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Speaker 2: Sorry, let's get back to the policy that's coming out

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Speaker 2: and d see fast and Furious. Nathan Dean, Bloomberg Intelligence

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Speaker 2: Senior Policy Analyst. Okay, so if we get this news

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Speaker 2: out of Mexico that Trump and Shamebaum spoke and they're

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Speaker 2: going to delay tariffs by a month while they work

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Speaker 2: out other stuff, does this mean that we know why

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Speaker 2: tariffs are being put. They're being put as a negotiating tactic,

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Speaker 2: full stop. Is that now correct?

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Speaker 3: So?

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Speaker 4: I certainly think you can think about it from President

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Speaker 4: Trump's point of view in terms of his goals. You know, obviously,

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Speaker 4: when he's talking about, you know, our trade and balance

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Speaker 4: or our trade relationship with Canada Mexico, He's mentioned three

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Speaker 4: things in his truth Social posts, all.

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Speaker 5: Border security and the economy.

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Speaker 4: But from the Canadian and Mexican perspective, it's much easier

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Speaker 4: for them to go to President Trump and say, look,

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Speaker 4: we'll do something on fentanyl and border security today. We

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Speaker 4: could take a longer term approach to the economic imbalance.

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Speaker 4: That's certainly something that President Trump still wants, but from

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Speaker 4: a negotiation perspective, I wouldn't be.

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Speaker 3: So I'm all.

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Speaker 4: Surprised by this because it was what they could give

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Speaker 4: President Trump in the short term. And we'll see what

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Speaker 4: this meaning with Justin Trudeau today at three pm. Maybe

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Speaker 4: Canada has a very similar proposition for the president.

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Speaker 6: So, I mean, I'm not even sure where to go here,

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Speaker 6: but I guess as you kind of phrase it there, Nathan,

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Speaker 6: this is a president that likes to negotiate, likes to

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Speaker 6: He's transactional, and it seems like if the counterparts are

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Speaker 6: equally transactional, then maybe you could avoid a wider trade war.

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Speaker 6: Is that kind of expectation for the folks down in DC.

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Speaker 4: Yeah, So if you're part of the bull case, I

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Speaker 4: think in terms of that, you know, President Trump is

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Speaker 4: the negotiator and so forth.

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Speaker 5: This is fitting into that narrative.

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Speaker 4: I mean, obviously you do have to prepare for tariffs,

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Speaker 4: because we do think tariffs are coming, but it just

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Speaker 4: really depends on the sectors and also the broad impact

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Speaker 4: of those tariffs. So let's just say that if Justin Trudeau,

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Speaker 4: the Prime Minister of Canada, and President Trump make a

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Speaker 4: deal today at three o'clock and it follows the same

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Speaker 4: timeline as Mexico, you get one month. President Trump is

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Speaker 4: eventually going to come back and say, okay, well, let's

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Speaker 4: talk about those trade and balances. Let's talk about in

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Speaker 4: his truth selles through posts but making Canada the fifty

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Speaker 4: first state. But you know, again, it's about extracting concessions.

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Speaker 4: So what do we have to do for us in

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Speaker 4: the market sides? You certainly have to prepare for it,

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Speaker 4: but also at the end of the game, you know,

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Speaker 4: it's very difficult to call because it's just one man's decision,

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Speaker 4: and so we're just gonna have to stay tuned and

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Speaker 4: see what happens.

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Speaker 2: All right, So that's a great point, stay tuned. What

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Speaker 2: are you standing us staying tuned for? Like, what are

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Speaker 2: going to be the key phrases, the key words, the

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Speaker 2: key pressors that you're gonna be watching out for to

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Speaker 2: tell you what the reality is going to be.

