Speaker 1: Hello, and welcome to another episode of the Odd Blots podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe Wisenthal. So, Joe, we
Speaker 1: are recording this on April nineteenth, and we are firmly
Speaker 1: in the middle of bank earning season, and so far
Speaker 1: it seems pretty good.
Speaker 2: You always know it's going to be a good one
Speaker 2: when we have to state the data. That's a sign.
Speaker 2: It's like, Okay, we're right in the fi stuff is happening.
Speaker 2: We're talking about news. It's going on right now. This
Speaker 2: is not some big theoretical thing where we're going to
Speaker 2: be talking about some ancient economic theory from one hundred
Speaker 2: years ago. This is right now.
Speaker 3: That's right.
Speaker 1: So you know, obviously we had the banking crisis in March,
Speaker 1: and we have seen some signs of distress in the
Speaker 1: financial system start to fade since then, so things like
Speaker 1: borrowing from the discount when that has gone down from
Speaker 1: the peak that we saw at the end of last month.
Speaker 1: And then of course, if you'd been listening to all
Speaker 1: lots before then, you would have known that discount lending
Speaker 1: was ticking up for months, even before March. But the
Speaker 1: point is that if you look behind some of these headlines,
Speaker 1: headlines about bank earnings, headlines about you know, discount borrowing
Speaker 1: starting to come down, some signs of strain beginning to evaporate.
Speaker 1: If you actually look into the guts of the financial system,
Speaker 1: there are still some issues and some maybe suggestions that
Speaker 1: there are more problems to come, right.
Speaker 2: I think that's a really good summary. Early March with
Speaker 2: the Silicon Valley bank implosion and some other concerns like
Speaker 2: that was like fears of financial crisis, and it faded
Speaker 2: pretty quickly, like those acute fears. But then there are
Speaker 2: the other questions. It's like, okay, well, it's like all right,
Speaker 2: the banking system maybe is still chugging along, but what
Speaker 2: does it mean for credit and how much of a
Speaker 2: mark will it leave on the sort of broader economy
Speaker 2: in general. That we had this moment and that all
Speaker 2: these sort of banks saw what can happen if they
Speaker 2: get on the wrong side of certain trends totally.
Speaker 1: And you know, banks are obviously big players in a
Speaker 1: lot of different markets, but a big one would have
Speaker 1: to be bonds, all sorts of different types of bonds,
Speaker 1: so everything from treasuries to T bills to commercial mortgage
Speaker 1: backed securities, to residential mortgage backed securities. And so the
Speaker 1: question is, if there's more regulatory scrutiny on all of
Speaker 1: these things, if there's more concern about interest rate risk
Speaker 1: and duration exposure, is the appetite, the bank appetite for
Speaker 1: those assets still going to be there. And even though
Speaker 1: we've seen some of the crisis headlines fade away, we
Speaker 1: know that use of the fed's reverse repo facility, for instance,
Speaker 1: the RRP is still pretty high, which means, you know
Speaker 1: a lot of money is still moving out of banks
Speaker 1: into money market funds and they're parking that at the FED.
Speaker 1: So the major disaster headlines may be gone, but there
Speaker 1: is still this evidence of strains in the background, worries
Speaker 1: about a credit crunch, a possible collateral crunch. Of course,
Speaker 1: those two things are interrelated. So we need to talk
Speaker 1: about all this. We need to get deep into the
Speaker 1: guts of the financial system and talk about what's going on.
Speaker 1: And I'm very pleased to say we have the perfect guest.
Speaker 1: We are going to be speaking with, Ben Emmons. He
Speaker 1: is a portfolio manager over at New Edge Wealth, and
Speaker 1: before that, for a long time he was a portfolio
Speaker 1: manager at PIMCO. I believe it sat fairly close to
Speaker 1: Bill Gross at the time, which must have been an
Speaker 1: interesting experience, to put it mildly, But someone who can
Speaker 1: talk to us about, you know, what is going on
Speaker 1: in this market? What do banks actually mean for bonds?
Speaker 1: Are we seeing signs of an unfolding credit crunch and
Speaker 1: collateral issues? So Ben, thank you so much for coming
Speaker 1: on all thoughts.
Speaker 4: Hi Tracia, Hi Joe, it's great to be here. Thank you.
Speaker 1: I'm glad we can finally get you on one thing
Speaker 1: I was wondering, just as I was sort of doing
Speaker 1: some of the prep for this episode, how do we
Speaker 1: actually measure credit in the banking system and what do
Speaker 1: we look at for signs of strains. I'm aware, for instance,
Speaker 1: that suddenly everyone has woken up to the fed H
Speaker 1: eight data, which hasn't gotten a lot of attention for
Speaker 1: a long time.
Speaker 3: But what are we looking at here?
Speaker 4: Yeah, the HA data, the arcane data. If you think
Speaker 4: about it, right, it's like, you know, you wouldn't really
Speaker 4: pay attention to it unless you We're in the nineteen eighties,
Speaker 4: a trader then and standing at the Xerox fax machine,
Speaker 4: eagerly seeing the money supply, A numbers coming off and
Speaker 4: then making assessment. Okay, what the FED is doing this
Speaker 4: with the FED is doing that, and that's a little
Speaker 4: bit what we deal with today too. Though you would
Speaker 4: say that that data now is important because this term
Speaker 4: called bank credit that's in there. There's seventeen trillion or
Speaker 4: a change is currently that accounts for all the loans
Speaker 4: and securities that the banks have on that books, and
Speaker 4: that's ultimately how they extend credit or contracted. So if
Speaker 4: you look at that number and the change and that
Speaker 4: which happened over the last months or so, it's kind
Speaker 4: of a few on abilion that changed it. That know,
Speaker 4: that's what people look at. That's a credit.
Speaker 2: Change, right. So every Friday, the FED releases this table
Speaker 2: called the HIGHT Data Assets and Liabilities of Commercial Banks
Speaker 2: in the United States. And it's interesting to get this
Speaker 2: historical perspective because back in the day forty years ago
Speaker 2: or whatever, the FED didn't give much in the way
Speaker 2: of communication about its policy. It just had some sort
Speaker 2: of money supply target and so people would look at
Speaker 2: this data to see how it was doing. Now though
Speaker 2: it's you know, we get all this communication, but it
Speaker 2: gives us some additional information about the growth and contraction
Speaker 2: of credit.
