39:37,439
Speaker 3: you are going to go into premiums, as I said,

772
00:39:37,440 --> 00:39:39,040
Speaker 3: it has to be in specified pools and you have

773
00:39:39,080 --> 00:39:42,480
Speaker 3: to target certain types of borrowers. The interesting thing that

774
00:39:42,560 --> 00:39:44,919
Speaker 3: I look at is. If that happens, the market will

775
00:39:45,040 --> 00:39:47,840
Speaker 3: change in ways. You're going to be able to target

776
00:39:47,920 --> 00:39:49,799
Speaker 3: specifyed borrowers, as you said, a little bit more. You're

777
00:39:49,840 --> 00:39:52,160
Speaker 3: going to get different specified pools. You're going to get

778
00:39:52,560 --> 00:39:55,239
Speaker 3: more focused specified pools, and you're really going to be

779
00:39:55,280 --> 00:39:58,000
Speaker 3: able to tweak things a little bit better and be

780
00:39:58,080 --> 00:40:00,880
Speaker 3: able to buy the pool that you really want. So

781
00:40:01,760 --> 00:40:05,000
Speaker 3: if the one side can do it, then the market

782
00:40:05,000 --> 00:40:07,600
Speaker 3: will do it too. So the market will adjust, and

783
00:40:07,640 --> 00:40:09,319
Speaker 3: I think it actually will open up a part of

784
00:40:09,320 --> 00:40:12,719
Speaker 3: the market that's not there. I mean there's gonna be

785
00:40:12,719 --> 00:40:15,359
Speaker 3: loans that are probably in you know megas right now

786
00:40:15,360 --> 00:40:18,359
Speaker 3: and are in these big deals that you could pull

787
00:40:18,400 --> 00:40:20,799
Speaker 3: out if you can use AI and find you know,

788
00:40:21,120 --> 00:40:22,879
Speaker 3: a little bit of a difference here, a little bit there,

789
00:40:22,880 --> 00:40:24,320
Speaker 3: and you can make a specified pool of it and

790
00:40:24,360 --> 00:40:26,919
Speaker 3: make it worth more. So I think it actually will

791
00:40:27,000 --> 00:40:30,400
Speaker 3: change both sides. I don't think it will necessarily hurt.

792
00:40:31,040 --> 00:40:33,839
Speaker 3: It might hurt the deliverable, might hurt TBA. But if

793
00:40:33,840 --> 00:40:35,920
Speaker 3: you really are in specified pools, like I think you

794
00:40:35,960 --> 00:40:38,640
Speaker 3: should be in those premiums, I think actually there is

795
00:40:38,719 --> 00:40:41,560
Speaker 3: some opportunity there and you will see more opportunities come

796
00:40:41,560 --> 00:40:44,000
Speaker 3: to market on.

797
00:40:44,000 --> 00:40:48,120
Speaker 1: The corporate side, on the investing in corporate bonds. In tech,

798
00:40:48,920 --> 00:40:50,840
Speaker 1: there seems to be quite a lot of price discovery

799
00:40:51,000 --> 00:40:53,520
Speaker 1: going on right now. No one really knows what this

800
00:40:53,719 --> 00:40:56,719
Speaker 1: is worth. You saw the Oracle deal that you mentioned. It,

801
00:40:57,239 --> 00:40:59,600
Speaker 1: you know, initially came tight and then it widened quite

802
00:40:59,560 --> 00:41:01,799
Speaker 1: a bit, and so Andy, I'm wondering how much more

803
00:41:01,840 --> 00:41:04,880
Speaker 1: widening if of this sect do you expect. You know,

804
00:41:05,040 --> 00:41:09,160
Speaker 1: we've seen ig tech spreads flip above the index. Generally

805
00:41:09,160 --> 00:41:13,080
Speaker 1: they trade tight to the index. But is there a

806
00:41:13,120 --> 00:41:14,200
Speaker 1: lot more widening to come?

807
00:41:14,560 --> 00:41:16,480
Speaker 3: But I do think you could see some more widening

808
00:41:17,440 --> 00:41:21,200
Speaker 3: right now if you look at it, we're on the

809
00:41:21,239 --> 00:41:24,799
Speaker 3: cheaper side in tech from a Z score perspective, we're

810
00:41:24,840 --> 00:41:28,719
Speaker 3: like just over two versus the index, two standardizations wide

811
00:41:28,800 --> 00:41:30,920
Speaker 3: versus the index, So a lot of that has been

812
00:41:30,960 --> 00:41:34,320
Speaker 3: priced in and it could get a little bit cheaper.

