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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: His name is Mike Swell. He's the head of fixed

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Speaker 1: income portfolio management at g SAM. That's Goldman Sachs Asset

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Speaker 1: Management Group. They run over seven hundred billion dollars just

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Speaker 1: on fixed income side. And man, let me tell you,

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Speaker 1: this is a master class in fixed income investing. If

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Speaker 1: you are interested in where to get yield, how to

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Speaker 1: pursue it, what the risks are involved, where there are

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Speaker 1: the best opportunities for fixed income investing, where you're not

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Speaker 1: getting paid to take risk. Uh. I don't even know

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Speaker 1: what else to say. One of the most knowledgeable people

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Speaker 1: I've ever heard in the fixed income space. I would

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Speaker 1: imagine you probably have to know a thing or two

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Speaker 1: if you're gonna run fixed income for Goldman SAX. Uh.

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Speaker 1: Absolutely must listen a fascinating, fascinating conversation. I learned a

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Speaker 1: ton of stuff, and I consider myself somewhat knowledgeable in

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Speaker 1: the space. I think that I'm going to listen to

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Speaker 1: this episode repeatedly. Uh, just because it was so dense

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Speaker 1: and so filled with really fascinating information. He's had a

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Speaker 1: really intriguing career UM and has really put up some

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Speaker 1: incredible UM insight and and lots of great numbers over

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Speaker 1: the time. Uh G Sam runs a variety of different

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Speaker 1: mutual funds. There are five or so that uh Swell

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Speaker 1: is either in charge of supervising, or a manager of,

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Speaker 1: or a co manager of. So this isn't just abstract theory.

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Speaker 1: He really is where the rubber meets the road. So,

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Speaker 1: with no further ado, my conversation with Mike Swell, the

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Speaker 1: head of fixed income portfolio management for Goldman Sects they

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Speaker 1: sees Masters in Business with very Rid Holts on Bloomberg Radio.

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Speaker 1: My extra special guest this week is Mike Swell. He

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Speaker 1: is the head of Global fixed income portfolio Management at

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Speaker 1: Goldman Sachs, where he oversees about seven hundred billion dollars

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Speaker 1: in assets. He's also a managing director at Goldman Sachs

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Speaker 1: Asset Management. Michael Swell, Welcome to Bloomberg Berry. I want

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Speaker 1: to thank you and thank Bloomberg for having me today.

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Speaker 1: So let's talk a little bit about the early days.

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Speaker 1: You graduated the London School of Economics in do you

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Speaker 1: remember what the yield was on the ten year back then, Uh,

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Speaker 1: it was meaningfully higher than it is today. I I, well,

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Speaker 1: it's it's it's roughly zero today, so it's got to

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Speaker 1: be a lot higher. I would say it was probably

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Speaker 1: in the very high single digits, pushing up on ten percent.

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Speaker 1: I'll go eat to nine percent. So so that was

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Speaker 1: still fairly early and what turned out to be a

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Speaker 1: very very long bull market. What were those days like,

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Speaker 1: did anyone have any idea about the legs that the

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Speaker 1: bond bull market would have? Well, I was still in

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Speaker 1: college at the time, and so I actually UM was

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Speaker 1: at LC for a year, and then I was at

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Speaker 1: Brandeis University got my bachelor's there. And while I was

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Speaker 1: in London, I kind of got exposed to global markets

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Speaker 1: to fixed income. I saw a lot of people applying

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Speaker 1: for internships to Wall Street and I said, it sounds

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Speaker 1: pretty good, it sounds competitive, UM and so I then

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Speaker 1: kind of applied to a program to get a master's

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Speaker 1: International finance at Brandeis UM. So I had yet to

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Speaker 1: know exactly what the bond market was until I started

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Speaker 1: my career at Lehman Brothers in UM and Uh, it

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Speaker 1: was a different world. I mean in terms of liquidity

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Speaker 1: in terms of transparency. Back then, you had to wait

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Speaker 1: until the next day to find out what happened with

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Speaker 1: bond prices. Uh. You had this thing called tear sheets,

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Speaker 1: pink sheets, and that was the way you learned about

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Speaker 1: what was going on with companies and what was going

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Speaker 1: on in terms of pricing in markets. So a very

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Speaker 1: very different world. The bond market wasn't the kind of

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Speaker 1: primary market of liquidity like it is today and something

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Speaker 1: that we talked about for twenty four hours a day.

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Speaker 1: Back then, probably if you had if you had a

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Speaker 1: finance show like Bloomberg, you probably would have spent ten

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Speaker 1: fifteen minutes on bonds and the rest was all on equities.

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Speaker 1: What about execution? What was it like trying to move

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Speaker 1: any sort of paper around back then versus today? Uh,

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Speaker 1: back then it was obviously it was a phone only market,

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Speaker 1: so not an electronic market. Now obviously you press a

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Speaker 1: button and you can move billions of dollars of risk,

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Speaker 1: and you can move billion dollars, billions of dollars of

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Speaker 1: risk in multiple different markets with a touch of a button,

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Speaker 1: whether it's the treasury market, the mortgage market, the corporate

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Speaker 1: credit market, derivative market. But back then it was a

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Speaker 1: phone to phone negotiation and very often while there were

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Speaker 1: some Wall Street players in between, typically what they would

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Speaker 1: do is they would try to find a buyer on

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Speaker 1: the other side. And so what now takes seconds back

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Speaker 1: then could have taken days to move to move risk

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Speaker 1: um just a very very different world, bigger bit offer spreads,

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Speaker 1: and so you didn't see as active trading in the

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Speaker 1: fixed income markets as you see today. But the other

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Speaker 1: side of that is that there was a lot more

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Speaker 1: a lot more yield, and with less transparency, there was

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Speaker 1: a little more inefficiency, and if you were a very

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Speaker 1: active player, you know, the potential for generating earnings and

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Speaker 1: margins by trading bonds was actually pretty pretty attractive given

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Speaker 1: how why bit offers spreads were back then. So so,

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Speaker 1: given how much more efficients the bond market has become,

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Speaker 1: we continue to see active bond managers outperformed passive indexes.

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Speaker 1: That's the opposite of what we see on the equity side,

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Speaker 1: where efficiencies have given the passive index er um a

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Speaker 1: huge advantage. Why do active bond managers, uh, why are

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Speaker 1: they still capable of beating the passive indexes when their

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Speaker 1: um equity cohorts can There are a number of different reasons.

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Speaker 1: There is a lack of homogeneity in the bond market.

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Speaker 1: And so if you think about something as clear as

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Speaker 1: the treasury market, there's on the run treasuries, there's off

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Speaker 1: the run treasuries, there's fourteen year treasuries, there's thirty year treasuries.

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Speaker 1: They trade at very very different levels. UH. You also

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Speaker 1: have UM a index that is very very UM transparent

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Speaker 1: in terms of what is in the index, and there's

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Speaker 1: a lot of ability to be able to purchase securities

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Speaker 1: that are outside of your index, very different than what's

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Speaker 1: in the equity market. Typically, what's in the equity market

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Speaker 1: and what's in your index is what is your investable universe.

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Speaker 1: Within the bond market, there are many many different sectors

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Speaker 1: that shit outside of the outside of the universe. The

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Speaker 1: other thing is that given that the indices are very transparent,

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Speaker 1: there's a market segmentation issue that goes on in bonds

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Speaker 1: where UM you have some investors that buy the index,

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Speaker 1: they have to buy the Barkley's agg they have to

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Speaker 1: buy the long corporate index because they're a pension fund.

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Speaker 1: Very very UM significant market segmentation issues that creates inefficiencies.

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Speaker 1: So when there's enormous amount of demand for one type

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Speaker 1: of asset. Um you can actually buy something that is meaningfully,

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Speaker 1: meaningfully cheaper. So if everybody has to, if everyone has

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Speaker 1: a limitation that they can only buy five year credit

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Speaker 1: or shorter, well, if you buy six year corporate credit

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Speaker 1: in a year, it becomes five year corporate credit. Very

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Speaker 1: often that six year bond will trade very cheap to

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Speaker 1: the five year because there are a lot of investors

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Speaker 1: they can't buy it. Same thing in the if you

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Speaker 1: think about the credit ratings UM, most investors, particularly in

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Speaker 1: the US, can only buy investment grade corporate credit, and

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Speaker 1: that's what the index. The index is typically an investment

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Speaker 1: grade credit index, but um when there are opportunities in

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Speaker 1: the double B sector, in the high field sector, you

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Speaker 1: have a lot of investors that are limit it in

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Speaker 1: terms of their guidelines and limited in terms of the

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Speaker 1: amount of capital they could deploy to lower and lower

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Speaker 1: credit related assets, and so as a result, not as

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Speaker 1: many buyers. So you as an active manager when you

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Speaker 1: see a disparity when there's a three B bond out

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Speaker 1: there that might yield hundred fifty basis points over treasuries,

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Speaker 1: but a to B bond market, so it's a double

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Speaker 1: B bond that might yield three or four hunder basis

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Speaker 1: points over well, the difference in leverage between a double

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Speaker 1: B company a triple B company is pretty limited, so

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Speaker 1: active managers can really take advantage of that. Another area

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Speaker 1: is UM. The agency mortgage market is a very big

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Speaker 1: part of UM, the global indices, the US, the Bloomberg

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Speaker 1: Index in the US UM and it's a very heterogeneous market. Uh.

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Speaker 1: There are different coupons and different types of securities in

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Speaker 1: that market, so there's a great ability that if you

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Speaker 1: have expertise in terms of understanding pre payment risk, which

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Speaker 1: is the biggest risk that occurs in agency mortgages, you

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Speaker 1: can buy securities that can perform a lot better than

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Speaker 1: the indusseries. So there are many different reasons why in

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Speaker 1: fixed income ACTA managers have consistently outperformed, and I think

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Speaker 1: that also is an important point when you think about

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Speaker 1: UM E t f s as well. While ets have

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Speaker 1: grown very, very significantly in the in in in the

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Speaker 1: equity market, it's been a little bit slower in the

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Speaker 1: fixed income market. And the reasons that we're talking about

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Speaker 1: right now in that active managers and more consistently beat

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Speaker 1: indices as a reason why it's been slower in fix income.

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Speaker 1: Quite quite interesting. Let's let's stick a little bit um

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Speaker 1: with your career. For a bit um. You leave Lehman

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Speaker 1: Brothers early nineties, long before they get into trouble and

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Speaker 1: eventually ends up at Um Freeman, Billings Ramsey's. Is that right? Yeah,

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Speaker 1: It's been a lot of years that Freddie mac um

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Speaker 1: in Washington, d C in in the mortgage market, securitizing mortgages,

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Speaker 1: trading mortgage securities, working very closely with originators, and then

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Speaker 1: transferred that risk to a firm that was getting involved

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Speaker 1: in the in the re market and particularly in the

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Speaker 1: in the sub prime mortgage market. So those were kind

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Speaker 1: of where the bulk of my my career was prior

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Speaker 1: to getting to Goldman Sacks, right, And you joined Goldman

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Speaker 1: in oh seven to run the Structured Products um group,

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Speaker 1: And if memory serves correctly, mortgages had already peaked and

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Speaker 1: we're rolling over by oh seven. Your charge was to

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Speaker 1: look across the spectrum at opportunistically at fixed income products

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Speaker 1: and alternative portfolios. Is it exaggerating to say it was

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Speaker 1: fishing the barrel? Or had it not quite gotten that

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Speaker 1: attractive yet? Actually, my timing was the opposite of fish

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Speaker 1: in the barrel. So the mortgage market didn't start rolling

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Speaker 1: over until the end of O seven and mainly in

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Speaker 1: two thousand and eight. And so my my my mandate

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Speaker 1: when I got to Goldman was to actually look at

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Speaker 1: the structured product market from an issue or standpoint. So

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Speaker 1: there was enormous amount of CDO and cello issuance UM.

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Speaker 1: The goal was to look at those markets to become

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Speaker 1: a manager. Uh. And when when I got there and

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Speaker 1: did a lot of the work, we said, you know what,

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Speaker 1: this is not actually a good investment for investors. They're

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Speaker 1: levering up an asset that has has you know, appreciated

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Speaker 1: massively and there's no return here for investors, and there's risk.

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Speaker 1: And so basically UM in OH seven, the CDO CLO

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Speaker 1: market also at the same time kind of shut down,

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Speaker 1: and I was left with kind of nothing to do,

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Speaker 1: and so I had to reinvent myself. And and one

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Speaker 1: of the things that's very important for people in this

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Speaker 1: in this industry and in any industry is always be

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Speaker 1: flexible to reinvent yourself. And so the crisis occurred. CDO

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Speaker 1: market CLO markets shut down, but the assets became very

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Speaker 1: distressed and there was a great opportunity to start investing

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Speaker 1: in those areas. So I went from trying to be

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Speaker 1: an issuer in that market to being a distress investor.