Speaker 4: Yeah, indeed, And I think even so that you could
Speaker 4: think of that as you listen to FAT speakers and
Speaker 4: they pointed this data, they seem to be quite confident
Speaker 4: that there isn't really anything you know, materially going on. Sure,
Speaker 4: but everybody paying attention to it means, like, you know,
Speaker 4: I'm going to try to distract the signal from this
Speaker 4: because if it does show more material decline and credit
Speaker 4: in this case, then the FAT would react to this, right,
Speaker 4: And that's what happened to Marus just.
Speaker 2: In terms of measuring credits. So this is volume, But
Speaker 2: then there are how do you incorporate the surveys of
Speaker 2: businesses we're having a harder time getting a loan that
Speaker 2: seems to be getting worse.
Speaker 1: Or the loan officers survey where they have been reporting
Speaker 1: tighter fighting, Yeah.
Speaker 2: Or spreads obviously we can look at you know, junk
Speaker 2: spreads or CNBS spreads, et cetera. So like, is it
Speaker 2: one of those things where like all of the we're
Speaker 2: all blind and like touching the side of the elephant
Speaker 2: and just trying to gather as much different pieces of
Speaker 2: it as possible.
Speaker 4: Yeah, The idea of a dashboard right, you have all
Speaker 4: these different signals that come at you. Obviously what you're
Speaker 4: summarizing the at different parts of the credit markets, because
Speaker 4: if you were to look at spreads and you look
Speaker 4: at say, junk bonds, you know that's little to do
Speaker 4: with the bank credits itself, unless there's underwriting from an
Speaker 4: investment bank in there. Even so, it's not really what
Speaker 4: we're looking at here today commercial bank credit, which is
Speaker 4: really about mortgages, about consumer loans, about credit cards and
Speaker 4: things like that. But you're right, you have to look
Speaker 4: at a broader spectrum of measures about what credit is
Speaker 4: really doing in the economy because it gets extended in
Speaker 4: different ways.
Speaker 2: Right.
Speaker 4: So I think if we take the Haight data and
Speaker 4: also the H four data, just don't mention that too,
Speaker 4: which is the fast balancy data every week, is the aggregate.
Speaker 4: The change in that does give us a sense where
Speaker 4: we are right now. Like we've risen rates a lot,
Speaker 4: it starts to affect the economy. People know that eventually
Speaker 4: banks will pull back, and the earnings from banks show this.
Speaker 4: To the start the provision for loan losses as a
Speaker 4: sort of a precautionary measure. But I think what happened
Speaker 4: in March was a reaction to what ltimate happen where
Speaker 4: banks can extend credit through and that's deposits, right, and
Speaker 4: the posits have obviously declined.
Speaker 3: Well, this is exactly what I wanted to ask you.
Speaker 1: So let's step back for a second and talk about
Speaker 1: why a credit contraction could materialize. So what are the
Speaker 1: dynamics that are affecting banks at the moment. You know,
Speaker 1: I mentioned that if there's additional regulatory scrutiny on interest
Speaker 1: rate risk, then obviously that could affect appetite for certain
Speaker 1: types of bonds. But you also have a situation where
Speaker 1: banks may be nervous about the future, they may be
Speaker 1: increasing their or hoarding their reserves, and that would also
Speaker 1: start to curtail on their lending. So walk us through
Speaker 1: how this materializes.
Speaker 4: Yeah, I was looking at the other day Tracy of
Speaker 4: thinking of different channels that are currently showing some signs
Speaker 4: of that credit crunch stress. So one is then that
Speaker 4: leverage loans, which is you know, or syndicate loans. That
Speaker 4: has to client quite a bit, and that has to
Speaker 4: do with that. During the pandemic boom, fair bit of
Speaker 4: financing took place because of all the hive that bank
Speaker 4: sitting on a lot of like residual loans on that
Speaker 4: bound sheet and having a hard time getting rid of
Speaker 4: those loans. You know, they have to be discound of
Speaker 4: low value, and therefore they pull back from that syndicate
Speaker 4: loan market and pushed it into the private credit market,
Speaker 4: which although have been lending, are lending at higher rates. Right,
Speaker 4: So it affects credit that way. Secondly, it's the commercial
Speaker 4: paper market, which is interesting that was mentioned in the
Speaker 4: FED minutes too. That's frozen, so to speak, meaning there's
Speaker 4: very little issuing is going on.
Speaker 1: I always get bad flashbacks like two thousand and eight,
Speaker 1: two thousand and nine when we start talking about commercial
Speaker 1: paper and that seizing up.
Speaker 4: Yeah, and that was happening in the twenty twenty as well, right,
Speaker 4: and then that's in March of twenty twenty the market
Speaker 4: community collapsed and I fat actually did something about it.
Speaker 4: This time it seems to be driven by, yeah, little
Speaker 4: appetite to issue these commercial paper this moment. As one
Speaker 4: one on a channel.
Speaker 2: Can you talk about, you know, different slices of the
Speaker 2: credit market or you know, I think one of our
Speaker 2: longtime guests that we haven't had on a while ago
Speaker 2: Chris Whitet, you know, talked about these different slices of
Speaker 2: the credit market essentially each being their own world, each
Speaker 2: being their own ecosystem. So when you talk about okay
Speaker 2: banks no longer being able to sell into the leverage
Speaker 2: loan market and having to move into the private credit market,
Speaker 2: I don't know what, like, what is the difference between
Speaker 2: these markets. Why do they have a different complexion? Why
Speaker 2: is the cost of funding in the letter higher?
Speaker 4: Well, the two things there so one the private credit
Speaker 4: lenders that's special lending or direct lending. I mean, you know,
Speaker 4: they use different terms. They don't act like a bank.
Speaker 4: You have to think of like companies like Apollo or
Speaker 4: KKR or Blackstone. You know, they lend to mid size
Speaker 4: to smaller sized companies that cannot go to a bank
Speaker 4: or find it harder to go to a bank. Is
Speaker 4: in the lending centers are tighter a the bank than
Speaker 4: they are at a private lender. Yet the interest rate
Speaker 4: that they pay, which is typically spread over the standard
Speaker 4: overnight funding rate of I'm secured overnight funding rate. Sorry,
Speaker 4: you know it's wider rights. The private lender will ask
Speaker 4: for more compensation on taking risks of a company that
Speaker 4: generates say fifty million ebitash you call that way per year.
