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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Single best idea. We usually do two voices, we went

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Speaker 2: do three today. It was such a rich program of conversation.

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Speaker 2: Marilyn Watson from Blackrock in London. I thought was really

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Speaker 2: quite something about linking in the geopolitics and the multiple

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Speaker 2: political stories into higher yield. We are seeing a higher

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Speaker 2: yield here, she suggested. It was an opportunity. One person's opinion,

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Speaker 2: many many other opinions as well. Major shout out to

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Speaker 2: Randy Boyd of the University of Tennessee. Really learned a

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Speaker 2: lot about the Land Grant school experience right now. He

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Speaker 2: did point out that Tennessee baseball did better than good

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Speaker 2: in a college World Series. But it's always good to

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Speaker 2: speak to a college president about the huge challenges faced

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Speaker 2: worldwide and the education of the excuse me of America.

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Speaker 2: Let us begin. Jim Karen was just wonderful today from

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Speaker 2: Morgan Stanley. He has prodigious physics and mathematic skills and

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Speaker 2: not only looking at fixed income but looking cross asset,

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Speaker 2: and that means there's that classic model sixty forty.

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Speaker 3: It's not that the sixty forty doesn't work, it's just

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Speaker 3: I think that the sixty forty will be suboptimal. And

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Speaker 3: the reason why the sixty forty portfolio will be suboptimals

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Speaker 3: we have to take a little bit of a trip

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Speaker 3: through history. If you go back to nineteen eighty one

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Speaker 3: to twenty twenty one, if you look at that forty

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Speaker 3: year period of time, bonds did very well during that period.

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Speaker 3: Thirty seven out of forty years they made money so

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Speaker 3: very stable, very good returns. Your shop ratio or your

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Speaker 3: your risk adjusted return if you had a sixty forty

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Speaker 3: portfolio was roughly seven percent, which is great. You know,

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Speaker 3: passive investing sixty You know, sixty forty did really well

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Speaker 3: for that forty year period of time. If you look

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Speaker 3: from twenty twenty two, twenty three and into twenty four,

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Speaker 3: what you're seeing is that bonds are becoming less stable,

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Speaker 3: less reliably you know, producing good, solid returns, and that's

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Speaker 3: likely to occur into the future. So what it would

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Speaker 3: suggest is that now the sixty forty might not give

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Speaker 3: you passive might not give you seven percent, but it

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Speaker 3: might actually only give you five. And that's a meaningful

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Speaker 3: difference in types of returns. So I would say that

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Speaker 3: the new way of thinking about how do we use

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Speaker 3: bonds to hedge. Our portfolio needs to be a lot

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Speaker 3: more flexible, So it could be seventy thirty, it could

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Speaker 3: be thirty seventy in some instances. Really, what we're trying

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Speaker 3: to account for is the volatility of returns and bonds,

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Speaker 3: which we think will start to follow the business cycle

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Speaker 3: more than just being a forty year you know, downward

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Speaker 3: trending rates and strong performance for that period of time.

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Speaker 2: Struggling with the end of the Great Deflation, the Great moderation,

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Speaker 2: I should say rather interesting to see Jim Caron there

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Speaker 2: on sixty percent in stocks, forty percent in bonds. Maybe

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Speaker 2: in Europe's the other way around sixty percent in bonds

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Speaker 2: forty percent in stocks. But a lot of miss to

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Speaker 2: what this broad institutional formula will do. There's no mystery

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Speaker 2: that the linkage of Edaheim and the economics, but Julian

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Speaker 2: Emmanuel equity market strategy is always valuable at evercore Isi.

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Speaker 2: Mister Hymen, of course, some would argue inventing market economics

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Speaker 2: always has looked every moment at Jeimen has looked to

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Speaker 2: the belief in the American system. We pause today with

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Speaker 2: Julian Emmanuel of evercore Isi.