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Speaker 1: Let's talk a little bit about the demand for bonds

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Speaker 1: these days. You recently said you see quote enormous demands

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Speaker 1: US fixed income. Explain So people would think that with

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Speaker 1: rates pushing on zero, with um kind of recovery in

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Speaker 1: the future and two dozen one, two dozen two, that

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Speaker 1: bonds would be completely out of vogue. And you know

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Speaker 1: a lot of concern around eventual inflation in the US

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Speaker 1: and rising rates. I would say to that, forget about

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Speaker 1: it for a number of years. There is an enormous

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Speaker 1: amount of demand for yield. There are there's enormous amount

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Speaker 1: of savings that exist. There's an enormous amount of market

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Speaker 1: segmentation that exists on a global basis with investors, where investors,

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Speaker 1: a lot of investors do not have the option to

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Speaker 1: go into alternatives or to go into equities. They are

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Speaker 1: fixed income investors. Obviously, retirees conservative can take the volatility

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Speaker 1: of own the equities they need to. They need to

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Speaker 1: generate income to live. You have insurance companies that predominantly

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Speaker 1: invest in in in fixed income, they write policies and

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Speaker 1: they buy fix income assets. On the the other side of that,

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Speaker 1: there's also a regulatory reason why. Um you find that

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Speaker 1: insurance companies by fixed income assets, same thing with commercial banks,

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Speaker 1: commercial banks by fixed income um so I I think

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Speaker 1: that there's going to be an enormous amount of demand

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Speaker 1: for yield, and you have to some degree look outside

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Speaker 1: the United States when you think about investing. You can't

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Speaker 1: just rely upon what you may think investors might do

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Speaker 1: in your country. We have very very global fungible markets now,

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Speaker 1: and so the fact that rates are negative in Europe,

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Speaker 1: rates are negative in Japan, that creates an enormous amount

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Speaker 1: of demand for for yield. We think the US market,

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Speaker 1: although we think the yields are very low, it's kind

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Speaker 1: of like the we're kind of the the uh ugly

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Speaker 1: prettiest in an ugly contest to a certain degree, and

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Speaker 1: that are yields at tore across different markets in the

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Speaker 1: US actually look very attractive to non US investors. So

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Speaker 1: we think the story for the next couple of years

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Speaker 1: is going to be demand for yield because we think

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Speaker 1: rates are going to stay extremely low across the globe

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Speaker 1: and do not fight the Fed. Um that's a very

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Speaker 1: important investment thesis. You're almost always right to not fight

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Speaker 1: the Fed. The FED has been very very clear rates

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Speaker 1: are going to stay lower for an extended period of

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Speaker 1: time to get average inflation meaningfully higher. Number one and

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Speaker 1: number two, there's been a recognition that the full employment

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Speaker 1: rate is not what you think it is, that there

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Speaker 1: are a lot of people that have been displaced from

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Speaker 1: the job market having come back in a long period

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Speaker 1: of time. You need to keep rates low to incentivize

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Speaker 1: companies to actually try to go in and hire those

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Speaker 1: people and to get people kind of better paying jobs

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Speaker 1: than where a lot of people are right now. And

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Speaker 1: so I think that the move from the fed uh

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Speaker 1: this year around number one, moving to more of an

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Speaker 1: average inflation target, and secondly, the discussion around what really

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Speaker 1: full employment is is likely to lead the to be

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Speaker 1: very very easy for an extended period of time, which

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Speaker 1: is going to mean low rates and yield is going

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Speaker 1: to commit a significant premium. So let's take a look

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Speaker 1: at that exact issue from the perspective of the average investor.

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Speaker 1: Where does someone who does not have those restrictions that

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Speaker 1: a public pension fund or a foundation might have where

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Speaker 1: do they go if they're looking for more yield but

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Speaker 1: without taking the sort of crazy risk that got people

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Speaker 1: into trouble in O eight oh nine. So I think

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Speaker 1: there there are a few different places I think UM

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Speaker 1: number one, I think that UM individual investors still benefits

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Speaker 1: significantly from owning long data municipals. So, as an individual,

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Speaker 1: I would own a good chunk of my uh my

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Speaker 1: six s income allocation in high quality long data municipals.

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Speaker 1: They're trading at very comparable yields to where treasuries are.

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Speaker 1: And obviously taxes are not going down, taxes are likely

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Speaker 1: to be going up UM, and so there's a significant

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Speaker 1: benefit there. UM. And I think we're very confident from

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Speaker 1: a credit standpoint in terms of higher quality investment grademmunities

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Speaker 1: that you're not talking about a significant credit risk. Secondly,

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Speaker 1: is within the kind of the Bloomberg aggregate world where

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Speaker 1: most fixed income lies in, in kind of the core

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Speaker 1: intermediate fixed income space. There are a lot of things

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Speaker 1: to do to do better than the one percent that

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Speaker 1: exists in treasuries. UM Number one is, uh, there's the

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Speaker 1: there's credit. So we think that the credit market, like

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Speaker 1: the two one is setting up to be a phenomenal

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Speaker 1: year for credit. Obviously, credit spreads have come back a

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Speaker 1: lot since the COVID shock, but we feel that the

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Speaker 1: combination of low rates as well as fiscal stimulus and

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Speaker 1: recovery post COVID is going to lead to an extremely

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Speaker 1: attractive market for credit. So number one is moving down

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Speaker 1: a little bit in quality and credit um within the

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Speaker 1: unconstrained space, moving a little bit into high yield. And

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Speaker 1: as I mentioned before, we think the double bees offer

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Speaker 1: a very significant yield pick up relative to owning, kind

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Speaker 1: of triple bes an investment grade. Secondly, as leverage loans um,

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Speaker 1: this is an asset class that's been an outflow um

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Speaker 1: since I've been in the business. Uh, leverage loans are

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Speaker 1: higher quality from a credit standpoint than high yield credit um.

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Speaker 1: They have a feature that works for investors sometimes but

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Speaker 1: not not other times, and so they're floating rate in nature.

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Speaker 1: A lot of investors have bought them because they were

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Speaker 1: concerned about rising rates. Despite the fact that they're floating rate,

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Speaker 1: and I mentioned the point that rates are likely to

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Speaker 1: stay low for extended period of time. They offer an

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Speaker 1: extremely attractive level of carry four or five without taking,

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Speaker 1: as you mentioned, kind of crazy crazy risk. Second, another

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Speaker 1: point on top of kind of having a little bit

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Speaker 1: more credit exposure in your portfolio and long dated communities

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Speaker 1: is agency mortgages and I kind of view them as

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Speaker 1: a a way to barbell your portfolio. And this is

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Speaker 1: what we're doing. In our core bond portfolios are traditional

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Speaker 1: Bloomberg aggregate portfolios were barbelling UM double B credit bank

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Speaker 1: loans along with agency mortgages. Agency mortgages either guaranteed or

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Speaker 1: implicit guaranteed from the government. What you're doing effectively is

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Speaker 1: your UM taking a spread for owning pre payment risk. Uh.

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Speaker 1: And our view is that number one is that we

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Speaker 1: feel that pre payment risk is coming down. But secondly,

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Speaker 1: and this is a really interesting point, is that mortgages

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Speaker 1: offer you a hedge. And one of the topics I

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Speaker 1: know that we're gonna talk today about a little bit

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Speaker 1: is the sixty forty kind of balance and do we

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Speaker 1: still feel the sixty forty makes sense? And then you're

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Speaker 1: getting kind of hedge benefits of being in fixed income.

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Speaker 1: Agency mortgages are one of the securities where you actually

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Speaker 1: are and the reason for that is that you have

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Speaker 1: a FED that is buying the securities, and so in

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Speaker 1: the event that the US economy go south, um credit

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Speaker 1: spreads potentially widden. You see, the agency mortgages are an

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Speaker 1: the class that the FED is likely to buy and

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Speaker 1: drive down that yield very significantly. So we think it's

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Speaker 1: a very important policy tool. And so buying on the fringe,

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Speaker 1: buying what the Fed's not buying number one, which is

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Speaker 1: double bees and uh and and bank loans, and pairing

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Speaker 1: that with what the FED is and can buy a

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Speaker 1: lot more of, which is agency mortgages. That's that's quite interesting.

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Speaker 1: I had a pet theory a couple of years ago

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Speaker 1: that there was a shortage of high quality sovereign bonds

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Speaker 1: UM and a number of people in the bond side

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Speaker 1: of things told me, Yeah, there's just insatiable demand for

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Speaker 1: paper and there isn't that much of it. Is that

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Speaker 1: still the case? Are we seeing enough high quality sovereign

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Speaker 1: paper out there to meet the demand? I I UM,

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Speaker 1: I don't believe that there's a shortage of bonds. There's

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Speaker 1: a shortage of bonds at good prices. So there's that's

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Speaker 1: a that's a that's a you know, it's it sounds

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Speaker 1: kind of silly, but it's it's it's actually an important difference.

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Speaker 1: You know, the ECB talked a lot about is there

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Speaker 1: a shortage of bonds for them to buy to implement

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Speaker 1: monetary policy and quee uh, And the answer is no,

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Speaker 1: just raise your price. And that's what they've done, and

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Speaker 1: that's why yields in Europe are negative. What they're doing

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Speaker 1: is they're driving sovereign yields down to the point where

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Speaker 1: you are forced to sell them and do something else

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Speaker 1: with it. What are you doing else with it? You

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Speaker 1: can buy equities, and some people are doing that and

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Speaker 1: rebalancing portfolios and buying equities, and that obviously has a

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Speaker 1: stimulant effect on the economy. And secondly is what they're

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Speaker 1: doing is they're forcing people out on the respectrum within

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Speaker 1: fixed income to buy credit. So to answer your question,

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Speaker 1: I don't think there's a shortage. I think in some

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Speaker 1: markets there's a shortage, shortage of good prices. But I

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Speaker 1: do feel that this movement to the next best asset class,

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Speaker 1: which is what central banks want people to do, that

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Speaker 1: there's enough yield and enough attractive opportunities. I think that

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Speaker 1: um keeping your money in your own market when the

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Speaker 1: central bank is manipulating the price. I think that that's

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Speaker 1: something to kind of think about. So you have obviously

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Speaker 1: US rates really low, European rates really low, in Japanese

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Speaker 1: rates really low because the central banks are trying to

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Speaker 1: create um simulus in the economy by keeping rates artificially low.

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Speaker 1: But there are other markets out there that are not

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Speaker 1: as heavily impacted by central bank policy. So one of

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Speaker 1: the things that we're doing in portfolios is not just

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Speaker 1: keeping all of our rate exposure in those markets, but

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Speaker 1: diversifying into some of the higher yielding markets. And so

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Speaker 1: if you look at UM rates in Australia, rates in Canada,

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Speaker 1: rates in uh in Sweden, you have Norway much steeper

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Speaker 1: yield curves and the ability be able to actually generate

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Speaker 1: yield on the longer end of those curves. The importance

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Speaker 1: of that is around hedge efficacy. At zero, you don't

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Speaker 1: feel like you have a lot of upside if the

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Speaker 1: world goes bad in your bond portfolio. But if you're

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Speaker 1: yielding one, one, one and a half percent you US,

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00:22:00,160 --> 00:22:03,040
Speaker 1: you have a lot more upside. And then lastly, diversifying

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Speaker 1: a little bit into some of the higher quality emerging

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Speaker 1: markets UM. A country like Mexico has meaningfully higher both

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Speaker 1: nominal rates and real rates in the US, and active

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Speaker 1: managers can look at that and say, Okay, what is

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Speaker 1: the risk of investing in Mexico. Do I want to

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Speaker 1: hold the currency risk or not? But I actually have

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Speaker 1: a real positive real rate And in the event that

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Speaker 1: the U S slows, well, then it's likely that Mexico slows,

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Speaker 1: and you should see kind of a rally and accommodated

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Speaker 1: policy in both countries. More room to rally in a

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Speaker 1: country like Mexico. So getting a little bit more diversified

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Speaker 1: in your sovereign exposure, we think makes a lot of sense.

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Speaker 1: So over the weekend I read this really interesting piece

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Speaker 1: on Bloomberg China opens its bond market with unknown consequences

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Speaker 1: for the world. So let's let's look at that. What

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Speaker 1: does it mean that China is opening their bond market

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Speaker 1: and what might that mean to global interest rates? So um,

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Speaker 1: you asked, you know the question earlier about the shortage

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Speaker 1: of high quality bonds. By seeing liberalization in China and

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Speaker 1: expansion of issuance from the Chinese government from high quality

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Speaker 1: Chinese corporates into the global markets, creating more access and

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Speaker 1: more liquidity, clearly is going to be good for investors

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Speaker 1: and savers UH, and it can potentially crowd out some

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Speaker 1: of the investment that's been made in in UM other

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Speaker 1: high quality markets. So if you look at Europe at

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Speaker 1: negative or zero rates, you look at the US at

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Speaker 1: very low rates, UM, you look at Japan. If you

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Speaker 1: create more liquidity, more access to Chinese sovereign bonds that

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Speaker 1: are right now yielding three and a quarter three and

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Speaker 1: a half percent, that may actually eventually crowd out other investors.