813
00:41:35,120 --> 00:41:38,000
Speaker 3: But even though Oracle did bounce back and get wider

814
00:41:38,239 --> 00:41:41,840
Speaker 3: after it, it came in twenty five basis points new issue.

815
00:41:42,080 --> 00:41:44,960
Speaker 3: If you actually look at it versus all other attech

816
00:41:45,000 --> 00:41:47,080
Speaker 3: and some of the other hyper scalers that were out there,

817
00:41:47,239 --> 00:41:49,160
Speaker 3: it held in pretty well. It was more by market

818
00:41:49,200 --> 00:41:51,080
Speaker 3: move when they widened out than it was anything else.

819
00:41:51,880 --> 00:41:54,000
Speaker 3: And I think today Oracle stock, even if you look

820
00:41:54,040 --> 00:41:55,680
Speaker 3: at it as up five percent or something like that

821
00:41:55,719 --> 00:42:00,000
Speaker 3: when it came in. So I think there is a lot,

822
00:42:00,000 --> 00:42:02,080
Speaker 3: a lot of worst case scenario in these built in

823
00:42:02,719 --> 00:42:05,160
Speaker 3: that we just need to see some kind of stabilization.

824
00:42:05,239 --> 00:42:07,680
Speaker 3: In my mind, I don't think they're going to go

825
00:42:07,760 --> 00:42:11,239
Speaker 3: out another you know, thirty forty basis points. There will

826
00:42:11,280 --> 00:42:13,479
Speaker 3: be names that do, because there will be like I said,

827
00:42:13,520 --> 00:42:16,640
Speaker 3: this one's a big one. To be a bond picker,

828
00:42:17,200 --> 00:42:19,960
Speaker 3: you have to be a very good bond picker in tech,

829
00:42:20,800 --> 00:42:23,360
Speaker 3: and it will be about to big companies. So you know,

830
00:42:23,400 --> 00:42:25,080
Speaker 3: it's gonna be interesting to see what Meta comes with

831
00:42:25,320 --> 00:42:27,840
Speaker 3: and what they do as well. But there will be

832
00:42:27,840 --> 00:42:30,480
Speaker 3: opportunities over the next six months, I think because of that,

833
00:42:30,520 --> 00:42:33,360
Speaker 3: and you do have a lot of the negative built

834
00:42:33,400 --> 00:42:36,080
Speaker 3: into the market where you could see that actually come

835
00:42:36,120 --> 00:42:38,200
Speaker 3: back and you could see it being a great buy

836
00:42:38,280 --> 00:42:40,960
Speaker 3: in six months. We just need to hold off a

837
00:42:41,000 --> 00:42:43,839
Speaker 3: little bit and wait for the stabilization because there are

838
00:42:43,880 --> 00:42:46,320
Speaker 3: so many uncertainties and there is so much price discovery

839
00:42:46,400 --> 00:42:46,759
Speaker 3: right now.

840
00:42:47,480 --> 00:42:49,040
Speaker 1: What do you like and why do you think the

841
00:42:49,040 --> 00:42:52,120
Speaker 1: best relative value is right now in credit markets and.

842
00:42:52,040 --> 00:42:55,319
Speaker 3: Beyond sure, I think one of the sectors you're seeing

843
00:42:55,360 --> 00:42:58,800
Speaker 3: that's still doing quite well is like the big six banks.

844
00:42:59,480 --> 00:43:01,640
Speaker 3: If you really look at it, the steepening of the

845
00:43:01,640 --> 00:43:04,480
Speaker 3: old curve, and I would expect the twos tens curve

846
00:43:04,560 --> 00:43:07,239
Speaker 3: to go closer to one hundred basis points this year.

847
00:43:07,280 --> 00:43:09,839
Speaker 3: And if we do get those rate cuts, you're gonna

848
00:43:09,880 --> 00:43:14,759
Speaker 3: get FED funds ten yres to be significantly steeper, so

849
00:43:14,800 --> 00:43:17,879
Speaker 3: that should help. There are no real credit issues anywhere yet.

850
00:43:18,360 --> 00:43:20,319
Speaker 3: There might be in six to nine months, but as

851
00:43:20,320 --> 00:43:22,960
Speaker 3: of right now, there aren't, so I would say that

852
00:43:23,280 --> 00:43:27,000
Speaker 3: right now, if you look at senior bonds again, we're

853
00:43:27,360 --> 00:43:30,520
Speaker 3: still about versus the index, about a standard deviation cheap

854
00:43:30,520 --> 00:43:33,360
Speaker 3: if you're looking at spreads versus the spread of the index.

