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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferroll and Lisa Brownwitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg terminal. Right now, the

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Speaker 1: conversation of the day for people clipping coupons. Kathy Jones joined,

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Speaker 1: just pianist and chief Fixed and Comes strategists at Charles Schwab. Kathy,

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Speaker 1: I'm gonna cut to the chase of Bloomberg Corporate Total

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Speaker 1: Return index is down eight point six percent, and I'm

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Speaker 1: gonna guess I've given up two and a half years

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Speaker 1: of coupon enjoying the price decline in in corporate bonds.

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Speaker 1: And there's the full faith and credit story as well.

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Speaker 1: The great dynamics here, and folks, this is Tuesday Dynamics

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Speaker 1: on Bloomberg Surveillance with Kathy Jones. The great dynamic here,

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Speaker 1: Kathy is with the rising coupon, it's okay to step

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Speaker 1: in and buy even with further price erosion, because now

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Speaker 1: I've got a decent coupon. Are we there? Yet yeah,

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Speaker 1: I think we're getting there. So we have recently pivoted

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Speaker 1: towards adding more duration to portfolios and to um being

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Speaker 1: pretty outspoken about income investors finding income and things like

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Speaker 1: investment great corporate bonds, preferred securities, even high yield if

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Speaker 1: you're willing to take some of the risks. We prefer

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Speaker 1: the upper end of high yield rather than the lower end.

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Speaker 1: But all things considered, we think a lot's been priced

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Speaker 1: in in this market, and we do see growth slowing

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Speaker 1: down in the second half of the year a bit,

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Speaker 1: and we you know, we had a brutal first quarter,

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Speaker 1: so in fixed income, so we think now of time

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Speaker 1: to step in and capture some of that income. I mean,

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Speaker 1: you're gonna capture coupon. What's a decent corporate coupon right now?

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Speaker 1: What's the yield I can expect? I think on the

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Speaker 1: index sits around three point six plus, so you can

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Speaker 1: be in uh, you know, in some depending on where

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Speaker 1: you want to be. In investment grade, you can be

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Speaker 1: three and a half up to four perhaps UM and

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Speaker 1: you know, preferred you're looking at five or six. So

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Speaker 1: these are pretty decent if you expect, as we do,

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Speaker 1: that inflation will trend lower later in the year, those

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Speaker 1: those yields and will look pretty attractive. I mean on

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Speaker 1: a price basis, Lisa, I'm looking at a very famous

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Speaker 1: American name with a twelve year piece of paper coupon

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Speaker 1: of one in three aces the yield, and you've enjoyed

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Speaker 1: a price move from one sixteen down to nineties seven.

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Speaker 1: You've taken out sixteen of price to enjoy your higher yield.

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Speaker 1: Bond shopping on line, we're talking Fox. I've got my

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Speaker 1: Blue SMP book from pim Box. Pimp Fox on my guest,

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Speaker 1: so I can look up my Boise Cascade bind. Okay, well,

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Speaker 1: I'll let you do that. But Kathy, I want to

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Speaker 1: go back to what Frances Donald was saying, and you

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Speaker 1: really touched on that that you basically are in her camp,

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Speaker 1: that you do think that inflation is going to roll over,

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Speaker 1: that there is a transitory nature to this that was

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Speaker 1: prolonged by the pandemic moving to the crisis, and that

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Speaker 1: that was really what was going on with the conflict

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Speaker 1: driven inflation that we're seeing. Do you also think the

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Speaker 1: FED will not be able to raise rates and nearly

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Speaker 1: as much as people are pricing in before they get

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Speaker 1: concerned about growth concerns. Yeah, you know, we've been in

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Speaker 1: that camp all along. I guess I should say I've

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Speaker 1: been in that camp all along, and that's everybody on

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Speaker 1: my team agrees with me. But um, I think that

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Speaker 1: you know, the FED now has to come out then

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Speaker 1: blazing declaring that they're going to conquer inflation because that's

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Speaker 1: their job and I'm sure make me in it. But

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Speaker 1: when fish comes to shove and we get to lower

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Speaker 1: inflation and slower growth and rolling over in some of

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Speaker 1: these sectors of the economy that are particularly interest very sensitive,

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Speaker 1: will they really be able to follow through on that.