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Speaker 4: So I'm actually looking for whether or not Canada and

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Speaker 4: Mexico fall through or at least threaten to fall through

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Speaker 4: in terms of their exports. For example, potash not something

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Speaker 4: many people talk about, but ninety percent of potash in

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Speaker 4: the United States, which is very important for our fertilizer industry,

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Speaker 4: comes from Canada. So if Canada wanted to imfact, you know,

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Speaker 4: put on ecademic pain on a certain aspect of the

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Speaker 4: American system, and especially a system that has voted for

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Speaker 4: President Trump, I certainly want to look for something like

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Speaker 4: that because for me to see the changing of the guard,

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Speaker 4: or at least a pressure on the president, I have

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Speaker 4: to see it coming from the trade associations here in Washington,

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Speaker 4: not the big ones like the US Chamber, but smaller

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Speaker 4: ones like the National Association and manufacturers are the fertilizer

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Speaker 4: or the farmers, they're the ones that can put pressure

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Speaker 4: on their allies on Capitol Hill to go to the

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Speaker 4: White House and say, President Trump, you need to step back.

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Speaker 5: So retaliatory tariffs is not something we talk about.

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Speaker 4: Here a much in the United States in this context,

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Speaker 4: but that's really what I want to see if President

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Speaker 4: Trump eventually would move away from these threats.

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Speaker 6: How about China, Nathan, I mean, we have, you know,

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Speaker 6: obviously generally very good relationships with Canada and Mexico, and

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Speaker 6: presumably that that helps in some negotiations like we saw

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Speaker 6: with Mexico this morning. How about China. What's the feeling

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Speaker 6: within the Beltway about how the US may approach China.

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Speaker 4: Yeah, that's a great question, because a lot of the

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Speaker 4: airtime right now, and certainly a lot of time in

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Speaker 4: Washington is spent on this Canada and Mexico relationship. But

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Speaker 4: it should also be said that China received a ten

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Speaker 4: percent increase in tariffs as well. Now we saw the

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Speaker 4: response from the Chinese government that was more mooted. In particular,

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Speaker 4: there wasn't any retaliatory tariffs at this point at least,

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Speaker 4: but I think that's certainly going to be part of

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Speaker 4: a broader discussion. I think the folks here in Washington

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Speaker 4: feel that when it comes to the US China relationship

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Speaker 4: they can at.

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Speaker 5: Least take a breath.

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Speaker 4: Things aren't going to be moving at lightning speed they

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Speaker 4: are in North America. There can be a little bit

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Speaker 4: slower aspect towards those negotiations. But again, this is certainly

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Speaker 4: coming and don't be for you know, European Union, they're

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Speaker 4: most likely next as well. I mean, President Trump has

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Speaker 4: a lot of areas around the world that he wants

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Speaker 4: to move into in terms of tariffs. You know, Canada

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Speaker 4: and Mexico and China just happened to be the first

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Speaker 4: one on his list.

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Speaker 2: But if we're learning anything from the market action in

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Speaker 2: relation to these headlines, it's that don't trust your first reaction.

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Speaker 2: I mean, you're just looking at it. And if you

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Speaker 2: look at the S and P mini futures market that

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Speaker 2: takes into account yesterday, this morning, and then now today trading,

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Speaker 2: it's a whole different world. So how should a market

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Speaker 2: participant think about this?

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Speaker 4: Yeah, so there's a lot of sentiment right now, and

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Speaker 4: I agree with this sentiment that you know, in terms

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Speaker 4: of these threats, we're beginning to see that it's just

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Speaker 4: the same playbook of that transactional president that he's willing

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Speaker 4: to negotiate. You know, it's obviously difficult for those of

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Speaker 4: us in the markets to try and figure out what

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Speaker 4: President Trump wants from those negotiations. But I think anytime

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Speaker 4: you see one of these tariff threat slash opportunities that

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Speaker 4: come up, always just keep in mind that there is

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Speaker 4: going to be a negotiation that takes place. Whether President

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Speaker 4: Trump is talking about fetnol border security. Those are things

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Speaker 4: that the Canadian and Mexican governments can easily control, like

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Speaker 4: Mexico's example of sending ten thousand troops to the border.

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Speaker 4: If President Trump's number one demand is an economic imbalance,

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Speaker 4: like with the European Union in terms of increased share

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Speaker 4: of GDP spending for its defense, that's a longer term

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Speaker 4: thing that the European governments would have to put in place.

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Speaker 4: So I would just say, what is President Trump's number

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Speaker 4: one goal here? What can the other countries give in exchange?