855
00:43:33,840 --> 00:43:35,719
Speaker 3: So I think that's still a good trade. I think

856
00:43:35,719 --> 00:43:38,920
Speaker 3: that grinds in over the next six months, so maybe

857
00:43:38,960 --> 00:43:41,600
Speaker 3: by the middle of the year that starts to change.

858
00:43:42,239 --> 00:43:44,760
Speaker 3: But until you start to see a weakening of consumer

859
00:43:44,800 --> 00:43:48,080
Speaker 3: credit and really a huge weakening there, I think those

860
00:43:48,120 --> 00:43:50,920
Speaker 3: will still continue to perform well. It's just we're probably

861
00:43:51,000 --> 00:43:53,600
Speaker 3: six to nine months away from that, you know, reversing

862
00:43:53,640 --> 00:43:54,240
Speaker 3: a little bit.

863
00:43:55,719 --> 00:43:59,000
Speaker 1: Other than watching the news. Is there anything that really

864
00:43:59,040 --> 00:44:00,840
Speaker 1: sort of brings you down about the outlook, anything that

865
00:44:00,880 --> 00:44:02,880
Speaker 1: you worry about. We all credit people, after all, we

866
00:44:02,920 --> 00:44:04,080
Speaker 1: worry about everything.

867
00:44:06,880 --> 00:44:11,319
Speaker 3: That is true. I think the thing that worries me

868
00:44:11,400 --> 00:44:14,280
Speaker 3: is anything that when you watch the news, it really

869
00:44:14,320 --> 00:44:17,120
Speaker 3: is the headline risk more than anything. I think the

870
00:44:17,160 --> 00:44:19,720
Speaker 3: headline risk that we've seen over the last two years

871
00:44:20,520 --> 00:44:23,600
Speaker 3: has been the biggest issue. We really need to find

872
00:44:23,600 --> 00:44:26,759
Speaker 3: a way to kind of just the economy is doing well.

873
00:44:27,520 --> 00:44:29,560
Speaker 3: There are some issues where we're starting to see some

874
00:44:29,800 --> 00:44:34,080
Speaker 3: some weakening, but in general, if this was time fifteen

875
00:44:34,160 --> 00:44:37,160
Speaker 3: years ago, no one would really have issues. Everything would

876
00:44:37,160 --> 00:44:39,560
Speaker 3: be be doing well and there would be no headlines.

877
00:44:40,160 --> 00:44:43,000
Speaker 3: The headline risk to me and watching people who it

878
00:44:43,719 --> 00:44:46,080
Speaker 3: kind of whips out a little bit is probably one

879
00:44:46,120 --> 00:44:49,239
Speaker 3: of my biggest risks because I'm trying not to do

880
00:44:49,280 --> 00:44:53,160
Speaker 3: that and trying to go out further. And then the

881
00:44:53,239 --> 00:44:55,640
Speaker 3: unknown in the fad, you know, those are the probably

882
00:44:55,640 --> 00:44:58,319
Speaker 3: the two things. The unknown in the fad is a

883
00:44:58,360 --> 00:45:02,440
Speaker 3: big one, and that Zabbi a third probably fourth quarter issue.

884
00:45:02,440 --> 00:45:05,320
Speaker 3: More than anything, Like I said, I tend to take people.

885
00:45:06,120 --> 00:45:09,600
Speaker 1: Do you worry to all about policymaking about mid term elections,

886
00:45:09,600 --> 00:45:12,560
Speaker 1: about anything to do with the current state of the

887
00:45:12,719 --> 00:45:13,720
Speaker 1: government in the US.

888
00:45:15,440 --> 00:45:19,360
Speaker 3: I think the midterm elections will be very telling. I

889
00:45:19,360 --> 00:45:21,680
Speaker 3: think the midterm elections are going to be huge, which

890
00:45:21,719 --> 00:45:24,920
Speaker 3: is why kind of anything that I'm seeing is I'm

891
00:45:24,960 --> 00:45:27,040
Speaker 3: not trying to go out too far past the midterms

892
00:45:27,080 --> 00:45:29,919
Speaker 3: because I think that what happens there could completely change

893
00:45:29,960 --> 00:45:34,680
Speaker 3: the game everywhere. I personally think that you know, you're

894
00:45:34,680 --> 00:45:36,239
Speaker 3: going to get one house to flip, You're gonna get