Speaker 4: So on the other end, you have the syndicated low market,
Speaker 4: which you know is a bigger market, like there's a
Speaker 4: bigger company involved. I really think there was what the
Speaker 4: leverage buyout boom that happened briefly in twenty twenty twenty
Speaker 4: one contributed to the banks puilding back and now provisioning
Speaker 4: for it too, as that's what showed up in the
Speaker 4: earning data so far. And that's actually the point that
Speaker 4: you were asking about, Tracy, is that you know, what
Speaker 4: I really think where the crunch comes from is that
Speaker 4: if we're getting banks starting to accumulate more and more reserves,
Speaker 4: lend out less or less incentivized to lend, and then
Speaker 4: you're getting a really pressure on auto markets other credit
Speaker 4: markets that have to then no longer having the access
Speaker 4: to banks because they ultimately to provide the liquidity and
Speaker 4: the credit for the system. Right. So I think this
Speaker 4: is where the real issue is. And people, if you
Speaker 4: rethink of back of history as you often do on
Speaker 4: the show, you think of treatment and sports studies about
Speaker 4: money supply, what they really looked at was like what
Speaker 4: banks in the thirties did too. They started to really
Speaker 4: cumulate reserves quite significantly, and that led to this huge
Speaker 4: contraction of credit and economy. Now we're not there here
Speaker 4: today yet because it's not like that at that time,
Speaker 4: but we have had instances of this, you know. Twenty
Speaker 4: eighteen nineteen was an example where it turned out as
Speaker 4: the FAT kept pulling, you know, kept we're reducing its
Speaker 4: bound sheet. The banks in the meantime, we're worried about
Speaker 4: the economy and start pulling back and started accumulating reserves.
Speaker 4: Not every bank has access to the FAT reserves, by
Speaker 4: the way, so there's another aspect of that too. So
Speaker 4: I think if you summarize it the different aspects of
Speaker 4: the credit markets, the private lending is really different from
Speaker 4: bank lending, clearly driven by different i think governance and
Speaker 4: underwriting standards and lending standards. But then the banks themselves
Speaker 4: are I think in a very precautionary mode currently, and
Speaker 4: therefore there is that possible risk of this, you know,
Speaker 4: further pressure on lending in the economy.
Speaker 1: So one of the interesting things that we've seen, and
Speaker 1: again this is sort of in the background, and I
Speaker 1: haven't seen it discussed that much, but I think risk
Speaker 1: premiums on things that tend to be dominated by bank buyers,
Speaker 1: So you know, mostly securitized products like residential mortgage backed
Speaker 1: securities or commercial mortgage backed securities rmbs and cnbs, which
Speaker 1: I mentioned in the intro. Risk premiums on those are
Speaker 1: higher than a lot of unsecured stuff, And I would
Speaker 1: guess the assumption is because people are thinking that banks
Speaker 1: may be less incentivized in the future to buy those
Speaker 1: types of assets given what we just saw in the
Speaker 1: additional regulatory scrutiny or caution that we're expecting.
Speaker 3: Now, talk to us about.
Speaker 1: Those markets and what sort of impact you see there.
Speaker 4: Yeah, we rethink about the agency mortgage back secure this
Speaker 4: market in particular that that's as a class that you know,
Speaker 4: there's still government guarantee by the way manit so.
Speaker 3: You're not worried about credit risk, just the rate risk, just.
Speaker 4: The purely the rate risk. And you know, a simple
Speaker 4: math of mortgages is that if rates go up, the
Speaker 4: prepayment speed of mortgages goes down, and that actually extends
Speaker 4: the maturity of a mortgage backed security. But banks by
Speaker 4: those because they're yielding a bit higher than treasuries. There
Speaker 4: are liquid there's a big market and the fat is involved.
Speaker 4: Right then that's been part of the reason. Now as
Speaker 4: the feed is reducing his balance sheet and pulling away
Speaker 4: from that market, the banks are left with buying more. Now,
Speaker 4: what's happened during this latest episode was that banks discovered
Speaker 4: that the duration of a deposit is actually a lot
Speaker 4: shorter than what has been estimated. You know, there's been
Speaker 4: real estimates out on this that this could be as
Speaker 4: long as seven years. That's basically the idea of like
Speaker 4: the three of us have a bank account that X
Speaker 4: Y Z bank, we have a deposit in there, we
Speaker 4: trust that bank, we stay there for longly years, and
Speaker 4: we don't have a real to pull our money out
Speaker 4: unless we absolutely have to. Now, what happened and in
Speaker 4: margins obviously people got really worried to pull their money
Speaker 4: out really quick. In other words, it's not seven years,
Speaker 4: it's probably seven hours, right. So if you think of that,
Speaker 4: the posit side of the duration much shorter, and you're
Speaker 4: having a lot of more expect securities on your bounce
Speaker 4: sheet that can extend the maturity as rates go up,
Speaker 4: you have this duration mismatch, and that I think is
Speaker 4: the issue here now for banks. They have to reassess
Speaker 4: that gap, and that will be regulatory scrutiny, as you say,
Speaker 4: coming in here, meaning they're going to be reevaluation of
Speaker 4: banks risk management in the wake of Silicon Valley. Obviously,
Speaker 4: I think what then happens is that you could expect
Speaker 4: that banks will either decide to sell more more expect
Speaker 4: securities or let them run off like so to speak.
Speaker 4: That just what the fetid. Either way, more of that
Speaker 4: supply code quote comes on the secondary market in mortgages,
Speaker 4: and it has to be repriced a higher spread. Indeed,
Speaker 4: nothing to do with the credit risk on the line,
Speaker 4: it's the government, but much more to do with I
Speaker 4: think the liquidity risk and the bank duration risk.
Speaker 1: Yeah, super reminiscent of the conversation we had late last
Speaker 1: year about the sort of broken mortgage market and how banks,
Speaker 1: you know, they didn't really want to hold a lot
Speaker 1: of mbs as rates were going up last year, and
Speaker 1: I can imagine this year they're even less incentivized to do.
Speaker 2: It on the mortgage front. Specifically, I mean, would their
Speaker 2: show up in sort of a straightforward higher spread relative
Speaker 2: to treasuries. I mean, all things equal in terms of like, okay,
Speaker 2: banks want to reduce their duration risk. They all saw
Speaker 2: what happened with Silicon Bailey Bank. The regulators come in,
Speaker 2: would this be expected to feed through in a sort
Speaker 2: of straightforward way to cost their mortgages.