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Speaker 1: Will they actually need to follow through on that, or

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Speaker 1: can they slow down the case? Then you add in

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Speaker 1: q T, which I think is being underestimated as a

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Speaker 1: factor here, and um, you've got a lot of tightening

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Speaker 1: in liquidity coming into the market just in the last

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Speaker 1: couple of months and maybe over of course the next

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Speaker 1: couple of months. So we get to the end of

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Speaker 1: the year, I think the pictures that will look a

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Speaker 1: lot different and the fab will be able to slow

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Speaker 1: down a bit. Just quickly here, Kathy, we were talking

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Speaker 1: to Francis about how she thinks we're getting close to

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Speaker 1: the peak that we're going to see in tenure yields

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Speaker 1: A pretty bold call when you've got the likes of

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Speaker 1: credit Sueee coming out in the opposite side, say, we

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Speaker 1: could see two point eight percent on the tenure because

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Speaker 1: of the same thing that you just mentioned, quantity of tightening.

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Speaker 1: Where do you fall on this, Yeah, I don't think

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Speaker 1: TATA tightening is negative for the long end um. I

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Speaker 1: don't see that supply wing on the long end. Most

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Speaker 1: of it. At the short end of the curve, they've

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Speaker 1: got an MBS and we don't know, you know, what

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Speaker 1: they're going to do with that yet, but that's probably

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Speaker 1: a lot shorter duration than it looks like on the

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Speaker 1: balance sheet. So I don't think QT weighed so much

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Speaker 1: on the long end of the curve. And if you

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Speaker 1: go back to the last period of QT, we actually

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Speaker 1: saw some curve flattening and yields fall. So I think

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Speaker 1: QT is more of a liquidity drain and that's a

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Speaker 1: slowing growth story. And you know, don't don't forget we're

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Speaker 1: getting tightening liquidity and higher rates globally, so that can

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Speaker 1: compound it on top up the war situation, where you know,

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Speaker 1: we really have a lot of uncertain So, Cathy, you

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Speaker 1: think that we've seen the peak so far in ten

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Speaker 1: your yields, I think we're pretty close to it. So

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Speaker 1: you know we're Our call for this year was around

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Speaker 1: two in a quarter and the ten year ending UH

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Speaker 1: to an a quarter or so on the ten year,

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Speaker 1: so we think as rates move of that to what

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Speaker 1: it's two and a half or above UM, we'll be

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Speaker 1: extending delation. Cathy Jones, joshuav Kathy, wonderful to catch up

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Speaker 1: with you as a wis. Andrew Weiss joins us to

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Speaker 1: this morning, vice president at Carnegie and dommad for International Peace. Andrew,

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Speaker 1: I want to talk about autocracy from the past. It's Hitler,

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Speaker 1: it's Stalin. Putin has mentioned this, We have Putin, we

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Speaker 1: have a massive win in Hungary with Orbon as well.

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Speaker 1: How do we control, manage, or end these outcomes of

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Speaker 1: autocracy as we see in Ukraine. So it's great to

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Speaker 1: be here with you. Tom. I am always skeptical that

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Speaker 1: the United States has within its power great ability to

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Speaker 1: shift the ultimate political direction of Russia. And as much

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Speaker 1: as what President Putin is doing in Ukraine is horrible,

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Speaker 1: and as much as the world must level, whatever tools

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Speaker 1: it has to try to slow down Russia's war in Ukraine.

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Speaker 1: We need to be realistic that regime change in Russia

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Speaker 1: is something that has looted Western policymakers now throughout Putin's tenure,

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Speaker 1: and every day Ludie Murputin wakes up when he comes

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Speaker 1: into work, he's mostly concerned about the safety and survival

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Speaker 1: of his regime, and he's prepared to escalate and do

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Speaker 1: things to protect himself against that threat. And that's been

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Speaker 1: basically what's been animating him throughout the past two decades.