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Speaker 1: My ninety three year old father in law recently departed,

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Speaker 1: lived a great life. Basically was in stocks until the end,

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Speaker 1: as much as in stocks as he could possibly because

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Speaker 1: he believed that when you look at it, and the

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Speaker 1: data supports this, through economic cycles, through you know, political turmoil,

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Speaker 1: through geopolitics, wars, all of these things, that stocks are

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Speaker 1: the long term income producing asset, and frankly, when you

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Speaker 1: think about the things that we're trying to hedge inflation

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Speaker 1: again some of these uncertainties. The other fact is that

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Speaker 1: if you look at it, the price chart of the

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Speaker 1: S and P five hundred mirrors the growth in earnings.

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Speaker 1: And if you're going to get long term earnings growth,

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Speaker 1: which we do believe and fundamentally, you must be in stocks.

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Speaker 2: Jillian emmanuellder On a father in law, a vintage ninety

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Speaker 2: three years Eric, could you see me, you know here

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Speaker 2: like eighty nine or single best idea? They got the

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Speaker 2: retirement party scheduled for the end of the summer. I'm kidding, folks.

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Speaker 2: We did a bonus round today. We had two with

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Speaker 2: Bob Dahl. Bob Dahl is legendary in the business. He's

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Speaker 2: always in the market. The glass is always a full,

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Speaker 2: even if he counsels a build up, a use of

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Speaker 2: cash to find a better day to buy. Really rich

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Speaker 2: conversation again today with Robert Doll of Crossmark.

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Speaker 4: COVID just threw so many typical patterns off their normal course,

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Speaker 4: and that's confused so many of us. For example, all

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Speaker 4: the excess savings saved this from an economic slow down,

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Speaker 4: if not a recession last year. That's just one example.

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Speaker 4: So the models that people use are causing them to

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Speaker 4: scratching it because they're just not working. And I think

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Speaker 4: there's more of that to come. I think there's a

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Speaker 4: false sense of security out there that everything's just fine.

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Speaker 4: I mean, look, when the market's selling over twenty times earnings,

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Speaker 4: things better be close to perfect, right, and they're not.

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Speaker 4: The economy is slowing, Inflation, while probably going to come

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Speaker 4: down some more, is stubborn, sticky. It's not going to

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Speaker 4: get to the two percent fed target. And got these

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Speaker 4: double digit earnings expectations for this year and next year.

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Speaker 4: I can't square all those very positive circles and come

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Speaker 4: up with a reason why fifty five hundred. I got

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Speaker 4: to jump in with both feet. So I'm a little

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Speaker 4: on the cautious side, fully invested but really careful about

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Speaker 4: what I own.

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Speaker 2: Robert Dull, there were the history of COVID. In coming

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Speaker 2: out of COVID, I do want to say so one

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Speaker 2: indicator at the end of the pandemic today it was

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Speaker 2: heartening Catherine Doherty writing this up for Bloomberg. In the

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Speaker 2: CFA program, I'm a member of this CFA institute. You

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Speaker 2: take three exams, Level one, level two, level three. Level

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Speaker 2: one is like really really basic, really really hard, really

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Speaker 2: really A lot of people flunk and you can take

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Speaker 2: it again and it's great. It's a rite of passage.

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Speaker 2: CFA Level two is considered, I think by many to

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Speaker 2: be the really toughest exam. And what a rebound today

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Speaker 2: in the announcement of fifty nine percent of people passing

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Speaker 2: the Level two CFA And to me, with all the

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Speaker 2: gyrations everybody's had with COVID, it's a really constructive sign

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Speaker 2: that we move beyond, beyond all that we lived with

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Speaker 2: in the pandemic. We're out on YouTube, Bloomberg Podcasts, search

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Speaker 2: Bloomberg Podcasts and subscribe. We would like that Apple car

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Speaker 2: play with Apple coming out with a new version at

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Speaker 2: some point and Android Auto as well. An Apple podcasts.

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Speaker 2: This is a single best idea