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Speaker 1: You also look at the Bloomberg Global Aggregate Index. It

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Speaker 1: has a pretty high percentage of China in it, and

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Speaker 1: it's growing, and so as a result, it can actually

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Speaker 1: be a yield enhancer for investors, but on the margin

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Speaker 1: it could have some negative implications to sovereign bond markets

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Speaker 1: where yields are so low. UM. We've actually think that, uh,

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Speaker 1: the liberalization of the Chinese capital markets is is net

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Speaker 1: not a good thing. It's a good thing for investors. UM.

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Speaker 1: The Chinese bob markets actually pretty attractive at those kind

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Speaker 1: of yields where the central Bank and the event that

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Speaker 1: there is a slowdown globally or slowdown in China, UM,

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Speaker 1: you have China in a very different policy position than

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Speaker 1: the US, Europe and Japan, and so you have a

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Speaker 1: lot of ability for rates to go down in in

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Speaker 1: UH in China, and now that you have more access,

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Speaker 1: we think that's a big positive. We think it's been

434
00:24:38,359 --> 00:24:41,399
Speaker 1: such an important UM change in the capital markets. We

435
00:24:41,440 --> 00:24:44,239
Speaker 1: actually have issued an e t f UM in in

436
00:24:44,440 --> 00:24:47,399
Speaker 1: UM in the non US market to get people access

437
00:24:47,400 --> 00:24:49,159
Speaker 1: to the Chinese bomb market because it's very hard for

438
00:24:49,160 --> 00:24:53,400
Speaker 1: people to get direct exposure. But as they liberalize clearing

439
00:24:53,480 --> 00:24:56,840
Speaker 1: and custodial issues, UM it's going to become a very

440
00:24:56,840 --> 00:25:00,320
Speaker 1: important part of the broader capital markets. Mike, let's talk

441
00:25:00,359 --> 00:25:03,640
Speaker 1: a little bit about the Federal reserve. I keep reading

442
00:25:04,600 --> 00:25:08,879
Speaker 1: people saying that the Federal Reserve is, you know, destroying

443
00:25:09,119 --> 00:25:14,360
Speaker 1: purchasing power, damaging the dollar and driving rates to zero.

444
00:25:14,440 --> 00:25:18,800
Speaker 1: But I'm compelled to ask the question, how influential is

445
00:25:18,840 --> 00:25:24,639
Speaker 1: the Federal Reserve in setting longer term interest rates? So

446
00:25:25,359 --> 00:25:29,960
Speaker 1: on your first question, there's no free lunch when it

447
00:25:30,000 --> 00:25:33,880
Speaker 1: comes to policy. When it comes to policy, it's all

448
00:25:34,000 --> 00:25:38,720
Speaker 1: about tradeoffs. It's about what environment are we in and

449
00:25:38,960 --> 00:25:42,120
Speaker 1: what risk do I want to protect against? And so

450
00:25:42,160 --> 00:25:46,000
Speaker 1: when the FED makes a decision to keep rates low

451
00:25:46,080 --> 00:25:48,880
Speaker 1: for an extended period of time. It does have negative implications.

452
00:25:48,920 --> 00:25:52,919
Speaker 1: It does hurt savers, uh, it does hurt banks. But

453
00:25:53,080 --> 00:25:56,399
Speaker 1: they're looking at a crisis situation. The COVID shock was

454
00:25:56,480 --> 00:26:00,600
Speaker 1: a real, real crisis situation. They were learned that you'd

455
00:26:00,640 --> 00:26:05,240
Speaker 1: see capital markets completely shut, company's access to that equity

456
00:26:05,280 --> 00:26:10,800
Speaker 1: financing pretty much gone, and that could lead to a really,

457
00:26:10,960 --> 00:26:14,680
Speaker 1: really bad economic scenario. And if we look at those

458
00:26:14,720 --> 00:26:18,120
Speaker 1: seven o eight financial crisis, the said was a lot

459
00:26:18,200 --> 00:26:23,320
Speaker 1: slower to act. They were um slower. They acted into

460
00:26:23,400 --> 00:26:25,960
Speaker 1: a small degree in terms of lowering rates, they acted

461
00:26:26,000 --> 00:26:28,960
Speaker 1: to a small degree in terms of purchasing assets, and

462
00:26:29,560 --> 00:26:32,119
Speaker 1: we're still feeling the pain of that as a result

463
00:26:32,119 --> 00:26:33,960
Speaker 1: of the fact that we did not see a v

464
00:26:34,040 --> 00:26:37,600
Speaker 1: shape recovery. We saw a very very slow recovery, and

465
00:26:37,680 --> 00:26:40,119
Speaker 1: it was very, very tough for companies to start spending again,

466
00:26:40,160 --> 00:26:44,359
Speaker 1: to start raising capital again. The FED learned their lesson,

467
00:26:44,760 --> 00:26:47,720
Speaker 1: and so in this COVID shock, they came in really big.

468
00:26:47,880 --> 00:26:50,680
Speaker 1: They drove rates down to zero, and they bought everything,

469
00:26:50,800 --> 00:26:52,639
Speaker 1: and they bought more than they ever bought in the past,

470
00:26:52,720 --> 00:26:56,680
Speaker 1: and they bought different asset classes, including removing the freeze

471
00:26:57,000 --> 00:27:00,840
Speaker 1: from the credit markets. Very very important. Now. It doesn't

472
00:27:00,840 --> 00:27:03,399
Speaker 1: come without a cost, but they had to do it,

473
00:27:03,440 --> 00:27:05,800
Speaker 1: and we're still in this shock. We still have companies

474
00:27:05,800 --> 00:27:08,000
Speaker 1: that haven't open, We have companies on the brink of

475
00:27:08,040 --> 00:27:12,520
Speaker 1: potential bankruptcy. So the need for keeping rates lower keeping

476
00:27:12,560 --> 00:27:15,680
Speaker 1: capital markets open is it's it's it's a trade off,

477
00:27:15,800 --> 00:27:19,120
Speaker 1: and so there's no kind of perfect answer, but from

478
00:27:19,119 --> 00:27:22,439
Speaker 1: my perspective, they've done the right thing. Now. To answer

479
00:27:22,480 --> 00:27:26,280
Speaker 1: your the second part of your question is the FED

480
00:27:26,320 --> 00:27:28,959
Speaker 1: in this case and in a crisis situation, they've had

481
00:27:28,960 --> 00:27:31,919
Speaker 1: an impact on interest rates across the entire curve. So

482
00:27:32,000 --> 00:27:35,320
Speaker 1: not only have they UM, you know, their main policy

483
00:27:35,320 --> 00:27:37,680
Speaker 1: tool is obviously the short term rate, so there they

484
00:27:37,680 --> 00:27:40,480
Speaker 1: have a lot of control. And typically you would see

485
00:27:40,600 --> 00:27:42,800
Speaker 1: five year rates, ten year rates, and thirty year rates

486
00:27:43,000 --> 00:27:47,480
Speaker 1: will be driven by economics supply demand factors. In this case,

487
00:27:48,080 --> 00:27:53,600
Speaker 1: the FED has become big across the entire curve. Obviously,

488
00:27:53,680 --> 00:27:57,520
Speaker 1: when you introduced q E to E UM not only

489
00:27:57,560 --> 00:28:00,960
Speaker 1: impact short in, but to E is buying and driving

490
00:28:01,040 --> 00:28:03,280
Speaker 1: yields lower, and so they've had an impact across the

491
00:28:03,400 --> 00:28:07,080
Speaker 1: entire curve. That's not the long term goal I would

492
00:28:07,080 --> 00:28:11,800
Speaker 1: expect to see. UH, the supply demand inflation to be

493
00:28:11,920 --> 00:28:14,800
Speaker 1: the bigger drivers on the long end of curve, and

494
00:28:14,840 --> 00:28:16,879
Speaker 1: over a long period of time, the set is going

495
00:28:16,920 --> 00:28:19,040
Speaker 1: to have much more control over the short end and

496
00:28:19,080 --> 00:28:21,120
Speaker 1: the long end is going to be driven by by

497
00:28:21,119 --> 00:28:24,840
Speaker 1: other factors. But in a crisis, the set has done

498
00:28:24,880 --> 00:28:27,600
Speaker 1: the right thing and has impacted rates across the entire curve.

499
00:28:28,600 --> 00:28:32,080
Speaker 1: Let's assume that Janet Yellen gets approved by the Senate

500
00:28:32,200 --> 00:28:35,920
Speaker 1: for Treasury Secretary. What do you think of this combination

501
00:28:36,040 --> 00:28:39,360
Speaker 1: of Janet Yelling at Treasury and Jerome Powell at the Fed?

502
00:28:39,720 --> 00:28:43,520
Speaker 1: What does that mean for fixed income investors? So we

503
00:28:43,520 --> 00:28:47,400
Speaker 1: were fortunate enough a couple of weeks ago before Cherry

504
00:28:47,480 --> 00:28:52,040
Speaker 1: Yellen was announced as the potential replacement for for Treasury,

505
00:28:52,480 --> 00:28:55,320
Speaker 1: we had her in our our daily investment forum, where

506
00:28:55,440 --> 00:28:58,400
Speaker 1: the equity, fixed income teams and the alternative teams meet

507
00:28:58,400 --> 00:29:00,440
Speaker 1: every day to discuss markets. We were for enough to

508
00:29:00,480 --> 00:29:03,960
Speaker 1: have her in and I think based on her history

509
00:29:04,000 --> 00:29:07,000
Speaker 1: and that conversation that between her and Powell, we have

510
00:29:07,080 --> 00:29:12,320
Speaker 1: the dynamic duo. We have people that completely understand um

511
00:29:12,600 --> 00:29:15,240
Speaker 1: capital markets and the impact that capital markets have on

512
00:29:15,320 --> 00:29:19,640
Speaker 1: the real economy. We have people that understand how politics work,

513
00:29:19,920 --> 00:29:23,440
Speaker 1: I think um Joannet Yellen's experience at the FED will

514
00:29:23,840 --> 00:29:27,840
Speaker 1: has definitely sensitized her to the importance of of of

515
00:29:27,720 --> 00:29:30,880
Speaker 1: of fiscal policy. She was not in control of fiscal policy.

516
00:29:31,040 --> 00:29:32,959
Speaker 1: But right now you have two people that have been

517
00:29:33,000 --> 00:29:37,680
Speaker 1: at the center of UM major major crises, UM global

518
00:29:37,720 --> 00:29:41,400
Speaker 1: crisis and US crises that are going to be responsible

519
00:29:41,440 --> 00:29:44,400
Speaker 1: for both the monetary and the fiscal side. I view

520
00:29:44,440 --> 00:29:46,480
Speaker 1: that as the dynamic duo, and so one of the

521
00:29:46,480 --> 00:29:50,400
Speaker 1: reasons why we're very constructive on kind of the credit

522
00:29:50,440 --> 00:29:54,560
Speaker 1: markets and voll both equity vall and and and credit

523
00:29:54,600 --> 00:29:57,640
Speaker 1: valls and rate balls staying relatively low for these couple

524
00:29:57,640 --> 00:29:59,880
Speaker 1: of years is that with the two of them in office,

525
00:30:00,240 --> 00:30:03,480
Speaker 1: we think you'll have a really good balance of relatively

526
00:30:03,520 --> 00:30:07,840
Speaker 1: easy monetary policy as well as enough fiscal stimulus to

527
00:30:08,440 --> 00:30:11,760
Speaker 1: UM keep the engine going, which we think will be

528
00:30:12,120 --> 00:30:14,960
Speaker 1: a very good environment for credit. Now, in the end,

529
00:30:15,480 --> 00:30:19,480
Speaker 1: fiscal and monetary policy are not going to drive companies profitability.

530
00:30:19,600 --> 00:30:21,760
Speaker 1: It's going to be the economy, and so the ability

531
00:30:21,800 --> 00:30:24,800
Speaker 1: for them to be successful in driving the economy. I

532
00:30:24,840 --> 00:30:27,120
Speaker 1: think that the jury is out on that one, but

533
00:30:27,240 --> 00:30:29,080
Speaker 1: I don't think we could have done much better than

534
00:30:29,120 --> 00:30:31,880
Speaker 1: the two of them. So so let's just talk about

535
00:30:31,960 --> 00:30:36,160
Speaker 1: fiscal policy for a moment. We saw a huge difference

536
00:30:36,320 --> 00:30:40,080
Speaker 1: between what happens with the Cares Act and that three

537
00:30:40,080 --> 00:30:42,960
Speaker 1: trillion dollars stimulus plan back in March of this year

538
00:30:44,840 --> 00:30:51,200
Speaker 1: versus the sort of very low key fiscal stimulus of

539
00:30:51,240 --> 00:30:54,400
Speaker 1: oh eight oh nine. UM it was it was much

540
00:30:54,400 --> 00:30:59,400
Speaker 1: more focused on unfreezing the credit markets and um managing

541
00:30:59,480 --> 00:31:05,160
Speaker 1: rates than was doing a traditional Keenzie stimulus. Since March

542
00:31:05,200 --> 00:31:09,080
Speaker 1: of this year, there have been repeated rumors of the

543
00:31:09,200 --> 00:31:13,440
Speaker 1: Cares Act too passing. I would have bet anything that

544
00:31:13,560 --> 00:31:18,000
Speaker 1: before the election everybody involved would want to pass another stimulus,

545
00:31:18,040 --> 00:31:20,840
Speaker 1: but that would have been a losing bet. It raises

546
00:31:20,880 --> 00:31:26,320
Speaker 1: the question if if we couldn't get stimulus through pre election,

547
00:31:26,800 --> 00:31:29,160
Speaker 1: are we going to see any sort of real stimulus

548
00:31:29,600 --> 00:31:33,520
Speaker 1: in the new Biden administration. So I would have lost

549
00:31:33,520 --> 00:31:36,560
Speaker 1: the bet as well. There there were too many incentives

550
00:31:36,600 --> 00:31:39,680
Speaker 1: to UM get a package done prior to the election.