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Speaker 1: If the people of Russia and the various peoples of

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Speaker 1: Russia find out what's going on, will they give him

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Speaker 1: support or will they walk away from Mr? Putin? We

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Speaker 1: need to be careful about what Russians are willing and

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Speaker 1: aren't willing to accept. And one of my colleagues at

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Speaker 1: Carnegie Mosca Center wrote about this very powerfully in Russian

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Speaker 1: earlier this week. Russians are living in an information vacuum,

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Speaker 1: and for the most part, they are doing that by choice.

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Speaker 1: They are not seeking out the truth. They don't believe

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Speaker 1: that their country is responsible for atrocities or war crimes

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Speaker 1: in Ukraine. And if we puncture, that information bubble, which

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Speaker 1: is a big if. I'm not sure that people in

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Speaker 1: Russia are prepared to take action to deal with the

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Speaker 1: problem of living in a country that's ruled by Vladimir Putin.

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Speaker 1: And that's just for a very simple reason. The instruments

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Speaker 1: of repression that Ludimur Putin has built up over the

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Speaker 1: past two decades are intimidating. They are prepared to use

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Speaker 1: violence and other measures to keep Russians off the streets

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Speaker 1: and to prevent political descent from spilling over into questions

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Speaker 1: of how their country is ruled. And you see that

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Speaker 1: level of fear among average people as well as the elite.

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Speaker 1: And so for the West to be banking on either

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Speaker 1: a split within the elite or bottom up pressure on

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Speaker 1: the regime to take care of our putent problem, I

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Speaker 1: think is is really unrealistic. The way we're going to

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Speaker 1: deal with our putent problem is action by Western leaders.

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Speaker 1: It's not going to come from within Russia itself. Unfortunately,

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Speaker 1: where does China fit into this? Andrew given the fact

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Speaker 1: that over the weekend and frankly yesterday the New York

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Speaker 1: Times put out an article talking about propaganda that China

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Speaker 1: has made that actually pays Vladimir Putin in a very

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Speaker 1: nice light for some of the party members. So I

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Speaker 1: think a lot of what China is providing right now

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Speaker 1: is moral support, as you say, in the propaganda sphere,

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Speaker 1: in terms of supporting Russia's lies about possible biological weapons

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Speaker 1: and things like that that it claims Ukraine has, all

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Speaker 1: of which is made up whole cloth. But when it

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Speaker 1: comes to the ways Russian needs help right now, the

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Speaker 1: main support China is going to be providing is by

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Speaker 1: providing the bid on Russian oil and gas resources, which

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Speaker 1: China advise on, you know, sort of at the moment

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Speaker 1: of as much as it wants from Russia. The longer

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Speaker 1: term problem for Russia is that China cannot be expected

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Speaker 1: to be the back stop and the fiscal authority for

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Speaker 1: its its government. And so as Russia comes under increase

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Speaker 1: pressure from Western sanctions, it's going to be turning to

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Speaker 1: China out of desperation. It's going to be looking to

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Speaker 1: China to be its its savior. I'm so I would

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Speaker 1: be very surprised, particularly in the technological area, which is

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Speaker 1: affected by Western export controls, if Chinese firms are gonna

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Speaker 1: be willing to step up and provide inputs to the

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Speaker 1: Russiant industrial sector that it can't buy now from the West. Andrew,

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Speaker 1: just to wrap things up, and we only have a

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Speaker 1: little bit of time, what do you think the West

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Speaker 1: could do to bring this to an end more quickly.

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Speaker 1: I think that the West is going to keep ratcheting

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Speaker 1: up sanctions. The problem isn't is that there isn't a

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Speaker 1: ton of headroom left short of a full scale embargo

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Speaker 1: on the Russian economy. And so if the West is prepared,

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Speaker 1: for example, to cut off all imports of Russian oil

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Speaker 1: and gas, which I think Germany is not willing to

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Speaker 1: countenance at this point, If the West is not prepared

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Speaker 1: to go to that length, I think the most likely

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Speaker 1: outcomes that this more simply drags on, and over time

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Speaker 1: it's likely to morph into something similar of the Balkans

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Speaker 1: Wars of the nies on a much vaster scale. Andrew,

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Speaker 1: we appreciate your time. It's a clinic thrill of us, Andrew.