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Speaker 4: And can there be a negotiation timeframe that's long enough

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Speaker 4: to not spook the markets?

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Speaker 6: Well, tariff certainly has the market's attention today, but tomorrow

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Speaker 6: is another day. What from a policy perspective, are you

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Speaker 6: and folks in DC kind of looking towards this Congress,

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Speaker 6: this administration to move forward on what are the important

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Speaker 6: ones coming up?

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Speaker 5: Yeah? So this week obviously we have confirmation hearings.

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Speaker 4: I mean, I think most people think are going to

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Speaker 4: get through Telca Gabbert I think is the one that

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Speaker 4: if she were not to get through, I wouldn't be

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Speaker 4: surprised by that. You know, Jamison Greer, who is the

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Speaker 4: US Trade representative of his confirmation hearing is on Thursday,

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Speaker 4: certainly important because he's going to be one of the

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Speaker 4: most important voices in this administration towards tariffs. So a

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Speaker 4: lot of questions may be asked, Hey, why would you

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Speaker 4: know we do this if potash and those farmers are

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Speaker 4: going to be harmed? But I would also point out

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Speaker 4: that the House Budget Committee is trying to come up

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Speaker 4: with their reconciliation blueprint about trying this is the instructions

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Speaker 4: for this major multi trillion dollar techs extension bill, and

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Speaker 4: if they can't get it done, that serves our narrative

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Speaker 4: that this is going to take a lot of time

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Speaker 4: to work out and if you lose any votes. And

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Speaker 4: for example, the Republican Study Committee has already said they're

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Speaker 4: not going to support anything that doesn't decrease the deficit. Well,

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Speaker 4: how do you include things like no taxes on tips

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Speaker 4: without decreasing the deficit. It's an extremely difficult question, and

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Speaker 4: so I think we're going to be looking to see

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Speaker 4: what those negotiations take place as well.

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Speaker 2: Can we just switch gears for a second and talk

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Speaker 2: about the Elon Musk and the government and what we've

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Speaker 2: seen from him and Doge in the last twenty four hours.

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Speaker 4: Yeah, so obviously, you know, we've seen reports over the

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Speaker 4: weekend that the Doge Committee is in Treasury accessing Treasury

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Speaker 4: payment systems. This is with the idea that eventually they

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Speaker 4: could cut off payments in wake of the federal freeze

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Speaker 4: executive order that was then rescinded. And this is an

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Speaker 4: idea about empoundment. And I think this is something that's

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Speaker 4: coming to the courts. And even if you listen to

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Speaker 4: the Elon Musk last night on his Twitter spaces or

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Speaker 4: his x spaces, he even said that he may need

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Speaker 4: the courts support in this this idea of impoundment. Let's

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Speaker 4: just say the Congress decides that if they're going to

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Speaker 4: give one hundred million dollars to the Department of Education,

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Speaker 4: President Trump could just come back and say, now, I'm

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Speaker 4: not going to pay for it, but somebody is eventually

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Speaker 4: going to sue over that that will eventually get to

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Speaker 4: the Supreme Court. And there are already laws that put

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Speaker 4: in place about empowerment. So it's sort of unclear does

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Speaker 4: the president have the ability to say we're.

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Speaker 5: Not going to spend this money.

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Speaker 4: But look, if from Elon Musk's perspective, there's a lot

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Speaker 4: of regulatory red tape, there's a lot of bloat in

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Speaker 4: the US government. We should certainly try, and it looks

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Speaker 4: like they're starting with the USAID first.

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Speaker 6: What's the feeling in DC about doze here? Is this

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Speaker 6: a credible I don't know. Effort, if you will, organization,

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Speaker 6: if you will, will actual change happen.

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Speaker 4: So I think if you talk about like the internal

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Speaker 4: structures of the US government, and specifically within the executive branch,

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Speaker 4: so agencies like the USAID, President Trump and the DOGE

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Speaker 4: Committee can do a lot of work in terms of

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Speaker 4: restructuring it and also, going back to that impoundment fight

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Speaker 4: that I just mentioned, shrinking it. I think you have

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Speaker 4: some Republicans who are completely on board with that idea.