551
00:31:39,760 --> 00:31:44,320
Speaker 1: Obviously to three months ago. It didn't happen. UM. It's

552
00:31:44,440 --> 00:31:46,680
Speaker 1: really a sign not that it wasn't needed, but it

553
00:31:46,720 --> 00:31:49,560
Speaker 1: was a sign of of of how bad the political

554
00:31:49,600 --> 00:31:52,400
Speaker 1: environment is in Washington. UM. I think as we go

555
00:31:52,480 --> 00:31:55,120
Speaker 1: into the new year, I think that the need is

556
00:31:55,320 --> 00:31:59,160
Speaker 1: very material. UM. Just because we've seen good news on

557
00:31:59,200 --> 00:32:03,480
Speaker 1: the vaccine, it doesn't mean that the real economy problems

558
00:32:03,480 --> 00:32:07,440
Speaker 1: go away UM in UM in short order, you still

559
00:32:07,480 --> 00:32:10,120
Speaker 1: have individuals a lot of people that are out of work,

560
00:32:10,480 --> 00:32:13,920
Speaker 1: that are furloughed UH. You still have people that are

561
00:32:13,960 --> 00:32:17,880
Speaker 1: struggling to make house payments UH. And you know, any

562
00:32:17,920 --> 00:32:21,640
Speaker 1: sort of significant deterioration and housing credit has its own

563
00:32:21,680 --> 00:32:25,120
Speaker 1: implications UM. And then you have also a very significant

564
00:32:25,120 --> 00:32:27,760
Speaker 1: amount of food and security in this country, where people

565
00:32:27,800 --> 00:32:30,920
Speaker 1: are lining up for hours to get food. That's not

566
00:32:31,040 --> 00:32:34,520
Speaker 1: where our country needs to be. And so I think

567
00:32:34,560 --> 00:32:38,600
Speaker 1: that the incentives are likely to be aligned to tast something.

568
00:32:38,920 --> 00:32:41,480
Speaker 1: It's likely not to be as big as UM what

569
00:32:41,520 --> 00:32:43,600
Speaker 1: we thought about UM last year in terms of three

570
00:32:43,640 --> 00:32:46,320
Speaker 1: billion dollar package, but I think that you're likely to

571
00:32:46,320 --> 00:32:49,440
Speaker 1: see something obviously higher probability depending on what happens in

572
00:32:49,480 --> 00:32:52,479
Speaker 1: Georgia if the Democrats do well there, But even if

573
00:32:52,520 --> 00:32:56,280
Speaker 1: we're in a in a UM senate situation, I think

574
00:32:56,280 --> 00:32:58,160
Speaker 1: we're going to see something of this. It's the need

575
00:32:58,280 --> 00:33:01,800
Speaker 1: is too great, and I think the incentives are too

576
00:33:01,800 --> 00:33:06,520
Speaker 1: greatly greatly aligned, So not a three trillion dollar package,

577
00:33:06,560 --> 00:33:10,840
Speaker 1: but something somewhat you know, a trillion trillion, trillion trillion

578
00:33:10,880 --> 00:33:13,840
Speaker 1: area right, A trillion here, a trillion there, it all,

579
00:33:14,000 --> 00:33:17,120
Speaker 1: it all adds up eventually. The timing really matters. Like

580
00:33:17,200 --> 00:33:19,760
Speaker 1: there there are a lot of people in this country

581
00:33:19,800 --> 00:33:21,480
Speaker 1: that need it. There are a lot of companies that

582
00:33:21,600 --> 00:33:24,800
Speaker 1: need the bridge to the other side. And the bridge

583
00:33:24,800 --> 00:33:27,680
Speaker 1: that was given with the fiscal policy number one is

584
00:33:27,760 --> 00:33:30,960
Speaker 1: over and so um and again. Back to my point

585
00:33:31,040 --> 00:33:35,280
Speaker 1: is that good vaccine news in the lab doesn't mean

586
00:33:35,640 --> 00:33:38,120
Speaker 1: everybody's getting back to work tomorrow. It's going to take

587
00:33:38,480 --> 00:33:41,800
Speaker 1: one to two years until you know, we really see

588
00:33:42,160 --> 00:33:46,920
Speaker 1: the world and the the economic engine um purring the

589
00:33:46,920 --> 00:33:49,600
Speaker 1: way that we did a couple of years back, and

590
00:33:49,680 --> 00:33:52,600
Speaker 1: so we need a little help to get there. To

591
00:33:52,640 --> 00:33:54,800
Speaker 1: say the least, let's talk a little bit about what's

592
00:33:54,800 --> 00:33:58,160
Speaker 1: been going on in the fixed income market. What do

593
00:33:58,240 --> 00:34:00,480
Speaker 1: we think of the yield curve these days? Does it

594
00:34:00,600 --> 00:34:05,000
Speaker 1: still signal anything? What were your thoughts when it inverted

595
00:34:05,680 --> 00:34:10,200
Speaker 1: not too long before this recession began last year. I

596
00:34:10,280 --> 00:34:13,759
Speaker 1: kind of love how people in the financial markets looked

597
00:34:13,800 --> 00:34:16,319
Speaker 1: to the bond people as the smart people and say

598
00:34:16,360 --> 00:34:19,080
Speaker 1: that bond people not only should know where bond prices are,

599
00:34:19,160 --> 00:34:22,280
Speaker 1: but should know where equity prices are, where the economy

600
00:34:22,360 --> 00:34:25,120
Speaker 1: is going. And so they think that we we are,

601
00:34:25,400 --> 00:34:28,520
Speaker 1: you know, we really can predict via what we think

602
00:34:28,520 --> 00:34:30,440
Speaker 1: of thirty year bonds versus what we think of two

603
00:34:30,520 --> 00:34:32,520
Speaker 1: year bonds. And what I'll tell you is that we're

604
00:34:32,560 --> 00:34:36,399
Speaker 1: not that smart. Uh and and and so I think

605
00:34:36,520 --> 00:34:40,480
Speaker 1: that the historical analysis of yield curves and how they

606
00:34:40,560 --> 00:34:45,000
Speaker 1: predict um equities and economic growth is has been way overstated,

607
00:34:45,080 --> 00:34:49,359
Speaker 1: particularly in an environment as we've been discussing on this

608
00:34:49,440 --> 00:34:56,000
Speaker 1: podcast around massive massive central bank intervention, both from a

609
00:34:56,160 --> 00:35:00,000
Speaker 1: policy rate perspective as well as from a QWE perspective

610
00:35:00,080 --> 00:35:02,920
Speaker 1: in terms of buying assets, it's hard to look at

611
00:35:02,960 --> 00:35:05,800
Speaker 1: the shape of the yield curve as a predictor for

612
00:35:06,200 --> 00:35:09,360
Speaker 1: much right now given the amount of number one government intervention.

613
00:35:09,840 --> 00:35:13,000
Speaker 1: And secondly is you have to keep in mind that

614
00:35:13,560 --> 00:35:18,360
Speaker 1: there is massive, massive investor segmentation going on in the

615
00:35:18,400 --> 00:35:21,600
Speaker 1: fixed income markets, where um there are a lot of

616
00:35:21,640 --> 00:35:25,080
Speaker 1: investors that like pension funds the United States, pension funds

617
00:35:25,120 --> 00:35:28,640
Speaker 1: the United States by long data fixed income to match

618
00:35:28,680 --> 00:35:31,320
Speaker 1: against their liabilities no matter what the shape of the

619
00:35:31,360 --> 00:35:33,440
Speaker 1: yield curve. They were buying them when the curve is flat,

620
00:35:33,680 --> 00:35:36,400
Speaker 1: They're buying them when the curve is steep. UM the

621
00:35:36,440 --> 00:35:39,040
Speaker 1: same thing with corporations that have been sitting on enormous

622
00:35:39,080 --> 00:35:42,160
Speaker 1: amounts of cash as they've issued a ton of debt

623
00:35:42,400 --> 00:35:44,120
Speaker 1: and are doing nothing with it because they just want

624
00:35:44,160 --> 00:35:47,840
Speaker 1: to be able to um bridge across the COVID crisis

625
00:35:47,880 --> 00:35:51,919
Speaker 1: to when the economy kind of reopens. They're buying very

626
00:35:51,960 --> 00:35:55,200
Speaker 1: short dated assets and so all the cash is going there.

627
00:35:55,520 --> 00:35:58,680
Speaker 1: So I think that it's very hard to look at

628
00:35:58,760 --> 00:36:00,920
Speaker 1: the yield curve, given give in the environment we're in,

629
00:36:01,000 --> 00:36:04,480
Speaker 1: both from a market segmentation standpoint as well as from

630
00:36:04,520 --> 00:36:07,800
Speaker 1: how much policy is having an impact across the entire curve,

631
00:36:08,040 --> 00:36:12,200
Speaker 1: and really make a significant judgment on on on unworthy

632
00:36:12,200 --> 00:36:14,080
Speaker 1: the economy is going. I will say one thing, though,

633
00:36:14,160 --> 00:36:17,160
Speaker 1: is that um I do think that this kind of

634
00:36:17,480 --> 00:36:20,960
Speaker 1: normalization that's occurred this year and the steepening of the

635
00:36:21,080 --> 00:36:23,840
Speaker 1: U s Heel curve tells you a little bit about

636
00:36:24,120 --> 00:36:28,080
Speaker 1: two things. One is the prospects for additional fiscal policy

637
00:36:28,080 --> 00:36:30,160
Speaker 1: and enormous amount of government issuance on the long end

638
00:36:30,200 --> 00:36:32,839
Speaker 1: of the curve, with rates so low, it obviously makes

639
00:36:32,840 --> 00:36:36,560
Speaker 1: an enormous amount of sense for the federal government to

640
00:36:36,800 --> 00:36:39,360
Speaker 1: issue debt. Um they're doing that, they're going to do

641
00:36:39,400 --> 00:36:42,080
Speaker 1: a lot more of it. And secondly, it tells you

642
00:36:42,120 --> 00:36:45,560
Speaker 1: a little bit about um uh kind of where we

643
00:36:45,600 --> 00:36:49,080
Speaker 1: stand from a monetary policy standpoint. Obviously, money has been

644
00:36:49,200 --> 00:36:52,440
Speaker 1: very easy, big increase in money supply, and so there

645
00:36:52,480 --> 00:36:55,000
Speaker 1: are some in the marketplace that think that on the

646
00:36:55,040 --> 00:36:57,120
Speaker 1: long end, you're starting to price in some level of

647
00:36:57,440 --> 00:37:00,840
Speaker 1: level inflation. I think that's overrated. I think that inflation

648
00:37:01,000 --> 00:37:02,680
Speaker 1: is going to be maybe a story five to ten

649
00:37:02,719 --> 00:37:06,240
Speaker 1: years from now, not something that investors, whether it's equity

650
00:37:06,280 --> 00:37:09,719
Speaker 1: investors or fixic investors, need to start positioning for. So

651
00:37:09,800 --> 00:37:13,680
Speaker 1: let's let's stick with the idea of um of how

652
00:37:13,719 --> 00:37:18,360
Speaker 1: the yield curve has been manipulated, manage, whatever word you

653
00:37:18,360 --> 00:37:23,040
Speaker 1: you want to use. Did you ever imagine ten fifteen

654
00:37:23,120 --> 00:37:27,800
Speaker 1: years ago that you would see so many yields gone

655
00:37:27,840 --> 00:37:31,080
Speaker 1: negative all around the world? And and is that a

656
00:37:32,000 --> 00:37:37,959
Speaker 1: realistic possibility of negative rates occurring in the US? So

657
00:37:38,560 --> 00:37:43,440
Speaker 1: ten fifteen years ago, no, when I was taking economous classes, no,

658
00:37:43,760 --> 00:37:46,719
Speaker 1: they you know, when the rates were eight nine Uh,

659
00:37:46,760 --> 00:37:48,680
Speaker 1: they didn't say, well, you know, what does it take

660
00:37:48,719 --> 00:37:51,120
Speaker 1: for rates to become negative? That wasn't kind of even