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Speaker 1: Watch that of the Econogy Endowment. It's Francis Donald, Global

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Speaker 1: Chief Economists, Manual Life Investment. We're thrilled that she could

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Speaker 1: join us this morning. Francis, I love what you say

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Speaker 1: about Jerome Powell, He's going to be boxed in and

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Speaker 1: the to distill your really good paragraphs, you're looking for

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Speaker 1: a steep downturn in manufacturing. Expand on that. Every leading

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Speaker 1: indicator we have of p M I S tells us

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Speaker 1: they're heading lower. Frankly, every leading indicator we have of

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Speaker 1: the economy tells us that it's heading sharply lower in

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Speaker 1: the next six months. And that means, as you said earlier,

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Speaker 1: that a lot of the information we have, like FED

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Speaker 1: minutes or how data was in January or February or March,

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Speaker 1: is really looking sale to me. When I look forward

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Speaker 1: over what the FED is facing in the next six

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Speaker 1: to nine months, We're gonna have still inflation, but their

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Speaker 1: mandate focus is going to have to shift back towards

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Speaker 1: the employment side of the picture as growth really softens.

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Speaker 1: And that's why if you're marking to market shirt that

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Speaker 1: looks like it could go eight nine times this year,

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Speaker 1: if you're looking forward into what the settle facing, much

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Speaker 1: more difficult to see how they're going to be able

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Speaker 1: to hike either as much as they want to or

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Speaker 1: the market has prices. The anti Holland horse, do they

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Speaker 1: come on and say one and done if they go

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Speaker 1: fifty beeps, or do they play it out, say into

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Speaker 1: the summer and then go enough. That pivot probably happens

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Speaker 1: closer to the end of Q two or Q three

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Speaker 1: because they're gonna need cover to do it. You can't

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Speaker 1: make a one eight until the data has changed. I

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Speaker 1: think they may start focusing on how the nature of

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Speaker 1: inflation has shifted. We're moving from COVID inflation to conflict inflation.

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Speaker 1: That's a really important inflection point. It's a different composition

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Speaker 1: of inflation. In mind you, it's much more damaging to

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Speaker 1: growth and COVID inflation. Hey, if you didn't want to

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Speaker 1: run kitchen or build a pool, or buy a used

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Speaker 1: car while you just went without. With conflict inflation, we're

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Speaker 1: going to see a lot more demand destruction. Even its

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Speaker 1: headline inflation declined. The feed is going to have to

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Speaker 1: face that full on. The prentis if we clarify the

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Speaker 1: reaction function of this FED given the opportunity, given the

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Speaker 1: decision a toxic one at that, to curtail inflation or

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Speaker 1: safety economy from recession, which one would they choose? Well,

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Speaker 1: Paula has suggested that he's more in the Volker Camp

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Speaker 1: than save growth Camp. I think it's really interesting that

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Speaker 1: we've moved from oh, it's gonna be the war in

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Speaker 1: twenties and it's a reflation trade for years to most

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Speaker 1: shops debating whether it's a technical recession or just the

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Speaker 1: growth slowdown in a period of time. It does appear

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Speaker 1: that the central bank is willing to sacrifice growth. That's

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Speaker 1: how monetary policy effectively works. And this market telling us

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Speaker 1: it's pricing and cuts over the next few years already

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Speaker 1: suggests that the reaction function the FED has so far

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Speaker 1: told us is that, yeah, it's willing to sacrifice growth

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Speaker 1: in order to con inflation. I think that makes sense

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Speaker 1: now when inflation is really high and growth feels like

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Speaker 1: it's repeating, it's not gonna feel like it makes as

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Speaker 1: much sense from three to six months Francis JP Morgan

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Speaker 1: taking some comfort in the upcoming mechanical peak in inflation.