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Speaker 4: You have also some Republicans who are sort of uneasy

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Speaker 4: about the idea that the White House would then have

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Speaker 4: the power to just take back this spending, because look,

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Speaker 4: eventually we will get a democratic president back, and when

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Speaker 4: a Democratic president comes back, he or she be able

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Speaker 4: to say, well, you know what, I'm not going to

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Speaker 4: spend these policy goals that Congress has implemented as well.

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Speaker 4: So I think there's some unease amongst the Republican Party

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Speaker 4: that he's doing this, but also supporting the narrative that

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Speaker 4: there is a lot of blow in the federal government

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Speaker 4: and so I think it's just one of those. Again,

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Speaker 4: stay tuned and see what happens over the next few months.

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Speaker 6: All right, Nathan Deane, thank you so much. We appreciate

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Speaker 6: that stay tuned. Every day is a new day in

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Speaker 6: this news flow.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Coarcklay and Android

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Speaker 1: Otto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: All right, let's take a look at what you do

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Speaker 2: in this market.

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Speaker 3: Now.

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Speaker 2: I'm taking only the S ANDP mini futures contracts. We

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Speaker 2: are all the lows of the session that we hit

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Speaker 2: earlier in the morning before the cash show, and so

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Speaker 2: keeping that a little bit in mind, Carol Pepper, founder

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Speaker 2: and CEO of Pepper International, joins us. So Carol makes

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Speaker 2: a question, do you buy this dip? Yes?

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Speaker 7: Well, as you guys know, I manage money for families

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Speaker 7: with over one hundred million dollars who are typically family

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Speaker 7: offices and I would say wait a little bit longer

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Speaker 7: to see how much the dip is going to dip.

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Speaker 8: This is a dip. It's a two four percent dip.

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Speaker 2: Not bad.

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Speaker 7: You can buy this dip if you want to, but

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Speaker 7: we may if it looks like these tariffs really will

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Speaker 7: be implemented.

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Speaker 8: This is just the beginning of a dip, right.

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Speaker 6: Well, just a red headline crossing the Bloomberg trumbinal right now.

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Speaker 6: Mexico's shinebaumb says tariffs delayed for a month, so we'll

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Speaker 6: have more reporting on that. Apparently the Mexican president had

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Speaker 6: a conference call early today with President Trump, so perhaps

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Speaker 6: some relief there. Carol, As we just kind of step

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Speaker 6: back here and think about some of the volatility or

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Speaker 6: the news flow that tends to come out of a

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Speaker 6: President Trump administration, how do you tell your clients to

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Speaker 6: kind of deal with that?

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Speaker 7: Well, I think you have to again keep your eyes

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Speaker 7: on a longer term prize. What sectors over the long

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Speaker 7: term are going to do well, not within the first

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Speaker 7: thirty days of a brand new administration, but what trends

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Speaker 7: that have been true for years are continuing to accelerate,

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Speaker 7: And I think those trends will work no matter what

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Speaker 7: comes out of the new administration's strategic statements in the

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Speaker 7: first month as they're trying to put their stamp on

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Speaker 7: the government.

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Speaker 8: So if you look at things like defense.

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Speaker 7: Technology, the entire world has burned through a lot of

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Speaker 7: weapons that is going to continue to be upgraded with AI.

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Speaker 7: There's going to be more robotics, there's going to be

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Speaker 7: more drones, there's going to be.

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Speaker 8: More data centers. AI is not going to go away.

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Speaker 7: Consumers are going to continue to switch and shop on

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Speaker 7: Amazon rather than.

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Speaker 8: In bricks and mortar stores.

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Speaker 7: All the things that we've been talking about still apply

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Speaker 7: today with the threat of tariffs if they're now or

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Speaker 7: in a month or two, So you still have to

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Speaker 7: keep your eye and then think about entry.

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Speaker 8: Point when should you enter these stocks. And so that's

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Speaker 8: really what we're doing.

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Speaker 7: We're not changing our basic thesis because we do believe

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Speaker 7: it is going to continue as we suspect it.