661
00:37:51,160 --> 00:37:55,160
Speaker 1: even discussed. Uh. So the answer is no. But when

662
00:37:55,200 --> 00:38:01,680
Speaker 1: you think about the environment we're in, you think about economics, uh,

663
00:38:01,719 --> 00:38:06,160
Speaker 1: there is some intuition around negative rates. Uh. And now

664
00:38:06,239 --> 00:38:08,719
Speaker 1: it's kind of the same discussion that we had earlier

665
00:38:09,160 --> 00:38:13,640
Speaker 1: around tradeoffs. So it's a trade off. The e c

666
00:38:13,800 --> 00:38:17,800
Speaker 1: b UM and the Bank of Japan made a decision

667
00:38:17,880 --> 00:38:24,160
Speaker 1: to sacrifice savers for the benefit of of of industry

668
00:38:24,239 --> 00:38:27,520
Speaker 1: and corporations to be able to have access to financing,

669
00:38:27,920 --> 00:38:32,640
Speaker 1: to incentivize savers to move out the respectrum, to buy equities,

670
00:38:32,680 --> 00:38:36,480
Speaker 1: to make equity financing more attractive, to make deafinancing more

671
00:38:36,480 --> 00:38:39,520
Speaker 1: more more attractive, to create more jobs, and to get

672
00:38:39,520 --> 00:38:41,600
Speaker 1: the economy going. But it's at a at a cost,

673
00:38:41,640 --> 00:38:43,799
Speaker 1: and it's obvious god a cost on savers and a

674
00:38:43,880 --> 00:38:47,839
Speaker 1: cost on on on on financial institutions that rely upon

675
00:38:48,480 --> 00:38:51,480
Speaker 1: shape of a yeel curve and rely upon yield. I

676
00:38:52,480 --> 00:38:57,120
Speaker 1: think that there is some merit to negative yields. The

677
00:38:57,200 --> 00:38:59,880
Speaker 1: said doesn't want to make that trade off. They've said that,

678
00:39:00,360 --> 00:39:02,960
Speaker 1: but I would say that it is a policy outcome

679
00:39:03,000 --> 00:39:05,240
Speaker 1: that could get there, could get there that either they

680
00:39:05,280 --> 00:39:07,960
Speaker 1: decide to bring it there or the market brings it there.

681
00:39:08,160 --> 00:39:11,839
Speaker 1: Envision a world where UM, you see significant slow down

682
00:39:11,840 --> 00:39:15,400
Speaker 1: and global growth, equity markets trade off outside the US,

683
00:39:15,440 --> 00:39:18,439
Speaker 1: and the US is viewed as the safe haven said

684
00:39:18,760 --> 00:39:22,680
Speaker 1: lowers rates even more, starts to buy more, and the

685
00:39:22,760 --> 00:39:25,799
Speaker 1: US dollar is viewed as that only thing that's good

686
00:39:25,960 --> 00:39:28,840
Speaker 1: and the safe haven currency. You can envision a situation

687
00:39:28,920 --> 00:39:32,799
Speaker 1: where treasuries, maybe the Fed doesn't bring rates negative, but

688
00:39:33,000 --> 00:39:37,160
Speaker 1: people decide that to store their wealth, they would rather

689
00:39:37,200 --> 00:39:40,120
Speaker 1: be in a dollar denominated asset that they have to

690
00:39:40,160 --> 00:39:43,120
Speaker 1: pay something small than being an asset that has a

691
00:39:43,120 --> 00:39:45,719
Speaker 1: lot of a lot of risk. And so it's it

692
00:39:45,880 --> 00:39:48,919
Speaker 1: is a possibility, but from a policy standpoint, the US

693
00:39:48,960 --> 00:39:50,960
Speaker 1: has so far made a decision to to not to

694
00:39:51,239 --> 00:39:56,080
Speaker 1: not go there. Huh. Interesting you mentioned UM the likelihood

695
00:39:56,120 --> 00:39:59,520
Speaker 1: of some form of fiscal stimulus and the need for

696
00:40:00,440 --> 00:40:06,160
Speaker 1: further UM treasury issuance. We've been hearing rumors, I don't know,

697
00:40:06,239 --> 00:40:10,960
Speaker 1: for about ten years of a grand infrastructure build out,

698
00:40:11,800 --> 00:40:14,680
Speaker 1: which has yet to happen. It seems like a no

699
00:40:14,800 --> 00:40:19,200
Speaker 1: brainer from the new administration. Any chance we see longer

700
00:40:19,280 --> 00:40:22,759
Speaker 1: dated bonds with rates this low, a fifty year treasury

701
00:40:22,840 --> 00:40:27,160
Speaker 1: or even a hundred year US Treasury. I mean, if

702
00:40:27,200 --> 00:40:29,480
Speaker 1: if if I were at the Treasury, I would issue

703
00:40:29,760 --> 00:40:34,960
Speaker 1: a thousand years at these rate levels. I mean, you know,

704
00:40:35,120 --> 00:40:38,200
Speaker 1: why not, You're you're locking in, you know, financing for

705
00:40:38,560 --> 00:40:41,040
Speaker 1: extended period of time at a dramatically lower yield. And

706
00:40:41,080 --> 00:40:43,919
Speaker 1: it's very possible that yields further out on the yield

707
00:40:43,920 --> 00:40:46,600
Speaker 1: curve are not meaningfully higher than where they are to day.

708
00:40:47,000 --> 00:40:50,920
Speaker 1: There's still a lot of demand for very long dated

709
00:40:51,120 --> 00:40:54,000
Speaker 1: cash flows from pension funds that and insurance companies that

710
00:40:54,000 --> 00:40:57,200
Speaker 1: are trying to match against match against liabilities. And as

711
00:40:57,200 --> 00:40:59,440
Speaker 1: people live longer and longer, there's going to be more

712
00:40:59,480 --> 00:41:02,960
Speaker 1: and more knee need for longer dated, longer dated assets.

713
00:41:02,960 --> 00:41:06,040
Speaker 1: So um, I could see that To your question on infrastructure,

714
00:41:06,480 --> 00:41:08,400
Speaker 1: I think it's gonna you know, it's really going to

715
00:41:08,520 --> 00:41:12,000
Speaker 1: rely upon, assuming that we have a Republican Senate. It's

716
00:41:12,000 --> 00:41:15,040
Speaker 1: going to rely upon whether or not the Biden administration

717
00:41:15,719 --> 00:41:18,240
Speaker 1: is true to its word about working across the aisle

718
00:41:18,640 --> 00:41:20,799
Speaker 1: number one and number two, if they're going to be

719
00:41:20,800 --> 00:41:23,640
Speaker 1: successful at doing that. But there's a lot of need

720
00:41:23,719 --> 00:41:27,440
Speaker 1: for you know, I think right now, the spending that

721
00:41:27,520 --> 00:41:29,200
Speaker 1: needs to get done needs to be directly in the

722
00:41:29,200 --> 00:41:32,080
Speaker 1: pockets of people that have been affected by COVID. But

723
00:41:32,200 --> 00:41:35,560
Speaker 1: as we look out a couple of years longer term,

724
00:41:35,840 --> 00:41:38,680
Speaker 1: there needs to be a long term investment plan for

725
00:41:38,760 --> 00:41:41,400
Speaker 1: this country and a lot of countries, and infrastructure is

726
00:41:41,400 --> 00:41:43,520
Speaker 1: going to be important. It's just a matter of whether

727
00:41:43,600 --> 00:41:46,520
Speaker 1: or not the political will there is there to look

728
00:41:46,840 --> 00:41:50,040
Speaker 1: at an investment that pays off in five, ten, fifteen years,

729
00:41:50,440 --> 00:41:52,480
Speaker 1: versus the way we look at things right now, which

730
00:41:52,520 --> 00:41:54,480
Speaker 1: is all about today and tomorrow and how does it

731
00:41:54,520 --> 00:41:56,920
Speaker 1: impact my poll numbers. So hopefully we get to the

732
00:41:56,920 --> 00:41:59,319
Speaker 1: point where we make more rational long term decisions, and

733
00:41:59,320 --> 00:42:01,800
Speaker 1: I think if we did, I think that infrastructure is

734
00:42:01,840 --> 00:42:06,919
Speaker 1: likely to be immedially on the table. Quite interesting. Let's

735
00:42:07,000 --> 00:42:10,560
Speaker 1: let's talk a little bit about duration. Um, you mentioned

736
00:42:10,560 --> 00:42:13,560
Speaker 1: the yield curve has steepened, but not a whole lot.

737
00:42:14,280 --> 00:42:17,000
Speaker 1: What what's the difference between the three month and the

738
00:42:17,040 --> 00:42:19,360
Speaker 1: ten year it's it's I think less than a hundred

739
00:42:19,440 --> 00:42:24,680
Speaker 1: bits less. I looked, is that sort of duration risk

740
00:42:24,760 --> 00:42:28,920
Speaker 1: worth it? Normally in a steeper yield curve, obviously you're

741
00:42:28,960 --> 00:42:33,280
Speaker 1: getting paid much more uh to lend out for a decade.

742
00:42:33,560 --> 00:42:36,040
Speaker 1: What what are you thinking in terms of duration? And

743
00:42:37,280 --> 00:42:40,440
Speaker 1: are we going to continue to see such a relatively

744
00:42:41,280 --> 00:42:46,839
Speaker 1: modest um yield curve for for the foreseeable future? So

745
00:42:47,520 --> 00:42:51,640
Speaker 1: you're you're The answer to your question can be very

746
00:42:51,719 --> 00:42:55,680
Speaker 1: different for UM, who am I or who am I

747
00:42:55,880 --> 00:42:59,560
Speaker 1: representing as an investor as a fiduciary UM in terms

748
00:42:59,560 --> 00:43:03,759
Speaker 1: of how I answer that question. So this kind of

749
00:43:03,920 --> 00:43:08,719
Speaker 1: um bleeds into the topic of kind of dynamic and

750
00:43:08,800 --> 00:43:12,560
Speaker 1: do do do bonds at very low yields still offer

751
00:43:13,000 --> 00:43:17,040
Speaker 1: investors protection against kind of growth and UH and and

752
00:43:17,040 --> 00:43:20,879
Speaker 1: and risk assets. And I think that at UM eight

753
00:43:22,120 --> 00:43:25,520
Speaker 1: basis points in that area you still have a meaningful

754
00:43:25,560 --> 00:43:28,319
Speaker 1: amount of upside. And back to my point earlier, it

755
00:43:28,480 --> 00:43:31,320
Speaker 1: is possible that rates break the lower bound of zero

756
00:43:31,640 --> 00:43:35,600
Speaker 1: in the event that you have a significant global global recession.

757
00:43:35,640 --> 00:43:39,279
Speaker 1: So I think that UM basis points in terms of

758
00:43:39,280 --> 00:43:42,120
Speaker 1: owning tenure treasuries, it doesn't feel really good, but it's

759
00:43:42,160 --> 00:43:44,840
Speaker 1: still when you look at equities and how equities have

760
00:43:44,920 --> 00:43:48,879
Speaker 1: performed so well, you don't want to just own equities unprotected.

761
00:43:48,920 --> 00:43:51,600
Speaker 1: And I still think in the rate market, whether it's

762
00:43:51,640 --> 00:43:54,000
Speaker 1: the US, whether it's the other markets I talked about earlier,

763
00:43:54,280 --> 00:43:57,600
Speaker 1: You're still getting some very significant hedge benefit. But when

764
00:43:57,600 --> 00:44:01,600
Speaker 1: you look out right at the US market at points

765
00:44:01,600 --> 00:44:04,040
Speaker 1: a hundred basis points on the tenure, is that a

766
00:44:04,120 --> 00:44:07,640
Speaker 1: great five to ten year investment. Probably not. I would

767
00:44:07,640 --> 00:44:10,560
Speaker 1: say as an individual, I would much rather own longer

768
00:44:10,640 --> 00:44:13,440
Speaker 1: data municipals. UM. I think I get a lot of

769
00:44:13,480 --> 00:44:15,920
Speaker 1: the upside in the event that rates come down and

770
00:44:15,920 --> 00:44:18,440
Speaker 1: there's a slowdown in the economy and I'm getting on

771
00:44:18,480 --> 00:44:21,680
Speaker 1: a tax adjusted basis a lot more yield. I uh.

772
00:44:21,719 --> 00:44:25,360
Speaker 1: And then and then lastly, as a active investor in

773
00:44:25,600 --> 00:44:27,600
Speaker 1: fixed income, do I want to be overweight duration or

774
00:44:27,640 --> 00:44:31,200
Speaker 1: underweight duration? UM? I would say that calling the rate

775
00:44:31,239 --> 00:44:34,040
Speaker 1: move is a really, really tough one, and I think

776
00:44:34,239 --> 00:44:37,799
Speaker 1: having an appropriate allocation across fixed income equities and other

777
00:44:37,840 --> 00:44:39,880
Speaker 1: asset classes is the way we really to think about it.