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Speaker 1: That's a mechanical peak, Francis, Can you run us through

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Speaker 1: when the base effects not to kick in the other

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Speaker 1: white and when you suggest that mechanical peak inflation would develop, Oh,

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Speaker 1: it's around March or April. But again, I really did

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Speaker 1: take a lot of comfort in that mechanical peak. I've

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Speaker 1: been in the transitory camp, even though it kind of

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Speaker 1: became bad to say that because COVID inflation was always

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Speaker 1: going to be transitory. But we really have to move

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Speaker 1: away from the mechanical peaks and inflation towards the compositional nature.

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Speaker 1: We've been complacent about the damaging impacts of inflation on

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Speaker 1: growth because where inflation was coming from was not necessary goods.

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Speaker 1: But this conflict inflation is going to create a much

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Speaker 1: bigger drag on growth, even if it's a lower number.

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Speaker 1: And that's why the FET is going to have this

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Speaker 1: covered for a pivot later this year. Inflation will look

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Speaker 1: a little bit better on the surface. We're all going

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Speaker 1: to feel it a little bit more in our day

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Speaker 1: to day lives. For TIS, I'm trying to game out

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Speaker 1: forty six months from now, and you think that we're

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Speaker 1: going to start to see the FED shifts stances back

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Speaker 1: to something that seems more concerned about the labor market

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Speaker 1: than simply inflation. How high do you expect the inflation

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Speaker 1: rate to be if we do get those base effects

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Speaker 1: the other way. Well, I'll give you an example. Prior

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Speaker 1: to Russia's invasion of Ukraine, we had inflation and may

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Speaker 1: at the bottom and the two percent range at the

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Speaker 1: end of this year. Now it's closer to the four

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Speaker 1: to five percent range. But when they do the same

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Speaker 1: the exercise of looking out five years, when we get

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Speaker 1: to three and beyond, our inflation forecast is back to two.

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Speaker 1: On March sixteenth, cheer Powell was asked how much of

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Speaker 1: this year's inflation do you expect to come down because

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Speaker 1: of your rate heights? He said, the most important thing,

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Speaker 1: he said in months, Well, we actually can't combat this

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Speaker 1: year's inflation. We're trying to target the next few years.

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Speaker 1: The next two years are not the problem for inflation.

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Speaker 1: Inflation is a problem in two and there's very little

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Speaker 1: the FED can do about it. Francis, the reason why

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Speaker 1: transitory became a dirty word is because the FED got

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Speaker 1: it wrong. The FED got inflation wrong on many levels

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Speaker 1: in terms of what their policy was. This is the

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Speaker 1: accusation in a lot of academic and frankly, market circles.

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Speaker 1: Where does the credibility come from for the Federal Reserve?

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Speaker 1: For them to make that pivot at a time when

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Speaker 1: inflation is still four to five percent, Well, what a challenge, right,

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Speaker 1: and all central banks understand that they can high rates

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Speaker 1: as much as they want, it's not going to bring

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Speaker 1: down energy prices. And that's why paying attention to long

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Speaker 1: term inflation expectations is so key, because central banks will

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Speaker 1: continue to try to convince us that they have some

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Speaker 1: control over that the Lisa. This brings to question a

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Speaker 1: longer term issue that I think central banks are going

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Speaker 1: to have to face, which is the inflation of the

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Speaker 1: next ten years looks different than the inflation of the

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Speaker 1: past ten years. It's going to be focused on the

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Speaker 1: globalization and E s G trends much more supply side,

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Speaker 1: much more global than the inflation week saying frankly the

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Speaker 1: past several decades. So there is going to come into

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Speaker 1: question how much control do central banks have on future

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Speaker 1: inflation post COVID inflation than they did before. Let's hope

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Speaker 1: they can control that long end of the inflation curve.

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Speaker 1: So far, we're still seeing the break even inverted. That's

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Speaker 1: good news, but I suspect we're gonna hear a lot

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Speaker 1: more comments about their extending mandate. That wouldn't surprise me.