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Speaker 8: There is more risk off in the market.

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Speaker 7: That means that's going to depress the growth stock priceis,

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Speaker 7: which is good.

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Speaker 8: News for you if you're long term ball. Your long

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Speaker 8: term ball, you kind of like this time to have

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Speaker 8: an entry point. It even a little bit more slippage.

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Speaker 7: Maybe we'll get a five or six percent down on

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Speaker 7: some of these big names.

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Speaker 8: Wouldn't it be nice to enter five or six percent lower.

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Speaker 2: You know, a week ago we also speaking of AI,

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Speaker 2: we would have been talking about how the AI hyperscaler

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Speaker 2: spending theme is pretty intact no matter what happens with

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Speaker 2: tariffs and that got disrupted. Is that still sort of

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Speaker 2: a major core theme for you?

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Speaker 3: Yes?

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Speaker 8: Absolutely.

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Speaker 7: I mean I talk to a lot of folks who

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Speaker 7: are busy building data centers. There are energy, energy and

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Speaker 7: data centers are getting very intertwined. So people are off

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Speaker 7: taking energy that before they might have made carbon credits

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Speaker 7: out of it and capturing it and making data centers

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Speaker 7: in places like middle of the country, in Oklahoma, in

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Speaker 7: places like this, So those themes are going to continue.

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Speaker 7: Wealthy families are piling into the construction of data centers,

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Speaker 7: whether the chips are in Nvidia or someone else. The

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Speaker 7: data center construction isn't something that takes a few days.

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Speaker 7: That will continue to create jobs. So data centers are

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Speaker 7: still a good play. They're already started, they're already under contract,

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Speaker 7: and they're not going to stop just because a teriff

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Speaker 7: is implosed.

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Speaker 6: Carol about on the fixed income side, how are your

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Speaker 6: clients playing fixed the come these days? They can actually

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Speaker 6: clip some pretty competitive coupons these days, that's right.

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Speaker 7: I think it's so hard to tell in fixed income

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Speaker 7: because we really don't know yet what are going to

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Speaker 7: be effect of the tariffs on potential inflation and what

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Speaker 7: Powell can or can not do. Obviously, real estate to

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Speaker 7: me is still a sector at risk. It's been holding

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Speaker 7: on by its fingernails now for a few years. You know,

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Speaker 7: extend and.

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Speaker 8: Pretend that might have to go on a bit longer.

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Speaker 7: Now if we have a situation where inflation ticks up,

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Speaker 7: if they're R and D tariffs and posed, that's going

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Speaker 7: to make it very hard for Powell to lower the

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Speaker 7: rates and therefore give some relief to real estate.

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Speaker 8: So that's a sector I think people need to kind

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Speaker 8: of watch out for.

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Speaker 7: It's I don't think we're out of the woods yet

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Speaker 7: on real estate, but you're right, and the short term

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Speaker 7: as well, not a bad time to have a little

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Speaker 7: bit of fixed income, but more on the shorter side

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Speaker 7: because the swings on the long end are not worth

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Speaker 7: it for most individuals. That's much more an institutional play.

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Speaker 2: What about safety plays? Like, what do you recommend to

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Speaker 2: your clients that just need a portion of their investment

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Speaker 2: portfolio that's saved. It's liquid, like, it's cash still the place.

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Speaker 7: Money markets and cash some people like gold. Bitcoin was

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Speaker 7: looking exciting, but look at what happened with ethereum.

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Speaker 8: It just collapse now that.

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Speaker 7: The environment looks a little bit more risky. So yes,

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Speaker 7: I think cash is still king. It's always been king,

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Speaker 7: it will continue to be king. And US dollar cash

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Speaker 7: is still the king because it is still the.

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Speaker 8: World's reserve currency.

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Speaker 7: Other countries might try to take that position, but I

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Speaker 7: don't think it's going to happen anytime soon. So sitting

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Speaker 7: in cash is no shame, and making some decent returns

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Speaker 7: into your money market fund while the dust settles absolutely straightforward.