Speaker 4: In some way? It does, right, because it's a market
Speaker 4: functioning is in Okay, there's a it's a very liquid market,
Speaker 4: so people will price in this quote quote higher supply
Speaker 4: that comes naturally own the market, so to speak, because
Speaker 4: there's continuous mortgage origination that are packaging these securities. Then
Speaker 4: you have to think about what happens also with other
Speaker 4: investors in this space, So the mutual funds and ETFs
Speaker 4: and foreign investors you know out of foreg mutual funds
Speaker 4: or foreign central banks even or foreign pension funds, what
Speaker 4: they do, how they respond. Now the analysis that's out
Speaker 4: there as an expectation that they're demand will pick up
Speaker 4: as that spread implicitly widens, you know, there will be
Speaker 4: the moneymar money managers that will find it attractive. But
Speaker 4: I do think that's say, on average, it should become
Speaker 4: a wider spread. Really because banks in the United States
Speaker 4: have been the purchaser of these securities. In fact, with
Speaker 4: all my nose that brought with me here today.
Speaker 2: I always love when guests bring data.
Speaker 4: Yeah, there's data out actually really specifically by entity with
Speaker 4: most backed securities. You have, even credit unions, involved, community banks,
Speaker 4: smaller regional banks. They all rely on these most backed
Speaker 4: securities in part because their loan book is largely FHA.
Speaker 4: Now mortgage is not really non residential sorry, not non
Speaker 4: agency mortgages. It's it starts mostly government backed loans. So
Speaker 4: I think there's that change potentially coming. How much it
Speaker 4: will be of spread mining is obviously a party, a
Speaker 4: bit of a market functioning ideas in you know, who
Speaker 4: will really be the buyer here? I can imagine that
Speaker 4: my former colleagues, as I may listen now, hey, you
Speaker 4: know you're right, Ben, this is interesting. We can you know,
Speaker 4: mortgage are interesting to buy. But that's not going to
Speaker 4: fill entirely the voice in my sense, given what the
Speaker 4: Feathers doing too with their portfolio, which is large, large
Speaker 4: portfolio mortgages.
Speaker 1: So would it be fair to say, summing it all up,
Speaker 1: that you know, Americans are in for higher mortgage rates
Speaker 1: thanks to a bunch of I guess venture capitalists who
Speaker 1: caught their money out of Silicon Valley.
Speaker 2: Yeah, maybe on average who had their money, who had
Speaker 2: their portfolio oil companies' money in Silicon Valley Bank in parts,
Speaker 2: so they personally could get lower mortgages from the bank.
Speaker 2: I don't you know that seems to be part of
Speaker 2: the story. So thank you, and now we all have
Speaker 2: to pay higher mortgages. But into the interest owns the
Speaker 2: layer on to the ironing.
Speaker 4: Yeah, the interest only mortgages that they that they have, right,
Speaker 4: they originate a low costs and you know, and all
Speaker 4: part of this idea if yeah, bring all your money
Speaker 4: in and we'll do more business with you. That's probably
Speaker 4: going to change to an extent. Now. I do think
Speaker 4: pointing to announced for Boomberg put out is really good, right,
Speaker 4: how mapping out where these interest only mortgages were in
Speaker 4: California and the East Coast. Fortunately it's all high quality borrowers, right,
Speaker 4: people that can essentially pay all those loans without a problem.
Speaker 4: It's not subprime. But nonetheless it's I think that market
Speaker 4: has changed and that will add to you know, rising
Speaker 4: costs of credit. I guess can we.
Speaker 1: Talk a little bit about what we're seeing in terms
Speaker 1: of collateral, because of course, you know, collateral, the availability
Speaker 1: of collateral will affect the availability of credit because it's
Speaker 1: the thing that's used to secure a bunch of loans.
Speaker 1: And we have seen some signs of like I don't
Speaker 1: want to say necessarily problems, but maybe weirdness in that market.
Speaker 1: So I think I wrote about this in the All
Speaker 1: Lots newsletter. But for instance, the one month T bill
Speaker 1: is yielding like eighty basis points below the effective FED
Speaker 1: funds rate, for instance, which is something that you wouldn't
Speaker 1: expect to see unless there was a big scramble for
Speaker 1: T bills at the moment.
Speaker 3: What is going on there?
Speaker 4: Yeah, there is I think three things happening. So, as
Speaker 4: you said earlier, the reverse rebo facility of the Fed
Speaker 4: is very large, and that has been for a while now,
Speaker 4: and the main reason is that which are particularly money
Speaker 4: market funds that are in that facility, they cannot purchase
Speaker 4: enough T bills out there. So one, it's the Treasury
Speaker 4: that hasn't issues more T bills right because of the
Speaker 4: debt ceiling in their account of the fat and that
Speaker 4: dynamic talk about it in second. Secondly, I think there
Speaker 4: has been indeed somewhat of a hoarding of these T
Speaker 4: bills now if it isn't by those money market funds,
Speaker 4: by other participants. And then it's about I think the
Speaker 4: way the foreign investors are involved in our markets, because
Speaker 4: you know, the latest data I looked up from the
Speaker 4: FAT TIC data showed actually increase of holdings of T
Speaker 4: bills by foreign central banks of foreign investors what they
Speaker 4: call it, which can be could be others. Right, So
Speaker 4: if you take that to gether there is a i'd
Speaker 4: say a limited supply of T bills in the marketplace,
Speaker 4: then the Treasury is not issuing enough of it, or
Speaker 4: so to speak. By the way, the FAT owns about
Speaker 4: three hundred billion of A two, which not insignificant. So
Speaker 4: I think it gives you together a picture of that.
Speaker 4: And this is statistics. By the way data and the notes,
Speaker 4: there's four trillion of T bills outstanding. That's something like
Speaker 4: two point two trillion is pledged as collateral. There's data
Speaker 4: from the FAT. Anything in between the sitting somewhere, someone's
Speaker 4: holding us and so it could be very different entities.
Speaker 4: I think this is constrained to supply of D bills.
Speaker 4: Why that yield is lower the effect.
Speaker 2: Would you expect that premium to shrink a bit? I mean,
Speaker 2: I could see like Okay, if it's early March, and
Speaker 2: you're probably thinking two things. I don't want to take
Speaker 2: any duration risk because we just saw a bank get
Speaker 2: blown out by duration risk. And I don't want to
Speaker 2: take any credit risk because I just saw a bank collapse.
Speaker 2: But we you know, as we get as that recedes
Speaker 2: in the past, we see some of these emergency functions
Speaker 2: start to recede again. Would you expect some of that
Speaker 2: to just sort of ease a little bit as people
Speaker 2: feel a little bit safe to hold something other than
Speaker 2: you know, one month government securities or something ultra short.