778
00:44:40,320 --> 00:44:42,000
Speaker 1: But I will say that I think the FED is

779
00:44:42,000 --> 00:44:43,719
Speaker 1: going to be on hold for a long period of time.

780
00:44:44,200 --> 00:44:48,160
Speaker 1: And as the ten year Treasury trades in the arrange

781
00:44:48,160 --> 00:44:50,680
Speaker 1: from fifty basis points on hundred fifty basis points, because

782
00:44:50,680 --> 00:44:52,600
Speaker 1: you get out to a hundred basis points, you probably

783
00:44:52,600 --> 00:44:54,239
Speaker 1: want to own a little bit more interest rate risk

784
00:44:54,360 --> 00:44:55,560
Speaker 1: is the Fed's going to be on hold, and I

785
00:44:55,560 --> 00:44:58,920
Speaker 1: think that inflation, particularly in the US, is going to

786
00:44:59,000 --> 00:45:04,680
Speaker 1: stay very modest wall below, well below the FETCH target. Interesting, well,

787
00:45:04,719 --> 00:45:07,360
Speaker 1: a lot of people agree with you. We continue to

788
00:45:07,440 --> 00:45:14,719
Speaker 1: see record inflows into fixed income ets despite interest rates

789
00:45:14,719 --> 00:45:17,759
Speaker 1: as low as they are. What are your thoughts about that?

790
00:45:17,880 --> 00:45:21,719
Speaker 1: Who who are the buyers of those fixed income ETFs?

791
00:45:21,840 --> 00:45:24,600
Speaker 1: Is that UM main Street or is that more of

792
00:45:24,600 --> 00:45:27,920
Speaker 1: an institutional investor? What? What are your thoughts on the

793
00:45:27,960 --> 00:45:31,479
Speaker 1: activity in that space. So we we talked a little

794
00:45:31,560 --> 00:45:34,880
Speaker 1: bit earlier about how fixed income ETFs have been a

795
00:45:34,960 --> 00:45:38,160
Speaker 1: little bit slower to be adopted because of active managers

796
00:45:38,200 --> 00:45:41,400
Speaker 1: having more success m but this year you're actually seeing

797
00:45:42,000 --> 00:45:45,800
Speaker 1: more flows into bondy TF and you're seeing in equity

798
00:45:45,800 --> 00:45:48,520
Speaker 1: e t F for the first time. So there's no

799
00:45:48,600 --> 00:45:52,040
Speaker 1: question that e t F are being used much more actively.

800
00:45:52,560 --> 00:45:58,600
Speaker 1: I would say two main holders investors. Number one is

801
00:45:58,680 --> 00:46:00,960
Speaker 1: the and you know the word world a lot better

802
00:46:01,000 --> 00:46:04,800
Speaker 1: than I do. The r I a community the wealth

803
00:46:04,880 --> 00:46:08,040
Speaker 1: managers in the marketplace that have kind of converted their

804
00:46:08,040 --> 00:46:11,320
Speaker 1: business model from more of an open ended model to

805
00:46:11,440 --> 00:46:14,880
Speaker 1: really one that is driven by liquidity and low fees.

806
00:46:14,920 --> 00:46:19,040
Speaker 1: Within ETFs, those are I think that the dominant players

807
00:46:19,040 --> 00:46:23,720
Speaker 1: that you're seeing more model portfolios that include ETFs mainly

808
00:46:23,760 --> 00:46:27,120
Speaker 1: for the purpose of UM access to different segments of

809
00:46:27,200 --> 00:46:29,239
Speaker 1: the marketplace. So the good thing about E t F

810
00:46:29,239 --> 00:46:31,120
Speaker 1: s is that you can carve up and you can

811
00:46:31,160 --> 00:46:33,640
Speaker 1: have an industrial only or this only or double B

812
00:46:33,760 --> 00:46:35,239
Speaker 1: only and so on and so on. So there's a

813
00:46:35,239 --> 00:46:37,960
Speaker 1: lot of ability to be able to carve portfolios in

814
00:46:37,960 --> 00:46:41,000
Speaker 1: a more customized way, and the fees are are very low.

815
00:46:42,000 --> 00:46:47,279
Speaker 1: Secondly is you have UM some institutional players that UM

816
00:46:47,560 --> 00:46:50,839
Speaker 1: use ETFs as a way to either gain very quick

817
00:46:50,880 --> 00:46:58,160
Speaker 1: exposure intra day or to UM basically UM UH exercise

818
00:46:58,440 --> 00:47:02,600
Speaker 1: UM arbitrage in in between kind of the cash underlying

819
00:47:02,640 --> 00:47:04,840
Speaker 1: securities that exists in E t F and the E

820
00:47:04,960 --> 00:47:08,239
Speaker 1: t F. I would say that those are the dominant

821
00:47:08,239 --> 00:47:12,000
Speaker 1: players within the t F market. There's no free lunch

822
00:47:12,080 --> 00:47:15,399
Speaker 1: that E t S gives an investor. UM people think

823
00:47:15,440 --> 00:47:17,239
Speaker 1: that while the liquidity is so much better in E

824
00:47:17,360 --> 00:47:20,160
Speaker 1: t F S and UH, you know, the liquidity in

825
00:47:20,200 --> 00:47:23,440
Speaker 1: ETFs on a day when there's very little trading might

826
00:47:23,480 --> 00:47:26,040
Speaker 1: be a little bit better than the underlyers. But in

827
00:47:26,160 --> 00:47:29,040
Speaker 1: a risk environment, in a credit risk environment. When there's

828
00:47:29,040 --> 00:47:32,040
Speaker 1: a risk off or or a lot of risk on liquidity,

829
00:47:32,080 --> 00:47:34,480
Speaker 1: b t S are only as good as the underlyer.

830
00:47:34,600 --> 00:47:37,480
Speaker 1: So I think it really comes down to UM segmentation,

831
00:47:37,560 --> 00:47:41,400
Speaker 1: the ability be able to specifically target certain parts of

832
00:47:41,480 --> 00:47:44,200
Speaker 1: the market as a r I A or an investor

833
00:47:44,280 --> 00:47:47,160
Speaker 1: that's trying to target specific risks, and then secondly to

834
00:47:47,880 --> 00:47:50,239
Speaker 1: to to get lower fees than what's available in the

835
00:47:50,320 --> 00:47:53,320
Speaker 1: open ended, open ended space. Now we as an active

836
00:47:53,400 --> 00:47:55,920
Speaker 1: manager UM, we are obviously have the ability be able

837
00:47:55,960 --> 00:47:58,040
Speaker 1: to buy bonds, and we try to buy bonds that

838
00:47:58,120 --> 00:47:59,879
Speaker 1: we think can outperform the index. We've done a good

839
00:48:00,040 --> 00:48:02,279
Speaker 1: job of that. We also will use e t F

840
00:48:02,400 --> 00:48:05,000
Speaker 1: from time to time, but really is a way to

841
00:48:05,760 --> 00:48:08,400
Speaker 1: get risk on in the market very quickly or in

842
00:48:08,520 --> 00:48:11,960
Speaker 1: periods of time where E t F liquidity is better

843
00:48:12,040 --> 00:48:13,840
Speaker 1: than the cash market. And one thing we've seen in

844
00:48:13,880 --> 00:48:16,400
Speaker 1: the credit markets and the COVID shock is that there

845
00:48:16,480 --> 00:48:19,400
Speaker 1: was a lot of transparency that existed in ETFs. The

846
00:48:19,560 --> 00:48:22,840
Speaker 1: physical bond market was frozen, but et F still traded

847
00:48:23,280 --> 00:48:24,920
Speaker 1: UM and so as a result, when you didn't see

848
00:48:24,960 --> 00:48:26,920
Speaker 1: a lot of trading in bonds, you actually saw E

849
00:48:27,000 --> 00:48:29,399
Speaker 1: t F trade and got a lot of price transparency,

850
00:48:29,640 --> 00:48:32,000
Speaker 1: and so we'll use that as another source of transfer

851
00:48:32,080 --> 00:48:34,239
Speaker 1: of risk. And so you're finding that a lot of

852
00:48:34,320 --> 00:48:37,120
Speaker 1: investors are actually using it for that purpose. Short term

853
00:48:37,200 --> 00:48:41,880
Speaker 1: trades get exposure and then eventually to work into single

854
00:48:42,000 --> 00:48:45,520
Speaker 1: name exposure within the cash market. So let's stay with

855
00:48:45,640 --> 00:48:48,520
Speaker 1: that for a minute. Back in March, when everything went

856
00:48:48,680 --> 00:48:53,799
Speaker 1: sideways um and and both inequities and bonds, we did

857
00:48:53,920 --> 00:48:57,920
Speaker 1: see a fairly substantial dislocation in the bond market and

858
00:48:58,200 --> 00:49:01,560
Speaker 1: some of the E t F pricing looked wildly out

859
00:49:01,600 --> 00:49:05,520
Speaker 1: of whack. Was it really the underlying that was the problem.

860
00:49:05,600 --> 00:49:08,680
Speaker 1: There was no pricing and liquidly so E t F

861
00:49:08,800 --> 00:49:12,239
Speaker 1: traders were just making their best guests. What what went

862
00:49:12,360 --> 00:49:15,440
Speaker 1: wrong back then when the n A V s UH

863
00:49:15,680 --> 00:49:23,160
Speaker 1: seemed to be not exactly on the money. So I

864
00:49:24,040 --> 00:49:27,399
Speaker 1: think what happened was was that you had a very

865
00:49:27,680 --> 00:49:32,960
Speaker 1: very quick move in the cash underliers and then you

866
00:49:33,080 --> 00:49:37,640
Speaker 1: had a lag in the equity prices of E t

867
00:49:37,880 --> 00:49:41,440
Speaker 1: F s, causing to some degree some premiums to be

868
00:49:41,560 --> 00:49:45,040
Speaker 1: very high or discounts to be very wide. That can

869
00:49:45,080 --> 00:49:49,040
Speaker 1: happen for a very short period of time. I will say, though,

870
00:49:49,160 --> 00:49:53,360
Speaker 1: that at that time, particularly the COVID crisis in credit

871
00:49:53,520 --> 00:49:56,160
Speaker 1: in high yield and investment great credit areas that really

872
00:49:56,239 --> 00:50:00,399
Speaker 1: froze up, and there was a massive lack of price

873
00:50:00,480 --> 00:50:05,640
Speaker 1: transparency in the cash market. UM E t F still

874
00:50:05,760 --> 00:50:10,239
Speaker 1: traded investors are as individuals. They wanted to get out,

875
00:50:11,000 --> 00:50:13,759
Speaker 1: and so what happened was was they have to UM

876
00:50:14,160 --> 00:50:16,800
Speaker 1: get to a price that can obviously clear the market.

877
00:50:17,239 --> 00:50:19,400
Speaker 1: But when you're trading an equity or an e t F,

878
00:50:19,920 --> 00:50:23,319
Speaker 1: you have two variables you're thinking about. One is can

879
00:50:23,440 --> 00:50:25,640
Speaker 1: I then sell that e t F to somebody else?

880
00:50:25,840 --> 00:50:28,000
Speaker 1: And what price story needs to move it down to

881
00:50:28,080 --> 00:50:30,279
Speaker 1: be able to bring in an investor. That wasn't the

882
00:50:30,400 --> 00:50:32,800
Speaker 1: environment because there were only sellers at the time. So

883
00:50:32,960 --> 00:50:37,000
Speaker 1: what was going on was a estimate by the e

884
00:50:37,160 --> 00:50:41,200
Speaker 1: t F liquidity providers on what is the right price?

885
00:50:41,480 --> 00:50:44,319
Speaker 1: How far down are these cash bonds. Now, I will

886
00:50:44,400 --> 00:50:48,880
Speaker 1: tell you that the traditional liquidity providers and e t

887
00:50:49,080 --> 00:50:53,440
Speaker 1: f s aren't fixed income experts to a great degree

888
00:50:53,800 --> 00:50:55,640
Speaker 1: that they can actually do that. So what happened was

889
00:50:55,719 --> 00:50:59,279
Speaker 1: players like us jumped in and said, okay, we'll buy

890
00:50:59,360 --> 00:51:01,640
Speaker 1: that e t F. We'll buy it down three points

891
00:51:01,719 --> 00:51:04,399
Speaker 1: or five points or whatever, because we have a high

892
00:51:04,480 --> 00:51:07,360
Speaker 1: degree of confidence on how to value the underliers. So

893
00:51:07,440 --> 00:51:09,600
Speaker 1: there was a mismatch for a very short period of

894
00:51:09,680 --> 00:51:13,840
Speaker 1: time between where equities cleared and what the actual pricing

895
00:51:13,880 --> 00:51:16,640
Speaker 1: was in the underliers. But it was a reality that

896
00:51:16,760 --> 00:51:20,840
Speaker 1: people just didn't know what the underwiers were worth. But

897
00:51:20,960 --> 00:51:25,680
Speaker 1: all told, it sorted itself out pretty quickly, and the

898
00:51:25,760 --> 00:51:28,560
Speaker 1: fact that there was even any liquidly at all is

899
00:51:28,840 --> 00:51:33,440
Speaker 1: uh was quite quite a surprise. And exactly players like

900
00:51:33,600 --> 00:51:37,160
Speaker 1: you are the reason why the e t F prices

901
00:51:37,520 --> 00:51:42,400
Speaker 1: eventually came back to where um they were rational. Am

902
00:51:42,480 --> 00:51:46,280
Speaker 1: I overstating that? Or is that A was absolutely absolutely accurate.