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Speaker 1: So Francis, let's put the other hand, what's the big

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Speaker 1: market kill? We are moving more defensively, So I tweeted yesterday,

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Speaker 1: recession or no recession on your outlook, growth is gonna

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Speaker 1: slow pretty significantly, and that means moving more defensively as

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Speaker 1: we head into that growth slow down. I do not

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Speaker 1: believe it is entirely priced right now, and I thinke

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Speaker 1: sure we could see some upside in yield, especially as

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Speaker 1: we see ongoing hawk and rish from the Fed. When

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Speaker 1: you look at that forty year down trend in that

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Speaker 1: tenure yield, I'm a believer we can't yet break out

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Speaker 1: of it. That means we're probably near the peak in

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Speaker 1: this rates mooth. Then we go. Francis don't know of

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Speaker 1: manual life investment management with a big colt right at

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Speaker 1: the end there, Francis, thank you very much. Into the

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Speaker 1: second quarter. What to do after negative eight percent and

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Speaker 1: bond price after challenges for the equity market with all

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Speaker 1: of us news, Sarah Hunt joins portfolio manager of the

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Speaker 1: Alpine Woods. Are the real tangible effort of what do

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Speaker 1: you do with a portfolio? What is the single change

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Speaker 1: you've made April one. I'm not sure that we've made

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Speaker 1: any single changes in April one. I mean, if you

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Speaker 1: think about the larger economic backdrop which you were just

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Speaker 1: discussing with commodities and everything else. You've had years of

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Speaker 1: history where the O E C. D countries have basically said,

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Speaker 1: we're not going to do a lot, We're gonna try

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Speaker 1: to move some of this stuff like mining and oil

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Speaker 1: production outside of these areas. And now this is coming

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Speaker 1: back to be a real problem when you start to

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Speaker 1: have geopolitical problems like we're seeing right now with Russian

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Speaker 1: the Ukraine, which is just horrible, and countries now trying

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Speaker 1: to figure out what do I do now that I've

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Speaker 1: outsourced all of my energy production and some of the

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Speaker 1: other production to other places. We had already been moving

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Speaker 1: in the direction of realizing that the FED was raising

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Speaker 1: rates and getting to more stable things in the portfolio,

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Speaker 1: higher cash flows, better balance sheets, things of that nature.

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Speaker 1: So it's not a huge change right now, but it

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Speaker 1: is looking at how do we take advantage of what

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Speaker 1: we think is coming in the future. And unfortunately, I

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Speaker 1: don't see energy prices coming down that quickly. I don't

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Speaker 1: see food prices coming down that quickly, and I think

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Speaker 1: that's gonna be a real problem globally, and it's gonna

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Speaker 1: be a problem ultimately for equities as well. Let's talk

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Speaker 1: about where that problem is concentrated and what you're pulling

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Speaker 1: back from, Sarah, can you be more specific? Well, So

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Speaker 1: we added some energy towards the beginning of the year

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Speaker 1: because it was clear that even before the Russia Ukraine situation,

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Speaker 1: the fact that there has been a pullback in the

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Speaker 1: investment in the hydrocarbon space because people are looking for

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Speaker 1: newer ways to produce energy, has meant that you've seen

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Speaker 1: an under investment, and as prices were starting to go up,

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Speaker 1: it started to look like that could be something that

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Speaker 1: was going to continue, and the Russian Ukraine situation just

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Speaker 1: exacerbated that. So we added some energy in the beginning

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Speaker 1: of the year. There's also places where on the technology side,

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Speaker 1: you saw some stocks come down quite dramatically in the

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Speaker 1: last couple of months. So we looked at some of

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Speaker 1: those large franchises like Adobe that we didn't have representation,

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Speaker 1: and we put some money to work there as well.

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Speaker 1: What do you make in the movement a home build

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Speaker 1: US Yet today it's been pretty great, So Sarah talk

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Speaker 1: about the economy to eat in America. We told it's great,

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Speaker 1: but the forward look, given rising interest rates, the homebuilders

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Speaker 1: have been hammered. Well, I think that. I mean, we'll

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Speaker 1: see how that actually plays out. But similar to some

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Speaker 1: of the technology stocks getting hit very early in the

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Speaker 1: year on the back of the potential of rising interest rates, um,

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Speaker 1: I think that part of the problem with housing is

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Speaker 1: that that playbook says that when rates go up, housing

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Speaker 1: comes down. But you've had such under investment and there's

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Speaker 1: such a demand for for housing, especially on the lower end,

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Speaker 1: and the unintended consequences of the Great Financial Crisis making

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Speaker 1: single family housing and investment class has also taken the

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Speaker 1: ability for people to buy those single family houses out

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Speaker 1: of the market. So I think the demand is there.