Speaker 4: Yeah, and in some ways playing out as we speak, right,
Speaker 4: you know, the spread looks like like where we are
Speaker 4: in two thousand eights, But I don't that's not the
Speaker 4: same idea, even though people link it to the bank stress,
Speaker 4: you know, and parallels to the bank stress are like, yeah, okay, oh,
Speaker 4: seven of eight showld some much similar events that we
Speaker 4: just went through. But there's a difference. Maybe that one
Speaker 4: the feed is much more in position to do something
Speaker 4: about it very really quickly. That's what we saw that
Speaker 4: that has definitely the fuse part of the crisis, And
Speaker 4: do as you say, there are a lot of alternatives
Speaker 4: now in terms of of T bills right that people
Speaker 4: want to invest in, you know, given that where rates
Speaker 4: are and fixed income, so I think that spread will
Speaker 4: not be so inverted for now for a long time,
Speaker 4: but that it is a combination of the technicality of
Speaker 4: T bill markets in terms of its supply and what
Speaker 4: the treasury is issuing and who's holding it, and the
Speaker 4: dynamic of the treasury with that seating and it's accounted
Speaker 4: the fat against just a general sense of flight the
Speaker 4: safety that is temporarily and has receded again.
Speaker 1: You've been a portfolio manager for a long time, which
Speaker 1: is one of the reasons we wanted to talk to
Speaker 1: you about this. But you know, you have experienced various
Speaker 1: financial crises from a sort of bond perspective.
Speaker 3: Talk to us about I.
Speaker 1: Guess what you saw in previous collateral crunches. So two
Speaker 1: thousand and eight Eurozone crisis. I mean, I remember writing
Speaker 1: about the repo market and the role of your Eurozone
Speaker 1: government bonds in the Eurozone crisis. Like these were financial
Speaker 1: crises that were basically caused by collateral problems and a
Speaker 1: big like crunch in that secured lending market.
Speaker 3: Talk to us about that.
Speaker 4: Yeah, and that was quite significant in twenty eight and
Speaker 4: twenty eleven. You know, on the one end, it was
Speaker 4: about people indeed literally holding safe bonds and by by
Speaker 4: quote quote holding them and not lending them out to
Speaker 4: the report market. You're getting this repostquisical other words. You know,
Speaker 4: so if there's not enough collateral to lend out there
Speaker 4: and people need that collateral, they have to pay more
Speaker 4: higher interests as a results. So come in to their
Speaker 4: discussion about mortgage the same idea, but the reduction of
Speaker 4: that supply mortgages because banks don't want to hold it,
Speaker 4: push it up at the cost of borrowing. Then obviously
Speaker 4: the derivatives market play is a huge role here because
Speaker 4: that's experience I had from two thousand and eight. It
Speaker 4: was not just the Leman moment itself, but it was
Speaker 4: the recognition that Lemen was such an important play in
Speaker 4: the derivatives market. And there's a collateral agreements that back
Speaker 4: those derivatives. And is that agreement International Security Data got
Speaker 4: the term is that the swap agreement. There's a collateral
Speaker 4: agreement and that's a quite quite detailed agreement, and it's
Speaker 4: important there is that if you are managing derivatives in
Speaker 4: a mutual fund or ETF. The banks that you have
Speaker 4: that derivtic agreement with, you agree on exchanging collateral as
Speaker 4: margining against the mark the market of the position. And
Speaker 4: then two thousand and eight what happened was that the
Speaker 4: banks were not in the position to deliver that clatteral
Speaker 4: or vice versa, and that led to this huge crunch
Speaker 4: now on top game Lehman, which was this big counterparty
Speaker 4: obviously pulling that out of the system, no longer recognizing
Speaker 4: that who is facing who in the system. Also, people
Speaker 4: didn't know like where's my coladal? You know, can I
Speaker 4: get it back? So from the experience of back then
Speaker 4: with PIMCO, you know, they did a really good job
Speaker 4: at that time to negotiate those cloudal agreements so that
Speaker 4: the banks had no choice that legally to actually return
Speaker 4: the cloudal unless they absolutely couldn't, because there was a
Speaker 4: lot of that going on too. It was like if
Speaker 4: you didn't have a good cloudal agreement, you would be
Speaker 4: at significant risk. But all of that contributed to this
Speaker 4: huge pressure in funding markets and what we call claudal
Speaker 4: shortage that to extent repeated in the Euro crisis too,
Speaker 4: in particularly with German government bonds. And then maybe last
Speaker 4: point on that is that this repo market, the repurchase market,
Speaker 4: which you then get is that you know, if people
Speaker 4: cannot or are on link to lend out cloud, you
Speaker 4: get a really functional market. Then it's not only that
Speaker 4: the bond straight what they say special were you're getting
Speaker 4: a significant squeeze, right, And that's.
Speaker 1: I was going to ask, have we seen any like
Speaker 1: pick up and fails to deliver and things like that
Speaker 1: in the repo market this time around, Ben's smiling because
Speaker 1: he has the data right in front of him, excellent.
Speaker 4: Grinning, grinning, grinning at you know. So at three four
Speaker 4: am this morning, I did look out that data the
Speaker 4: Treasury fails. It had picked up actually in March, you know,
Speaker 4: there was a little spike there.
Speaker 3: So this would be a classic sign something else deliver.
Speaker 2: You get buy something and they don't give it to you.
Speaker 4: Yeah, it's it's literally death. As you know that there's
Speaker 4: people that are unable to settle securities or settle rebolt.
Speaker 3: Transaction, deliver the bond that you said you would deliver.
Speaker 2: Why is that not a default?
Speaker 4: Yeah, because the.
Speaker 3: Repo market is special in many ways.
Speaker 1: And actually if it was, if I mean, Ben can
Speaker 1: talk about this obviously, but if it was considered a default,
Speaker 1: I think we would suddenly have a major seizure in
Speaker 1: credit because part of what happens is like you can
Speaker 1: kind of online credit that you've been promised, so you
Speaker 1: get this daisy chain of credit that lubricates the entire market.
Speaker 1: And if you start breaking the chain by saying this
Speaker 1: is a default rather than a fail to deliver, then
Speaker 1: that's a big issue.
Speaker 2: Ben is showing me some cool charts that he has
Speaker 2: on his laptop, so we got to get them and
Speaker 2: then post them along.
Speaker 3: Yeah too, you know, I have a question.