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Speaker 6: Play Carol, thank you so much for joining us. Krol

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Speaker 6: Pepper found and CEO of Pepper International, joining us again.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Colocklay, and Android

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Speaker 1: Otto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 6: The story today for global markets, Global Wall Street are

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Speaker 6: these tariffs and the economic impacts that they may or

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Speaker 6: may not have. Brian Whalen joins US. He's a chief

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Speaker 6: investment in the generalist portfolio manager at tc W in

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Speaker 6: Los Angeles. Hey, Brian, I know you and your team

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Speaker 6: you think kind of about global markets here, How do

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Speaker 6: you guys think about kind of just tariffs in general.

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Speaker 6: We're not really sure what degree they'll be imposed for

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Speaker 6: how long? How do you guys factor that into your calculus?

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Speaker 3: It's hard? What a morning? Huh? Yeah? Can you can

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Speaker 3: you believe deep steak was just a week ago? Right?

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Speaker 5: Monthly?

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Speaker 9: Look, I think you know the term we've been using

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Speaker 9: around here. We're using the term fat tails, which is

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Speaker 9: just kind of a reflection of like in a traditional

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Speaker 9: investing environment, you've got your base case scenario, maybe you've

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Speaker 9: got a seventy percent probability assigned to it, and then

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Speaker 9: you got your two other options. You know, you got

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Speaker 9: fifteen percent of the downside fifteen percent the other way.

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Speaker 9: I mean, you know, with regards to you know, this

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Speaker 9: new administration and the volatility, fat tails for US means

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Speaker 9: we still have our base case, but you know there's

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Speaker 9: a lower probability on that and then we've got, you know,

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Speaker 9: maybe something like a fifty in the middle, and then

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Speaker 9: twenty five we have this US exceptionalism, high growth, low inflation.

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Speaker 9: On the other side, maybe a lot of this towerst

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Speaker 9: for instance, cause I'll pull down on both domestic and

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Speaker 9: international growth and it up ends the job market and

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Speaker 9: maybe we have a recession.

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Speaker 3: And so for us as portfolio managers, what we.

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Speaker 9: Think about at TCW is like, you still got.

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Speaker 3: To instruct around your base case.

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Speaker 9: But in an environment, particularly one where it's not that

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Speaker 9: expensive to buy optionality, volatility is still low, at least

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Speaker 9: the priced one. You try to do things that you

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Speaker 9: know help your portfolio not lose so much and if

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Speaker 9: it goes one way, or maybe even gain if it

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Speaker 9: goes another. And that's kind of the things we've been

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Speaker 9: doing the last couple of months, have to do about

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Speaker 9: putting things in place in the portfolio that actually help

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Speaker 9: even if our base case isn't realize.

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Speaker 2: So, Brian, why is volatility And I'm just looking at

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Speaker 2: the move in next with the JP Morgan volatility and next,

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Speaker 2: why is it low?

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Speaker 9: Well, a lot of that, I think you know what's transpired,

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Speaker 9: you know, from the FED, particularly once we got into

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Speaker 9: the late months of twenty twenty four, and even what

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Speaker 9: you just heard them say, you know, powisay last week,

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Speaker 9: which is basically, you know, we're good, which is, you know,

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Speaker 9: we kind of like where you know, the FED funds

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Speaker 9: is right now.

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Speaker 3: We still think it's restrictive.

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Speaker 9: But given all the other volatility going on prickly tariffs

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Speaker 9: for instance, we're going to kind of.

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Speaker 3: Sit here and kind of watch things. So what that's

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Speaker 3: done is it's anchored.

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Speaker 9: It's provided stability to the front end of the yield

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Speaker 9: curve and particularly somewhere between like two years and five years.

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Speaker 9: It's anchored there, and it's left the rest of the curve,

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Speaker 9: the ten year and the thirty to kind of move

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Speaker 9: up and down. And so you know, with the fact

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Speaker 9: that the Fed has moved into this kind of pause

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Speaker 9: slash easing mode, it's led to the implied volatiler in

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Speaker 9: the rates market to be relatively low. However, what I

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Speaker 9: would say is, and we can get back to tariffs

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Speaker 9: and other things going on the market, It's like that's

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Speaker 9: conditional upon risk assets performing well. And if we get

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Speaker 9: moves and risk assets, particularly to the downside, you could

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Speaker 9: see that implied ball in the rates market could go

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Speaker 9: away and rates.