895
00:45:36,239 --> 00:45:39,279
Speaker 3: the house to flip, maybe not to sign it, and

896
00:45:39,320 --> 00:45:42,239
Speaker 3: so if that happens, then it's probably status quo. But

897
00:45:42,360 --> 00:45:45,480
Speaker 3: if you do have anything outside of that, I do

898
00:45:45,520 --> 00:45:49,600
Speaker 3: think that could change the game. So that's why I'm

899
00:45:49,840 --> 00:45:52,080
Speaker 3: when I'm making these these focuses and I'm talking about

900
00:45:52,120 --> 00:45:54,840
Speaker 3: the fat I think the FED stays put for six months.

901
00:45:55,080 --> 00:45:58,160
Speaker 3: I don't think Powell cuts rates again, I don't think

902
00:45:58,200 --> 00:46:02,040
Speaker 3: he hikes rates. I think he's he's done. And then

903
00:46:02,320 --> 00:46:04,680
Speaker 3: what will actually happen in the fad as we go

904
00:46:04,800 --> 00:46:08,560
Speaker 3: into the third fourth quarter? Mostly the fourth quarters is

905
00:46:08,600 --> 00:46:11,440
Speaker 3: a big concern, and then everything that's geopolitical after that,

906
00:46:11,880 --> 00:46:14,880
Speaker 3: So that really is it's that fourth quarter timeframe is

907
00:46:14,880 --> 00:46:19,600
Speaker 3: probably the more concerning, but that's why I think until

908
00:46:19,640 --> 00:46:23,320
Speaker 3: then it's all about just find good bonds, clip the coupon,

909
00:46:23,560 --> 00:46:27,040
Speaker 3: get your carry in, don't go over your skis and duration,

910
00:46:27,360 --> 00:46:30,279
Speaker 3: don't take too many big, huge bats, and at four

911
00:46:30,320 --> 00:46:33,040
Speaker 3: and a half to five percent yields, it's a pretty

912
00:46:33,080 --> 00:46:34,080
Speaker 3: good next nine months.

913
00:46:34,680 --> 00:46:37,520
Speaker 1: Great stuff, Oliver Chambers Capital. It's been a real pleasure

914
00:46:37,520 --> 00:46:38,719
Speaker 1: having you on the Credit Edge Money.

915
00:46:38,719 --> 00:46:41,799
Speaker 3: Thanks, thank you, it's been a pleasure.

916
00:46:42,719 --> 00:46:45,279
Speaker 1: And of course we're very grateful to Erica Adelberg with

917
00:46:45,280 --> 00:46:47,920
Speaker 1: Bloomberg Intelligence. Thank you so much for joining us today.

918
00:46:48,040 --> 00:46:49,759
Speaker 2: Yeah, thanks for having me on as well. Great to

919
00:46:49,800 --> 00:46:50,399
Speaker 2: talk to you, Oliver.

920
00:46:50,800 --> 00:46:53,160
Speaker 1: For more credit market analysis and insight, read all of

921
00:46:53,239 --> 00:46:56,319
Speaker 1: Erica's great work on the Bloomberg terminal. Bloomberg Intelligence is

922
00:46:56,320 --> 00:46:58,640
Speaker 1: part of our research department, with five hundred analysts and

923
00:46:58,680 --> 00:47:02,200
Speaker 1: strategists working across all markets. Coverage includes over two thousand

924
00:47:02,239 --> 00:47:05,200
Speaker 1: equities and credits and outlooks on more than ninety industries

925
00:47:05,400 --> 00:47:09,560
Speaker 1: and one hundred market indices, currencies and commodities. Please do

926
00:47:09,640 --> 00:47:12,640
Speaker 1: subscribe to the Credit Edge wherever you get your podcasts.

927
00:47:12,800 --> 00:47:16,080
Speaker 1: We're on Apple, Spotify and all other good podcast providers,

928
00:47:16,120 --> 00:47:19,360
Speaker 1: including the Bloomberg terminal at the pod Go. Give us

929
00:47:19,360 --> 00:47:21,879
Speaker 1: a review, tell your friends, or email. Meet directly at

930
00:47:22,000 --> 00:47:26,160
Speaker 1: jcromb eight at Bloomberg dot net. I'm James Crombie. It's

931
00:47:26,160 --> 00:47:28,600
Speaker 1: been a pleasure having you join us again next week

932
00:47:28,640 --> 00:47:29,640
Speaker 1: on the Credit Edge