Speaker 2: Also going back from the portfolio manager perspective, and we
Speaker 2: were talking about mortgages and mortgage spreads and maybe what
Speaker 2: is sort of a worse situation for a bank because
Speaker 2: they don't want to get a tap on the shoulder
Speaker 2: from a regulator. Maybe that's an opportunity for an asset
Speaker 2: manager like a PIMCO or something else. In general, how
Speaker 2: much of the opportunity to pick up alpha or extra
Speaker 2: gains for an asset manager, whether it's the size of
Speaker 2: Pimco or maybe a smaller one, comes from essentially the
Speaker 2: constraints that are imposed on other types of potential holders
Speaker 2: that don't exist for the asset manager.
Speaker 4: Yeah, what comes to mind immedia is like that these
Speaker 4: securities have I liquidity risk and therefore that's priced into
Speaker 4: the spread right as a risk premium. Because if the
Speaker 4: banks are somewhat called called natural holders of these mortgages,
Speaker 4: as they originate the mortgages, they have MORGS backed securities
Speaker 4: to manage to repayment risk, and so I could imagine
Speaker 4: that that therefore the spread could add alpha to your portfolio.
Speaker 4: The other part of it is more about that It
Speaker 4: isn't that again liquidity, I guess, but it's the dislocation idea,
Speaker 4: like you know, how do you generate alpha as you
Speaker 4: jump on these opportunities where there's some level of dislocation
Speaker 4: and you expect it to reverse right, and therefore you're
Speaker 4: getting price return out of those securities. The other part
Speaker 4: could be is that as much as the FAT is
Speaker 4: continuing with its quantitative tidening policy, and I guess the
Speaker 4: commercial banks have to pull back or because of duration risk,
Speaker 4: that you're getting this more permanent, higher level of mortgage
Speaker 4: backed securities yielding higher more permanently. Then it becomes an
Speaker 4: income opportunity, and I could see for that reason certain
Speaker 4: funds allocate to these type of securities. But from my
Speaker 4: own experience with mortgages is that the challenge of managing
Speaker 4: them in your own bump portfolio is duration. Because of
Speaker 4: the repayment movements. You know, they have coveccity. They can
Speaker 4: sometimes be very positive if rates go up really quick,
Speaker 4: but then the other way around it, you'd start to decline.
Speaker 4: The convectionity on these securities get quite negative, and that
Speaker 4: could actually adversely strength and shrink your duration of your
Speaker 4: portfolio versus your index, and then your alpha argument isn't
Speaker 4: really there because you'll be lagging.
Speaker 1: Yeah, you touched on this already briefly, but I think
Speaker 1: there's probably more to say. How would you expect the
Speaker 1: FED to react to all of this, because this is
Speaker 1: also one of the things that is going on at
Speaker 1: the moment. Seems to be a lot of volatility and
Speaker 1: almost day to day changes in expectations for future hikes
Speaker 1: maybe even future cuts. You know, people are trying to
Speaker 1: figure out what potentially lower credit circulating in the economy
Speaker 1: actually means for things like inflation. How would you expect
Speaker 1: the FED to handle this?
Speaker 4: So the One of what they did in March was
Speaker 4: I think, as expected, you know, your lender of last resort,
Speaker 4: you should provide this liquidity. So that term loan facility
Speaker 4: was a new facility, but it wasn't to me a
Speaker 4: surprise because the FED is the ability now to put
Speaker 4: those up those facilities in twenty four hours?
Speaker 3: Can I take them off a shelf basically pretty much?
Speaker 4: So the market knows this right. So it means that
Speaker 4: if we're getting autocredit stresses that we saw in March
Speaker 4: twenty twenty, for example, yeah, with a visit corporate bump
Speaker 4: purchase program, a commercial paper purchase program and so on,
Speaker 4: that is an alphabet soup of these facilities. So I
Speaker 4: think that will be the first reaction. The other reaction
Speaker 4: is is that it is interesting how LA Guard looks
Speaker 4: at this crisis and saying this is not affecting us,
Speaker 4: but we're on guard right because it does correlate with
Speaker 4: their banking system. You know, if bank stocks go down
Speaker 4: here significantly, so will they do so will they in Europe?
Speaker 4: And the ECB would have to react to that. So
Speaker 4: that's another I think an element of the total reaction
Speaker 4: function central banks. Lastly, people probably look at this by
Speaker 4: the two yields as being so volatile, Will there be
Speaker 4: a raycod will there be a pause? And that sort
Speaker 4: of idea. It turns out not right. It turns out
Speaker 4: that this was for the FED not the reason to
Speaker 4: shift policy at this point. But it isn't to say
Speaker 4: that that could be the case. And that's what we've
Speaker 4: been discussing, right.
Speaker 2: Yeah, Well, that's that's what I sort of wanted to
Speaker 2: follow up on specifically, And again I'm thinking back to
Speaker 2: how we started the conversation, which is that sort of
Speaker 2: measures of total bank credit or at one point the
Speaker 2: sort of central the central data points that bond traders
Speaker 2: would look forward to see where the FED was and
Speaker 2: hitting its goals, et cetera. And one other thing, you know,
Speaker 2: we talked about this with Matt King and City recently,
Speaker 2: which is this sort of return of monitorist thinking on
Speaker 2: some level, to what extent is there a sort of
Speaker 2: clear relationship between the volume of credit, the so called
Speaker 2: money supply, and the actual change to price, the price
Speaker 2: level that we see in the economy. The idea that
Speaker 2: money supply and prices were correlated went out of fashion
Speaker 2: pretty hard, I would say, in the twenty tens, but
Speaker 2: could it come back and do fashion And I don't know,
Speaker 2: is there a like how much is the FED or
Speaker 2: economists at the FED looking at these credit numbers as
Speaker 2: being early warning signals in one way or another about
Speaker 2: what inflation will be doing three months or six months
Speaker 2: down the line.
Speaker 4: Yeah, And I think it touched there on like how
Speaker 4: people behave with money, meaning what happened with these deposits
Speaker 4: at Silicon Value Bank, for example, and how quickly that
Speaker 4: went out of Silicon Valley within forty eight hours, like
Speaker 4: you no, forty fifty billion or whatever was requested. That's
Speaker 4: I think what they would be looking at that behaviors change.
Speaker 4: That money went elsewhere. It went to money market funds,
Speaker 4: but the part of it is not known where went
Speaker 4: The data shows only only half of the depositive fly
Speaker 4: it went to money market fund So to your point,
Speaker 4: the money supply analysis, And I actually read the transcript
Speaker 4: from the early eighties because I was looking at when
Speaker 4: they rates speak and what was the fat focus on.
