WEBVTT - Single Best Idea with Tom Keene: Ira Jersey & Pat Haskell

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>A single best idea, and since we've had two hours sleep,

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<v Speaker 2>I think two nights in a row is a collective

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<v Speaker 2>team here at Bloomberg's Surveillance that we're gonna make this

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<v Speaker 2>quick today, but we can't because the guest quality today

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<v Speaker 2>was so much. I can't say enough about the conversation

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<v Speaker 2>with ed El Husseini and Ira Jersey. We broke a

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<v Speaker 2>rule at the beginning of the nine o'clock hour and

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<v Speaker 2>we talked very sophisticated short term paper fixed income stuff

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<v Speaker 2>like what pros in the street talk about. We really

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<v Speaker 2>try to stay jargon free, and ed ed L. Husseini

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<v Speaker 2>of Columbia Thread Needle was actually quite good about that.

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<v Speaker 2>I can't say it about Ira Jersey. He was on fire.

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<v Speaker 2>He is a true expert for Bloomberg Intelligence on the

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<v Speaker 2>short term market, what I call the trust market. And

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<v Speaker 2>you know who's looking at that right now, the Fed.

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<v Speaker 2>Here's Ira Jersey on the FED.

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<v Speaker 3>I think the Federal Reserve has a job to do here,

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<v Speaker 3>and it's more of a traditional job that we've kind

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<v Speaker 3>of forgotten about over the last seventeen or eighteen years,

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<v Speaker 3>and that's that they are the lender of last resort

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<v Speaker 3>and who are they going to lend to at this point. Well,

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<v Speaker 3>they've created some liquidity programs that just haven't worked the

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<v Speaker 3>way that they had hoped. So there's the standing REPO

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<v Speaker 3>facility that they thought would be able to replace the

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<v Speaker 3>traditional open market operations, liquidity operations that they had done

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<v Speaker 3>every day. They used to do these operations every single

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<v Speaker 3>day prior to two thousand and eight. But it's not

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<v Speaker 3>working because it's design. It has design flaws, and you

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<v Speaker 3>know that's probably too wonky for most of your listeners.

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<v Speaker 3>But let's think about the Federal Reserve as a first

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<v Speaker 3>step doing traditional open market operations, just like it did

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<v Speaker 3>after the REPO hiccup in twenty nineteen. So they do overnights,

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<v Speaker 3>they do one week repos. They basically they basically allow

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<v Speaker 3>balance sheets to expand a little bit for people to

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<v Speaker 3>take advantage of relative value opportunities in the treasury market.

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<v Speaker 3>And I agree with Ed that is the you know,

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<v Speaker 3>that would be a beneficial outcome. The second thing that's

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<v Speaker 3>very easy to do that you know, I hope that

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<v Speaker 3>the FSOC, the Financial Stability Oversight Council, gets together in

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<v Speaker 3>an emergency meeting soon and says, hey, let's do something

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<v Speaker 3>that we were thinking about doing anyway, and just get

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<v Speaker 3>rid of the supplementary leverage ratio from treasury. So exempt

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<v Speaker 3>treasuries from some of the bank capital rules, that allows

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<v Speaker 3>balance sheets to expand. It incentivizes dealers and banks to

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<v Speaker 3>actually buy some treasuries. Those are two easy things that

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<v Speaker 3>could be done today, right, So it's not And those

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<v Speaker 3>aren't things that are unusual either. We did do them

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<v Speaker 3>in March of twenty twenty.

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<v Speaker 2>The advantage of a podcast, you can rewind it and

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<v Speaker 2>listen to that again. That is a window into the

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<v Speaker 2>adult perspective of Bloomberg Intelligence. There unfixed income our Jersey,

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<v Speaker 2>but Gina Martin Adams today, inequities, Damien Sassauer and em

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<v Speaker 2>these people are grizzled Wall Street pros. We rarely do that,

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<v Speaker 2>but you just got a window into the inside baseball

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<v Speaker 2>and the trust market. That's what we try to do

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<v Speaker 2>here at Bloomberg Surveillance. We also like to look at

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<v Speaker 2>people's biography. Pat Haskell is at Blackrock and yes it's

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<v Speaker 2>municipal bonds, but far more than that, he has decade

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<v Speaker 2>of experience out of Union College of being on desks

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<v Speaker 2>and with a tension we saw this morning at four am,

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<v Speaker 2>five am to worry about hedge funds and all. It

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<v Speaker 2>was a joy to have Pat Haskell with us, just

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<v Speaker 2>to give perspective across previous crises. Here the gentleman from Blackrock.

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<v Speaker 4>If we step back, one of the great traders I

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<v Speaker 4>work with early in my career and a client of mine,

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<v Speaker 4>always said, first rule of trading always fade emotion. So

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<v Speaker 4>if we step back, now we think about this and

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<v Speaker 4>we're like, all right, what's going to happen? Is a

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<v Speaker 4>recession likely to result from this?

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<v Speaker 2>Yes?

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<v Speaker 4>Is the FED likely to have lower rates a year end?

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<v Speaker 2>Yes?

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<v Speaker 4>So when I think about that and I back into

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<v Speaker 4>my market and you look at some of the levels

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<v Speaker 4>that are available today, super attractive. And if you're going

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<v Speaker 4>to take a CounterPunch at this market and you're going

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<v Speaker 4>to buy something with a little bit of some high

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<v Speaker 4>quality spread, you're going to do something that's not affected

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<v Speaker 4>by global supply chains. What's that essential services immunities.

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<v Speaker 2>He repeated that a number of times, I don't have

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<v Speaker 2>the exact piece in front of me, but he mentioned

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<v Speaker 2>Pat mentioned a New York City muni that has been

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<v Speaker 2>so beat up and he believes it's of quality. He said,

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<v Speaker 2>it's been so beat up it generates a ten percent

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<v Speaker 2>equivalent return in that old triple text free New York state.

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<v Speaker 2>This is single best idea across nation and our commute.

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<v Speaker 2>Thank you so much for listening on YouTube and on

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<v Speaker 2>YouTube podcasts. It is single best idea.