903
00:51:46,719 --> 00:51:49,759
Speaker 1: And I will say that this level of dislocation that

904
00:51:49,920 --> 00:51:52,360
Speaker 1: occurred between the cash market and the e t F market,

905
00:51:52,400 --> 00:51:57,399
Speaker 1: between the cash and the synthetic market and credit was very,

906
00:51:58,120 --> 00:52:01,200
Speaker 1: very very I think I said that three times concerning

907
00:52:01,520 --> 00:52:04,880
Speaker 1: to the FED, and this is one of the reasons

908
00:52:04,920 --> 00:52:10,160
Speaker 1: why the Fed decided to do something extremely unprecedented. The

909
00:52:10,280 --> 00:52:13,040
Speaker 1: FED stepped in and said, We're not just going to

910
00:52:13,120 --> 00:52:16,880
Speaker 1: buy twelve year treasuries because their cheap to tenure treasuries.

911
00:52:17,120 --> 00:52:20,960
Speaker 1: We're not just going to provide um funding to the

912
00:52:21,080 --> 00:52:24,800
Speaker 1: money markets. We're not just going to buy agency mortgages

913
00:52:24,840 --> 00:52:27,560
Speaker 1: to drive down the cost for homeowners and refinancing, but

914
00:52:27,600 --> 00:52:29,640
Speaker 1: we're actually gonna get into the credit market because the

915
00:52:29,680 --> 00:52:32,360
Speaker 1: credit market and particularly the cash market is frozen. So

916
00:52:32,560 --> 00:52:36,080
Speaker 1: they announced a plan to buy individual bonds, provide direct

917
00:52:36,160 --> 00:52:40,320
Speaker 1: funding by e TF in the credit market. Uh and

918
00:52:40,560 --> 00:52:43,560
Speaker 1: and also extend lending and potentially by municipals as well.

919
00:52:43,680 --> 00:52:47,400
Speaker 1: So very unprecedented action because of these these kind of

920
00:52:47,440 --> 00:52:50,480
Speaker 1: dislocations that occurred in the lack of transparency, and what

921
00:52:50,600 --> 00:52:54,279
Speaker 1: did it do. It actually caused that that um, you know,

922
00:52:54,360 --> 00:52:58,400
Speaker 1: that arbitrage between ets and cash bonds to eventually go away.

923
00:52:59,080 --> 00:53:01,960
Speaker 1: Uh And it also you open the capital markets to

924
00:53:02,000 --> 00:53:04,160
Speaker 1: allow companies to get back to issue debt to be

925
00:53:04,200 --> 00:53:09,239
Speaker 1: able to bridge themselves past the past economic crisis. Quite fascinating.

926
00:53:09,600 --> 00:53:11,960
Speaker 1: Before we get to our favorite questions, I have to

927
00:53:12,080 --> 00:53:14,920
Speaker 1: at least ask you about some of the funds that

928
00:53:15,200 --> 00:53:19,160
Speaker 1: that your team manages and the four big ones I'm

929
00:53:19,160 --> 00:53:24,240
Speaker 1: looking at Government income fund, core fixed income fund, bond fund,

930
00:53:24,640 --> 00:53:29,800
Speaker 1: and strategic income funds. I know compliance gives you limited

931
00:53:29,840 --> 00:53:33,320
Speaker 1: things you're allowed to say about them, um, but broadly

932
00:53:33,640 --> 00:53:39,440
Speaker 1: tell us about the strategic differences between those groups. So

933
00:53:40,040 --> 00:53:44,880
Speaker 1: UM government income has stated is combination of government securities

934
00:53:44,880 --> 00:53:48,560
Speaker 1: as well as agency mortgage securities. So super high quality

935
00:53:49,000 --> 00:53:51,759
Speaker 1: UM a decent amount of duration there, but not a

936
00:53:51,880 --> 00:53:56,839
Speaker 1: credit oriented product. UH. Core product UM is a core

937
00:53:56,960 --> 00:53:59,920
Speaker 1: holding for people, So we we think of sixty allocay

938
00:54:00,080 --> 00:54:04,480
Speaker 1: and something like a core fund is critical to balance

939
00:54:04,560 --> 00:54:07,440
Speaker 1: in a portfolio relative to equity and risk assets. The

940
00:54:07,600 --> 00:54:12,799
Speaker 1: idea in a core fund investment grade only agency mortgages, treasuries,

941
00:54:13,160 --> 00:54:16,279
Speaker 1: agency debt, as well as investment grade credit and so

942
00:54:16,440 --> 00:54:19,399
Speaker 1: our view about it's really important that you have your

943
00:54:19,520 --> 00:54:22,960
Speaker 1: the chunk of your fixed income allocation in super high

944
00:54:23,040 --> 00:54:27,279
Speaker 1: quality to avoid situations that we experience like in the

945
00:54:27,360 --> 00:54:31,239
Speaker 1: oh seven oh shock where people had the sixty allocation,

946
00:54:31,600 --> 00:54:33,239
Speaker 1: but when they woke up the next day and rates

947
00:54:33,280 --> 00:54:35,560
Speaker 1: were down, they figured out that their forty was also

948
00:54:35,680 --> 00:54:38,440
Speaker 1: down because it had a lot of credit and and

949
00:54:38,800 --> 00:54:41,560
Speaker 1: and subprime mortgages and things like that in there. So

950
00:54:41,760 --> 00:54:45,720
Speaker 1: core is by definition core. Then you have our GS

951
00:54:45,760 --> 00:54:48,680
Speaker 1: bond product, which is more of a it's a Bloomberg

952
00:54:49,000 --> 00:54:52,000
Speaker 1: aggregate product, white core, but it can do high yield

953
00:54:52,040 --> 00:54:55,520
Speaker 1: an emerging market debt, so it's intended to be part

954
00:54:55,600 --> 00:54:59,880
Speaker 1: of your fixed income but have more satellite higher return

955
00:55:00,040 --> 00:55:04,719
Speaker 1: type strategies to increase the yield. And then strategic by

956
00:55:04,800 --> 00:55:08,000
Speaker 1: definition is strategic it can go kind of anywhere, um,

957
00:55:08,040 --> 00:55:11,040
Speaker 1: and so there it's a library based products, so not

958
00:55:11,520 --> 00:55:13,840
Speaker 1: it doesn't have five years or seven years of duration

959
00:55:13,960 --> 00:55:17,200
Speaker 1: potentially like the other products. But it is a cash

960
00:55:17,280 --> 00:55:19,600
Speaker 1: based product where it's kind of more of an absolute

961
00:55:19,600 --> 00:55:21,600
Speaker 1: return product where you can go anywhere within the fixed

962
00:55:21,640 --> 00:55:24,360
Speaker 1: income markets. And so that product is trying to generate

963
00:55:24,400 --> 00:55:26,680
Speaker 1: a little bit higher levels of return without taking on

964
00:55:26,760 --> 00:55:30,120
Speaker 1: the interest Thry risk. I'm glad I I asked about that.

965
00:55:30,440 --> 00:55:33,760
Speaker 1: I'm sure our listeners are going to be quite interested

966
00:55:33,800 --> 00:55:37,440
Speaker 1: in that. These are our favorite questions that we ask

967
00:55:37,719 --> 00:55:41,120
Speaker 1: all of our guests. And since we're talking about COVID

968
00:55:41,200 --> 00:55:44,040
Speaker 1: in the lockdown, let's let's start right right with that.

969
00:55:44,239 --> 00:55:46,680
Speaker 1: What are you streaming these days? Give us your favorite

970
00:55:47,280 --> 00:55:54,360
Speaker 1: work from home Netflix? Amazon? Videos you're watching? So favorite

971
00:55:54,400 --> 00:55:57,480
Speaker 1: on the video side, UM, I would say was a

972
00:55:57,680 --> 00:56:00,640
Speaker 1: recent movie that I think was very elivan as we

973
00:56:00,760 --> 00:56:03,640
Speaker 1: were kind of in a very critical election for our country,

974
00:56:04,080 --> 00:56:07,160
Speaker 1: was The Trial of Chicago seven. I'm not sure if

975
00:56:07,160 --> 00:56:11,040
Speaker 1: it was Netflix or Amazon Prime. But an amazing movie

976
00:56:11,120 --> 00:56:15,400
Speaker 1: about the history of the hippie movement and the protest

977
00:56:15,520 --> 00:56:19,120
Speaker 1: that the hippies um uh and and I went to

978
00:56:19,400 --> 00:56:23,680
Speaker 1: the Democratic National Convention in Chicago to protest against the

979
00:56:23,680 --> 00:56:27,080
Speaker 1: Democratic Party the war, um and kind of and then

980
00:56:27,239 --> 00:56:29,400
Speaker 1: a number of them got arrested. And the reason it

981
00:56:29,520 --> 00:56:32,080
Speaker 1: was number one of the acting was unbelievable. Sasha Baron

982
00:56:32,160 --> 00:56:35,839
Speaker 1: Cohn's in it. He plays Abby Hoffman uh and Uh.

983
00:56:35,880 --> 00:56:37,719
Speaker 1: Abbie Hoffman actually went to the same college me as

984
00:56:37,800 --> 00:56:39,920
Speaker 1: Brandis and so I just found that movie to be

985
00:56:40,719 --> 00:56:43,600
Speaker 1: very telling, and it's it's kind of a um a

986
00:56:43,719 --> 00:56:46,680
Speaker 1: story about if you think something's going wrong, speak up

987
00:56:46,680 --> 00:56:48,799
Speaker 1: and do something about it. So I would say from

988
00:56:48,840 --> 00:56:51,840
Speaker 1: a from a movie perspective and streaming that was that

989
00:56:51,920 --> 00:56:56,200
Speaker 1: was definitely number one. That is my Netflix Q and

990
00:56:57,520 --> 00:57:00,600
Speaker 1: I'm looking forward to checking that out. Let. Let's talk

991
00:57:00,640 --> 00:57:04,560
Speaker 1: about your early mentors who affected um the way you

992
00:57:04,640 --> 00:57:09,880
Speaker 1: look at fixed income, who helped guide your career. So UM,

993
00:57:10,080 --> 00:57:13,640
Speaker 1: I would say that two people very early in my career,

994
00:57:13,680 --> 00:57:16,800
Speaker 1: Earleman Brothers, had a pretty big impact. And it was

995
00:57:17,360 --> 00:57:19,280
Speaker 1: less about kind of over the course of a long

996
00:57:19,280 --> 00:57:21,800
Speaker 1: period of time, but single events that had a real

997
00:57:21,840 --> 00:57:24,400
Speaker 1: big impact on me. And so one was this gentleman

998
00:57:24,480 --> 00:57:27,040
Speaker 1: Mike McKeever, who had a lot of capital markets. I

999
00:57:27,040 --> 00:57:30,240
Speaker 1: think he ended up running banking at at lehman Um

1000
00:57:30,520 --> 00:57:33,040
Speaker 1: he put me in charge of very early in my

1001
00:57:33,160 --> 00:57:36,640
Speaker 1: career was in the first few months of of recounting

1002
00:57:36,720 --> 00:57:39,920
Speaker 1: what happened in the European markets from an issue and

1003
00:57:39,960 --> 00:57:42,880
Speaker 1: standpoint overnight, so that people when they came in they

1004
00:57:42,920 --> 00:57:45,280
Speaker 1: were speaking their clients about the U S markets had

1005
00:57:45,360 --> 00:57:48,600
Speaker 1: some context for what happened in Europe. And somebody asked

1006
00:57:48,600 --> 00:57:51,680
Speaker 1: me a question about during the meeting about a European

1007
00:57:51,720 --> 00:57:54,720
Speaker 1: issue where and I kind of hesitated and I kind

1008
00:57:54,720 --> 00:57:57,120
Speaker 1: of gave an answer like, oh, yeah, yeah, that's what

1009
00:57:57,240 --> 00:58:00,680
Speaker 1: happened in a way that Mike McKeever very much neew

1010
00:58:00,920 --> 00:58:02,440
Speaker 1: that I didn't know what I was talking about. And

1011
00:58:02,560 --> 00:58:04,120
Speaker 1: so in the meeting he called me out and said

1012
00:58:06,000 --> 00:58:09,000
Speaker 1: that your answer is correct, and I said, not really,

1013
00:58:09,080 --> 00:58:11,080
Speaker 1: he said, and in the meeting he said, this is

1014
00:58:11,080 --> 00:58:13,760
Speaker 1: not high school anymore, this is not college. If you're

1015
00:58:13,800 --> 00:58:16,000
Speaker 1: not if you're not sure, you say you're not sure

1016
00:58:16,000 --> 00:58:18,120
Speaker 1: when you get back to someone, But you're talking about

1017
00:58:18,400 --> 00:58:22,680
Speaker 1: people's careers, our client's money at stake, and you can't

1018
00:58:22,920 --> 00:58:26,400
Speaker 1: fake it. And so obviously I was distraught and couldn't

1019
00:58:26,440 --> 00:58:28,320
Speaker 1: believe that somebody tore me to shreds in front of

1020
00:58:28,320 --> 00:58:30,320
Speaker 1: a lot of people. But he was a hundred percent right,

1021
00:58:30,360 --> 00:58:31,840
Speaker 1: and it kind of helped me very early in my

1022
00:58:31,960 --> 00:58:37,640
Speaker 1: career to uh uh take work seriously and that the

1023
00:58:37,720 --> 00:58:42,040
Speaker 1: facts matter. Quite quite interesting, Let's let's talk about books.