Speaker 4: Obviously they were focused on M one and M two.
Speaker 4: They knowed by the way back then at M two
Speaker 4: and then one were really rising a lot, and that
Speaker 4: was part of the economy growing and doing actually well
Speaker 4: that this does matter to the fat today too, meaning
Speaker 4: if they don't see in these eggo good significant contraction
Speaker 4: at points to a change in the economy going out
Speaker 4: of the direction. That means that there's money from commercial
Speaker 4: banks that went to money market funds and elsewhere. It's
Speaker 4: just recycled and gets ultimately out in the economy. So
Speaker 4: I do think that they pay attention to it because
Speaker 4: there is that link. We came out of a pandemic
Speaker 4: at a production capacity was hugely shut off right and
Speaker 4: had to turn it back on, so that equation monitors
Speaker 4: the equation plays an our role because if you have
Speaker 4: price level higher reproduction best you could say to be higher,
Speaker 4: the movement of money will only drive into the economy.
Speaker 4: I think so because velocity is funny, is that the
Speaker 4: toughest that is the measure is probably higher given what's
Speaker 4: happened with is depositive flights. So I think if I
Speaker 4: think of a Joe, I think of it that within
Speaker 4: the fact they're going to try to model OUs. Not
Speaker 4: only would the New York I put out the other
Speaker 4: day how sensitive deposits are to change an interest rates.
Speaker 4: It was an interesting research piece but also then you know,
Speaker 4: if people change their mind about holding it the positive
Speaker 4: the bank and using it in a different way, say
Speaker 4: money market fund, will that ulto spending behavior and therefore
Speaker 4: affect the economy.
Speaker 1: So the overall dynamic that we're seeing is that deposit
Speaker 1: flight from banks and rotation into largely money market funds
Speaker 1: cash like instruments, who are then parking it at the
Speaker 1: reverse repo facility because they probably don't have enough t
Speaker 1: bows to invest in things like that. Is there a
Speaker 1: point at which the RRP becomes problematic for the economy,
Speaker 1: Like the Fed created it, I think it was in
Speaker 1: twenty fourteen or twenty thirteen as a way of better
Speaker 1: managing interest rate hikes or preparing for interest rate hikes
Speaker 1: around that time. But is there a point at which
Speaker 1: like it becomes competition for banks?
Speaker 4: Basically yeah, and that may be happening. You know, if
Speaker 4: you raise rates to a certain level, that attracts money
Speaker 4: to alternatives to deposits, and the banks have a hard
Speaker 4: time you know, catching up, as that announcement New York
Speaker 4: Fed shows, and we're seeing it through earnings by the way,
Speaker 4: coming through now that banks are adjusting somewhat but not
Speaker 4: significant enough then a bloated a very large reverse repo
Speaker 4: facility indicates that the money markets are getting way too
Speaker 4: much money in that they cannot deploy in T bills
Speaker 4: directly and have to go to the Fed's facility to
Speaker 4: get sort of a quasi T bill. There By they
Speaker 4: post money to defend and get an interest back on
Speaker 4: that money, and it's a collaborized transaction. But it's lily
Speaker 4: they're getting just interest paid on that money like the
Speaker 4: T bill. But that becomes a problematic as much as
Speaker 4: too that the money marks are funds are happy, right
Speaker 4: they go out there market and you know, we are
Speaker 4: higher heels and you know, and but at some point
Speaker 4: this creates this, I guess, this tension in the system,
Speaker 4: just like in twenty eighteen when the FED discovered, like
Speaker 4: there's a natural level of bank reserves that we cannot
Speaker 4: go under or we're getting major attention in the system
Speaker 4: because if we're getting any major tax payments that are
Speaker 4: not coming in or cash withdrawals or any sort of
Speaker 4: that sort of dynamic causes this friction and then they
Speaker 4: have to do other things. At that time, they had
Speaker 4: to actually they bought E bills at that time to
Speaker 4: try to reverse the situation. This case, you probably see
Speaker 4: more of these landing facilities being initiated in order to
Speaker 4: upset the friction of the reverse repubs.
Speaker 1: Because this kind of it reminds me of like, you know,
Speaker 1: you bring in like a cat to catch a mouse,
Speaker 1: and then you have to bring in, like, I don't know,
Speaker 1: a dog to catch the cat, and then.
Speaker 3: Like it just keeps going.
Speaker 1: Right, It's like one lending facility and to fix the
Speaker 1: tensions or frictions caused by the other lending facility.
Speaker 4: Yeah, and they've long said that they wanted to use
Speaker 4: the permanent repo facility as a way to control all
Speaker 4: of this, but people have said, like, well you do that,
Speaker 4: then everything will converge to that facility, because that's the
Speaker 4: safest points that you in the system that you can
Speaker 4: go to. Right.
Speaker 1: It's almost like they're creating like different tiers of money, right,
Speaker 1: because the RRP suddenly becomes like a specific type of
Speaker 1: money that's in competition with like money in bank deposits
Speaker 1: and that sort of thing, but.
Speaker 4: It's considered to be safe. So that's the safest acid
Speaker 4: you can have, is that reverse repo facility. So it's
Speaker 4: obviously a really complex issue, not easy to solve. I
Speaker 4: think for markets, it continues to mean like we're going
Speaker 4: to phase another episode like this for sure. I mean
Speaker 4: I think the more that facility grows, as one indicator
Speaker 4: to our earlier discussion, that's a sign of stress.
Speaker 2: So just sort of a big picture, I mean, we
Speaker 2: have I've not seen credit fall off a cliff yet,
Speaker 2: Like we're seeing some signs of stress difficulty getting but
Speaker 2: it's not been fall of a clip. Nonetheless, there's something,
Speaker 2: but it sounds like from this conversation there's like a
Speaker 2: few distinct stories. So there was the acute shock at
Speaker 2: the beginning of March related to Silicon Valley Bank. But also,
Speaker 2: as you point out, like twenty twenty one was just
Speaker 2: sort of an insane year and when everyone sort of
Speaker 2: got drunk on line go up and then some of
Speaker 2: that naturally has to be unwound. Then there is the
Speaker 2: stress of rising rates creating competition for deposits, and so
Speaker 2: it's particularly at the smaller and regional banks where they
Speaker 2: may have been doing very well in that interest margin.