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Speaker 1: The question is going to be what happens with pricing, materials, labor,

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Speaker 1: All those costs are going higher. What's the best head

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Speaker 1: right now? Sarah? If there is this feeling that we

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Speaker 1: are heading into a slowdown, is it on the margins

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Speaker 1: certain US equities? Well, I think that we go back

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Speaker 1: to the fact that once again the US equity market

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Speaker 1: tends to be the strongest when things are weakest globally.

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Speaker 1: And I think that the U s economy, even with

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Speaker 1: the challenges that it's seeing, it is not seeing the

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Speaker 1: problems that you're seeing in some of the emerging markets.

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Speaker 1: You do have debt issues in the United States, but

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Speaker 1: it's not going to be as bad as dollar denominated

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Speaker 1: debt that's coming in other places. So I think US

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Speaker 1: equity markets are a decent place to hedge. It's just

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Speaker 1: a challenge, you know, when you look at the rest

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Speaker 1: of the globe, It's not so much how great the

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Speaker 1: US is, it's how much more of a challenge the

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Speaker 1: rest of the globe is facing right now? What are

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Speaker 1: you doing with cash right now? Are you hoarding it

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Speaker 1: or are you actually deploying it? Well, I am a

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Speaker 1: believer that cash does have a place in portfolio management.

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Speaker 1: Not a huge amount of cash, but we are on

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Speaker 1: the margins higher on our cash positions than we have

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Speaker 1: and just because we think that there's more volatility, and

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Speaker 1: if you want to be able to take advantage of

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Speaker 1: that volatility, you'd like to have some cash sitting around

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Speaker 1: because the drawdowns. We've seen some drops that happen very

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Speaker 1: quickly and then rebounded very quickly, and it's very difficult

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Speaker 1: in those moments to try to sell something that's down

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Speaker 1: to buy something else that's down. So we have some

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Speaker 1: cash on the portfolios right now and probably a little

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Speaker 1: higher than normally, Sir. A lot of good studies on

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Speaker 1: how out of vogue equities our Liza and Saunders just

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Speaker 1: out with a great chart on Twitter on that what

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Speaker 1: is the level of unloved nous of equities right now

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Speaker 1: and what do you do with that knowledge? Well, it's

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Speaker 1: a relative game because there's equity participations does not go

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Speaker 1: across the board. I mean, if you look at some

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Speaker 1: of the problems with the US is having right now,

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Speaker 1: that a lot of people do not participate in the

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Speaker 1: stock market. And I think that fixed income, which has

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Speaker 1: come down so much, is starting to get a little

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Speaker 1: bit more of a bid here because rates have gone up.

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Speaker 1: But the concern that the bet is going to keep

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Speaker 1: hiking makes the bond market scene as volved hell as

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Speaker 1: the stock market. So I think if you look back

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Speaker 1: at what's happened over the last six months and not

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Speaker 1: the last couple of years, because I'd argue coming out

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Speaker 1: of COVID, you're not going to expect those kind of

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Speaker 1: equity returns again. But I think that you've got some

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Speaker 1: real decent growth in the equity market, even if it's

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Speaker 1: not going to be the stellar growth that you've seen

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Speaker 1: in the last couple of years. I think you've at

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Speaker 1: least got some ways to participate in companies that can grow,

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Speaker 1: and I think that's gonna end up being important, especially

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Speaker 1: given a backdrop and fixed income, which is going to

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Speaker 1: be I think more volved. Sara Hunt of val palm

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Speaker 1: Wood's Capital Investors. Thank you. This is the Bloomberg Surveillance Podcast.

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Speaker 1: Thanks for listening. Join us live weekdays from seven to

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Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

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Speaker 1: each day from six to nine am for insight from

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Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

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Speaker 1: dot com, and of course on the terminal. I'm Tom

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Speaker 1: keene In. This is Bloomberg