1024
00:58:42,080 --> 00:58:44,000
Speaker 1: What are you some of your favorites and what are

1025
00:58:44,000 --> 00:58:50,480
Speaker 1: you reading currently? Uh? A bunch so um. I kind

1026
00:58:50,480 --> 00:58:53,160
Speaker 1: of have a theme in the books that I read

1027
00:58:53,360 --> 00:58:57,840
Speaker 1: almost all our nonfiction uh and and I would say

1028
00:58:57,920 --> 00:59:01,120
Speaker 1: that the two themes are real A lot of investments

1029
00:59:01,160 --> 00:59:04,640
Speaker 1: and I read a lot about UM income inequality and

1030
00:59:05,480 --> 00:59:09,120
Speaker 1: historical racism in in our country. And so the few

1031
00:59:09,120 --> 00:59:11,240
Speaker 1: books that I can think of that that really kind

1032
00:59:11,280 --> 00:59:14,280
Speaker 1: of had an impact on me was Devil in the Grove,

1033
00:59:15,320 --> 00:59:19,560
Speaker 1: which is an amazing book about Thurgood Marshall and his

1034
00:59:20,400 --> 00:59:25,360
Speaker 1: plight into the South, particularly into Florida to help um

1035
00:59:25,840 --> 00:59:29,919
Speaker 1: wrongly accused UM black men who were accused of either

1036
00:59:30,040 --> 00:59:32,360
Speaker 1: murders or were put in put in jail for life

1037
00:59:32,600 --> 00:59:36,280
Speaker 1: or actually um actually uh sentenced to death and to

1038
00:59:36,400 --> 00:59:38,920
Speaker 1: go into these places and defend them. And I think

1039
00:59:38,960 --> 00:59:41,080
Speaker 1: that there's obviously been a lot of books and movies

1040
00:59:41,520 --> 00:59:45,080
Speaker 1: UM since, but this specific story about UM a gentleman

1041
00:59:45,160 --> 00:59:49,560
Speaker 1: in Florida had just a massive impact impact on me. UM.

1042
00:59:49,760 --> 00:59:53,040
Speaker 1: Just Mercy is a very similar book, recent recent movie

1043
00:59:53,160 --> 00:59:57,080
Speaker 1: and and a very similar topic UM. One other on

1044
00:59:57,240 --> 01:00:01,160
Speaker 1: income inequality Hillbilly Elogy, which now there's a movie out UM.

1045
01:00:01,240 --> 01:00:02,640
Speaker 1: I haven't seen the movie yet, but I did read

1046
01:00:02,640 --> 01:00:05,480
Speaker 1: the book and UM kind of thinking about the broader

1047
01:00:05,560 --> 01:00:08,800
Speaker 1: issues that exist across our country. Why there's a lot

1048
01:00:08,880 --> 01:00:13,680
Speaker 1: of political issues UM, racist racism issues and come inequality issues,

1049
01:00:14,160 --> 01:00:17,360
Speaker 1: very very impactful, impactful book. UM. And then on the

1050
01:00:17,400 --> 01:00:20,919
Speaker 1: investment side, this is going back a while, but David

1051
01:00:21,000 --> 01:00:24,920
Speaker 1: Dreaman's book on Country and Investing UM had had a

1052
01:00:24,960 --> 01:00:28,200
Speaker 1: pretty significant impact on me and and and his book

1053
01:00:28,240 --> 01:00:33,640
Speaker 1: is a lot about UM behavioral behavioral science, behavioral economics,

1054
01:00:34,080 --> 01:00:36,680
Speaker 1: and you know, not always following the trend. So being

1055
01:00:36,720 --> 01:00:40,360
Speaker 1: a contrying investor most bond investors are, but looking at

1056
01:00:40,600 --> 01:00:43,440
Speaker 1: investing from different lens than everybody else has had had

1057
01:00:43,440 --> 01:00:47,880
Speaker 1: a pretty big impact on me. Huh, quite fascinating. UM.

1058
01:00:48,360 --> 01:00:50,560
Speaker 1: What sort of advice would you give to a recent

1059
01:00:50,760 --> 01:00:54,440
Speaker 1: college grad who was interested in a career on the

1060
01:00:54,560 --> 01:00:58,960
Speaker 1: fixed income side of the street. Well, I would say,

1061
01:00:59,080 --> 01:01:03,840
Speaker 1: first off, just in terms of people entering the capital markets,

1062
01:01:03,960 --> 01:01:07,720
Speaker 1: financial markets, any any any part of finance, the most

1063
01:01:07,800 --> 01:01:10,080
Speaker 1: important thing is not to worry about what you're doing,

1064
01:01:10,680 --> 01:01:13,400
Speaker 1: and it's more to worry about who you're doing it

1065
01:01:13,480 --> 01:01:16,040
Speaker 1: with and who you're around. And I think in the

1066
01:01:16,160 --> 01:01:19,120
Speaker 1: first five to ten years of your career, don't worry

1067
01:01:19,120 --> 01:01:21,000
Speaker 1: about what you're gonna be when you grow up. That

1068
01:01:21,120 --> 01:01:24,240
Speaker 1: doesn't really matter. What matters more is that you're around

1069
01:01:24,840 --> 01:01:28,440
Speaker 1: smart people that can teach you and are willing to

1070
01:01:28,520 --> 01:01:31,600
Speaker 1: teach you, and and and you will then figure out

1071
01:01:31,920 --> 01:01:34,160
Speaker 1: what direction you want to take your take your career.

1072
01:01:34,600 --> 01:01:37,600
Speaker 1: So I really think that's important. And on top of that,

1073
01:01:38,320 --> 01:01:41,680
Speaker 1: you want to be in a diverse environment. And the

1074
01:01:41,760 --> 01:01:44,120
Speaker 1: word diversity obviously can mean a lot of different things.

1075
01:01:44,560 --> 01:01:49,360
Speaker 1: It can mean diverse obviously racial backgrounds, gender, but it

1076
01:01:49,480 --> 01:01:54,120
Speaker 1: also you want to be around diverse ideas, and it's

1077
01:01:54,200 --> 01:01:56,160
Speaker 1: really important. You don't want to be in an environment

1078
01:01:56,200 --> 01:01:58,920
Speaker 1: where everybody thinks the same. The way you learn is

1079
01:01:58,960 --> 01:02:01,760
Speaker 1: by being exposed to things that are very, very diverse.

1080
01:02:01,880 --> 01:02:04,560
Speaker 1: So I think that's most important. Don't worry about what

1081
01:02:04,600 --> 01:02:06,240
Speaker 1: you want to do when you grow up. Be around

1082
01:02:06,280 --> 01:02:10,800
Speaker 1: smart people. You'll figure it out. Good advice. And our

1083
01:02:10,840 --> 01:02:13,360
Speaker 1: final question, what do you know about the world of

1084
01:02:13,440 --> 01:02:17,560
Speaker 1: investing in fixed income today that you wish you knew

1085
01:02:18,080 --> 01:02:22,560
Speaker 1: thirty years or so ago when you first got started. Well,

1086
01:02:23,120 --> 01:02:26,120
Speaker 1: I first maybe like to answer the question around just

1087
01:02:26,240 --> 01:02:30,840
Speaker 1: investing overall, as giving younger people some advice around investing.

1088
01:02:30,880 --> 01:02:34,680
Speaker 1: I think that the most important thing develop a plan,

1089
01:02:35,760 --> 01:02:39,280
Speaker 1: stick to the plan and don't look at it. And

1090
01:02:39,880 --> 01:02:43,440
Speaker 1: that is true for people who are non investors, but

1091
01:02:43,680 --> 01:02:47,160
Speaker 1: it's also true for people who are investors. We often

1092
01:02:47,440 --> 01:02:50,400
Speaker 1: get scared out of our out of our shorts when

1093
01:02:50,440 --> 01:02:53,600
Speaker 1: we see events occurring, and we'll go to cash because

1094
01:02:53,640 --> 01:02:56,400
Speaker 1: we think we can be smarter than the market. Don't

1095
01:02:56,480 --> 01:03:00,600
Speaker 1: do that. Develop a plan, develop a diversive pipe diversify

1096
01:03:00,680 --> 01:03:03,880
Speaker 1: plan for your investing, and don't look at it, and

1097
01:03:04,040 --> 01:03:07,920
Speaker 1: stay very consistent in terms of in terms of investing.

1098
01:03:08,360 --> 01:03:11,360
Speaker 1: In terms of the fixed income portion of that UM,

1099
01:03:11,800 --> 01:03:15,640
Speaker 1: I would say probably the same thing goes UM by

1100
01:03:15,680 --> 01:03:18,440
Speaker 1: the same token that I thought that UM rates at

1101
01:03:18,440 --> 01:03:20,520
Speaker 1: eight percent or nine percent when I started my career,

1102
01:03:20,880 --> 01:03:24,360
Speaker 1: looked pretty expensive because rates two years or three years prior,

1103
01:03:24,480 --> 01:03:27,800
Speaker 1: we're eleven or twelve percent. Don't think that you're smarter

1104
01:03:27,920 --> 01:03:31,080
Speaker 1: than the market. Think about your client, think about the

1105
01:03:31,120 --> 01:03:33,600
Speaker 1: type of portfolio and type of riskers you want to take,

1106
01:03:34,000 --> 01:03:38,000
Speaker 1: and be very thoughtful about asset allocation and diversification. And

1107
01:03:38,120 --> 01:03:41,240
Speaker 1: I think that that is the most important lesson, and

1108
01:03:41,280 --> 01:03:43,720
Speaker 1: I think it's true with regard to an individual and

1109
01:03:44,000 --> 01:03:46,360
Speaker 1: multi asset investing, and I think it's also true as

1110
01:03:46,400 --> 01:03:49,280
Speaker 1: a fixed income investor. Thanks Mike for being so generous

1111
01:03:49,320 --> 01:03:52,000
Speaker 1: with your time. We have been speaking with Mike Swell,

1112
01:03:52,080 --> 01:03:56,520
Speaker 1: who runs fixed income portfolio management for Goldman Sachs. If

1113
01:03:56,560 --> 01:03:59,520
Speaker 1: you enjoy this conversation, well, be sure and check out

1114
01:03:59,600 --> 01:04:03,800
Speaker 1: any of our almost four hundred other such conversations where

1115
01:04:03,880 --> 01:04:07,880
Speaker 1: we keep the tape rolling and continue discussing all things finance.

1116
01:04:08,360 --> 01:04:11,920
Speaker 1: You can find that at iTunes, Spotify, wherever you regularly

1117
01:04:12,000 --> 01:04:16,960
Speaker 1: get your podcast fixed. We love your comments, feedback and

1118
01:04:17,160 --> 01:04:21,600
Speaker 1: suggestions right to us at m IB podcast at Bloomberg

1119
01:04:21,680 --> 01:04:24,800
Speaker 1: dot net. Be sure to give us guest suggestions at

1120
01:04:24,880 --> 01:04:28,320
Speaker 1: that email address. Give us a review on Apple iTunes.

1121
01:04:28,920 --> 01:04:31,400
Speaker 1: You can sign up from my Daily reads at rid

1122
01:04:31,440 --> 01:04:35,200
Speaker 1: Halts dot com. Check out my weekly column on Bloomberg

1123
01:04:35,280 --> 01:04:39,280
Speaker 1: dot com slash Opinion. Follow me on Twitter at rit Halts.

1124
01:04:39,840 --> 01:04:42,040
Speaker 1: I would be remiss if I did not thank the

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01:04:42,080 --> 01:04:46,000
Speaker 1: Crack staff that helps put these conversations together each week.

1126
01:04:46,600 --> 01:04:51,280
Speaker 1: Tim Harrow is my audio engineer, Michael Boyle is my producer.

1127
01:04:51,920 --> 01:04:56,080
Speaker 1: Latika Valbrun is my project manager. Michael Batnick is my

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01:04:56,160 --> 01:04:59,960
Speaker 1: head of research. I'm Barry rid Holts. You've been listening

1129
01:05:00,000 --> 01:05:03,000
Speaker 1: into Master's in Business on Bloomberg Radio