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Speaker 3: Move abruptly if we get down.

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Speaker 9: Drafts and equity markets are widening and credit spreads.

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Speaker 6: So talk about credit here, Obrian. How much credit risk

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Speaker 6: are you guys taking these days? When you look at it,

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Speaker 6: you know, to your treasure you're still getting four and

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Speaker 6: a quarter percent. How much above and beyond that do

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Speaker 6: you want to take in terms of credit risk?

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Speaker 9: You know, one of our favorite trades right now is

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Speaker 9: not to have that on.

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Speaker 3: It's not to take credit risk.

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Speaker 9: You know, I think, I think you know you're being

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Speaker 9: you know, fairly well compensated to take no credit risk,

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Speaker 9: which is which is effectively you know, treasuries, and you

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Speaker 9: know you've never been paid less, and that's hard to

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Speaker 9: believe given you know, deep seak a week ago and

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Speaker 9: terror volatility of the last twenty four hours, and you know,

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Speaker 9: Trump's being Trump, and all of a sudden, you know,

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Speaker 9: we spent twenty four hours cranking through the models to

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Speaker 9: determine how these tarifs are going to impact inflation and growth,

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Speaker 9: and all of a sudden we get a big you know,

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Speaker 9: just kidding, you know, and that creates of all So

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00:19:54,040 --> 00:19:56,560
Speaker 9: you've never actually gotten paid less to take credit risk

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00:19:56,640 --> 00:19:58,439
Speaker 9: right now, you know, to get paid, you know, to

443
00:19:58,440 --> 00:20:00,600
Speaker 9: take it, to take exposure to kind of average, high

444
00:20:00,680 --> 00:20:03,879
Speaker 9: quality companies. Right now, it's about extra zero point seventy

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00:20:03,880 --> 00:20:07,040
Speaker 9: five of a percent of yield over treasuries and that's

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00:20:07,080 --> 00:20:11,119
Speaker 9: never been that low. So look, you win by buying

447
00:20:11,160 --> 00:20:15,040
Speaker 9: that right now if there is no VALL. You know,

448
00:20:15,080 --> 00:20:17,120
Speaker 9: if the next six to twelve months it's very low

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00:20:17,200 --> 00:20:19,800
Speaker 9: ball and you don't get uncertainty and markets don't move around,

450
00:20:19,840 --> 00:20:21,480
Speaker 9: and that's that's the carry trade.

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00:20:21,520 --> 00:20:24,159
Speaker 3: You win. You lose if.

452
00:20:24,040 --> 00:20:25,919
Speaker 9: We do get bouts of VALL and things bounce up

453
00:20:25,960 --> 00:20:27,960
Speaker 9: and down. Are particularly wider because when you buy, we

454
00:20:28,119 --> 00:20:31,359
Speaker 9: get in such a little premium of compensation for risk.

455
00:20:31,840 --> 00:20:34,000
Speaker 9: When spreads go from seventy five to maybe just one

456
00:20:34,080 --> 00:20:37,240
Speaker 9: hundred basis points one percent over treasuries, that's going to

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00:20:37,280 --> 00:20:39,480
Speaker 9: impact the value of your holdings.

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00:20:39,000 --> 00:20:41,520
Speaker 3: And you'll be wishing you saved your dry powder. You'll

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00:20:41,520 --> 00:20:42,200
Speaker 3: be wishing you.

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00:20:42,160 --> 00:20:45,159
Speaker 9: Bought treasuries instead of corporate bonds because you'd wish you

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00:20:45,160 --> 00:20:46,439
Speaker 9: could buy them at cheaper levels.

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00:20:47,080 --> 00:20:49,639
Speaker 2: All right, we really appreciate it. You're awesome. Brian Whale

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Speaker 2: and CIO and generalist portfolio manager at TCW's Fixed Income Group.

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Speaker 2: Great perspective on the fixed income market.

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