Speaker 2: Suddenly they might have higher funding costs if they want
Speaker 2: to keep their deposit base. Each of these seem like
Speaker 2: slightly different sort of strange putting stress. But like, how
Speaker 2: would you sort of I don't know if weight is
Speaker 2: the right word, but like sort of like think about
Speaker 2: all these things we're talking about and sort of like,
Speaker 2: I don't know, rank them in terms of top of
Speaker 2: mind or like what sort of the most salient factor
Speaker 2: here at this point in terms of what could drive
Speaker 2: the availability of credit.
Speaker 4: Yeah, I do think it's it is the depositive story
Speaker 4: that was I think the significant change because what it
Speaker 4: did was that as we're seeing it coming through the earnings,
Speaker 4: bank become cautious, so they start to build up reserves.
Speaker 4: I think is really important underlying trend there against you know,
Speaker 4: the fact that you have an economy that's uncertain, so
Speaker 4: the opportunities to lend are by definition diminishing. Right, that's natural,
Speaker 4: I guess. But I think the fact that the way
Speaker 4: people responded to what happened at Silicon Valley Bank has
Speaker 4: woken up markets right and saying, wait a minute, you
Speaker 4: have actually an ability to withdraw money so fast, so
Speaker 4: quick through an app, and you know the digital age
Speaker 4: of our money, as you covered crypto laws. Fact that's
Speaker 4: actually at this time that much to do with this.
Speaker 4: But it's in the context, right, a digital payment system
Speaker 4: could cause more shocks going from here is my sort
Speaker 4: of broader take. I would think, yeah, it's good interesting
Speaker 4: years that we're waking up.
Speaker 2: We did a episode again right before SVB with Joe
Speaker 2: Baldad Barclays, who put out a note recently talking about
Speaker 2: SVB waking up so called sleepy deposits, which is suddenly
Speaker 2: people waking up to the fact that it's like I
Speaker 2: can get higher yield and higher safety in one move,
Speaker 2: Like what's the catch?
Speaker 3: Exactly it?
Speaker 1: Yeah, I remember I actually pitched a story idea after
Speaker 1: It was after our conversation with the New York landlord
Speaker 1: where he was like, why do I want to be
Speaker 1: in the business of renting out apartments when I can
Speaker 1: get six percent on like a money market front or
Speaker 1: like a bank deposit. And I remember pitching a story
Speaker 1: going we should do like how higher rates are kind
Speaker 1: of changing everything.
Speaker 2: It's like, what's the catch? Yeah, it's like no credit,
Speaker 2: no bank run risk, and higher rates Like who wouldn't want?
Speaker 1: You know?
Speaker 2: But I think a lot of people would wake up
Speaker 2: to that.
Speaker 1: That's exactly what we're seeing, right, It's like the reconfiguration
Speaker 1: of money because of the higher rates that we haven't
Speaker 1: seen for many, many many years anyway, and we're gonna
Speaker 1: leave it there, but so glad we could have you on.
Speaker 1: That was an amazing discussion.
Speaker 3: So thank you so much, Thank you, Tracy, Thanks Joe.
Speaker 4: It's wed be great to be.
Speaker 2: Yeah, this is really fun. Thank you so much. Ben,
Speaker 2: Thank you.
Speaker 3: So Joe. I thought that was fascinating.
Speaker 1: I can see a headline about, you know, venture capitalists
Speaker 1: pulling money causing higher mortgage rates for millions of Americans,
Speaker 1: just doing absolute number we could get in lots of traffic.
Speaker 1: Maybe we won't do that, but there is something there, right,
Speaker 1: you know, you have seen this deposit flight set in motion,
Speaker 1: and it seems natural to assume that there is going
Speaker 1: to be some sort of impact on the banks who
Speaker 1: may pull back from certain markets.
Speaker 2: No, it's really interesting, and there are like so many
Speaker 2: like different factors, Like getting a handle on what's going
Speaker 2: on with credit at any given moment is really tough,
Speaker 2: and I thought Ben sort of explained why. I mean,
Speaker 2: one is, there's no one credit market. There's bank credit,
Speaker 2: there's entities like Pimcode, there's private credit entities like Apollo,
Speaker 2: et cetera. So like, there's no one thing. Spreads are
Speaker 2: different from volume. You have surveys of private borrowers, you
Speaker 2: have surveys of bank lenders. You're trying to get a
Speaker 2: handle on it, and I you know, it does seem
Speaker 2: like we're not in like a crisis by any stretch,
Speaker 2: but it does seem like, you know, money is less
Speaker 2: freely available than it was maybe several Once.
Speaker 3: Again, well, this is the other thing.
Speaker 1: I think people naturally they hear the word credit crunch
Speaker 1: or the term kind of crunch, and they think two
Speaker 1: thousand and eight, and they think, you know, sharp dramatic
Speaker 1: pullback in credit availability, And that's not necessarily the way
Speaker 1: it has to play out. You can have these sort
Speaker 1: of slow moving crunches that maybe affect certain markets more
Speaker 1: than others. And I would imagine that's probably what we're
Speaker 1: going to see.
Speaker 2: And you know, again that's what the Fed's going for
Speaker 2: in some sense, I mean, what is what is interest
Speaker 2: rate policy but an attempt to make credit more expensive
Speaker 2: with the goal of stealing the economy for fighting inflation
Speaker 2: and so like, to the extent that all these things
Speaker 2: are coming together to put pressure on credit availability. And
Speaker 2: again it goes back to the mad King conversation and
Speaker 2: the sort of like prety like straightforward return of like
Speaker 2: monitorist thinking. On some level, we're watching the plan.
Speaker 1: Yeah, I mean, it's the reconfiguration of money in the
Speaker 1: financial system based on these new sort of rates that
Speaker 1: are available in different ways or at different places.
Speaker 2: Shall we leave it there, Let's leave it there.
Speaker 4: Okay.
Speaker 1: This has been another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway.
Speaker 2: And I'm Jill Wisenthal. You can follow me on Twitter
Speaker 2: at the Stalwart. Follow our guest Ben Emmons on Twitter.
Speaker 2: He's under the handle at Marco Madness to post a
Speaker 2: bunch of great charts. Maybe he'll post some of the
Speaker 2: charts that we talked about today on the show. Follow
Speaker 2: our producers Carman Rodriguez at Carman Arman and Dashel Bennett
Speaker 2: at dashbot. And check out all of the Bloomberg podcasts
Speaker 2: under the handle at Podcasts, and for more Oddlots content,
Speaker 2: go to Bloomberg dot com slash Oddlots, where we post transcripts.
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