1
00:00:02,520 --> 00:00:15,000
Speaker 1: Bloomberg Audio Studios, podcasts, radio news, nerdfest.

2
00:00:15,400 --> 00:00:21,440
Speaker 2: It's single best idea today was absolutely extraordinary. Moody's cut

3
00:00:21,720 --> 00:00:23,959
Speaker 2: the rating, you know whatever, it's old news now coming

4
00:00:23,960 --> 00:00:28,280
Speaker 2: out on Friday afternoon, and we decided and Eric and

5
00:00:28,280 --> 00:00:32,040
Speaker 2: the team were just brilliant and really taking a bond focus.

6
00:00:32,560 --> 00:00:34,600
Speaker 2: What a bonds mean the debt and the deficit? What

7
00:00:34,680 --> 00:00:37,840
Speaker 2: a bonds you mean for equities? What do they mean

8
00:00:37,960 --> 00:00:42,599
Speaker 2: for currencies? What do they mean for commodities? And we're

9
00:00:42,640 --> 00:00:49,200
Speaker 2: just a fascinating bond geek. Monday Strong was George Bori

10
00:00:49,320 --> 00:00:53,240
Speaker 2: at all Spring. He's got decades and decades of experience,

11
00:00:53,800 --> 00:00:57,080
Speaker 2: and we talked to him about this partition between price

12
00:00:57,400 --> 00:01:02,880
Speaker 2: decline of Bill's notes and bonds and yield increase.

13
00:01:03,320 --> 00:01:07,160
Speaker 3: The gield dominates in this environment. And even if bond yields,

14
00:01:07,319 --> 00:01:08,880
Speaker 3: so if the thirty year were to go up to

15
00:01:08,880 --> 00:01:11,360
Speaker 3: say five and a half percent, which is not out

16
00:01:11,360 --> 00:01:15,080
Speaker 3: of the realm of possibility, you're still looking at positive

17
00:01:15,120 --> 00:01:18,200
Speaker 3: returns in bonds. And that's why year to date bonds

18
00:01:18,200 --> 00:01:20,920
Speaker 3: have been done exactly what they're supposed to do. That

19
00:01:21,120 --> 00:01:25,199
Speaker 3: income is carrying the day. Your sort of average bond

20
00:01:25,400 --> 00:01:28,920
Speaker 3: performance is up about two percent year to date, not

21
00:01:29,080 --> 00:01:32,520
Speaker 3: wildly exciting, but enough to beat cash and certainly enough

22
00:01:32,520 --> 00:01:35,839
Speaker 3: to beat equities in a market where the market's trying

23
00:01:35,840 --> 00:01:38,000
Speaker 3: to figure out what the growth trajectory is going to

24
00:01:38,000 --> 00:01:40,680
Speaker 3: be on the back of tariffs. So what I tell investors,

25
00:01:40,880 --> 00:01:43,880
Speaker 3: I tell our investors is two things. One, income is

26
00:01:43,920 --> 00:01:48,120
Speaker 3: your friend. Number two, diversify that duration, and then let

27
00:01:48,360 --> 00:01:51,920
Speaker 3: the bonds do their job. They're doing exactly what they're

28
00:01:51,960 --> 00:01:56,760
Speaker 3: supposed to do. Income, coupon, compound through time. If I

29
00:01:56,880 --> 00:02:02,520
Speaker 3: can compound my portfolio today at say five to eight percent,

30
00:02:02,600 --> 00:02:05,040
Speaker 3: depending on what kind of bond I buy, but if

31
00:02:05,040 --> 00:02:07,600
Speaker 3: it's five and a half to six, I'm doing just

32
00:02:07,760 --> 00:02:11,120
Speaker 3: fine and just sort of You can't ignore price changes

33
00:02:11,160 --> 00:02:14,440
Speaker 3: in bonds. The price change only matters if you decide

34
00:02:14,440 --> 00:02:16,960
Speaker 3: to sell it. If you hold onto the bond and

35
00:02:17,000 --> 00:02:21,840
Speaker 3: you continue to compound your performance and the return improves

36
00:02:21,880 --> 00:02:24,640
Speaker 3: as you move through time. And that's the very powerful

37
00:02:24,720 --> 00:02:26,120
Speaker 3: message in bond.

38
00:02:26,120 --> 00:02:28,799
Speaker 2: George Boy replay that if you'd like to, I think

39
00:02:28,840 --> 00:02:31,960
Speaker 2: there's a lot of wisdom there. Mister borri is within

40
00:02:32,400 --> 00:02:36,840
Speaker 2: all Spring. Dan Kerry came in today just outstanding outstanding

41
00:02:36,880 --> 00:02:42,359
Speaker 2: work at Macro Risk advisors. It's very very financy derivatives,

42
00:02:42,400 --> 00:02:45,440
Speaker 2: all sorts of forecross moments. It's a good place to

43
00:02:45,520 --> 00:02:49,240
Speaker 2: mention that we protect the copyright of all of our guests.

44
00:02:49,360 --> 00:02:53,519
Speaker 2: Get their research from them, a kind note, a kind

45
00:02:53,520 --> 00:02:56,440
Speaker 2: of email, a kind phone call. You'd be amazed how

46
00:02:56,480 --> 00:02:59,919
Speaker 2: they give you a flavor of their genius. Dan Kurrent

47
00:03:00,160 --> 00:03:02,360
Speaker 2: and I were talking about dollar dynamics, and that of

48
00:03:02,360 --> 00:03:05,239
Speaker 2: course goes to my book of the Summer in Economics

49
00:03:05,240 --> 00:03:09,120
Speaker 2: with Kenneth Rogoff, and that would be our Dollar Year Problem,

50
00:03:09,200 --> 00:03:12,880
Speaker 2: dancing off of John Connolly from decades and decades ago.

51
00:03:13,360 --> 00:03:16,919
Speaker 2: Dean currentive mri On Rogueff.

52
00:03:16,639 --> 00:03:18,440
Speaker 4: So Ken reached out to me on this book as well.

53
00:03:18,480 --> 00:03:22,440
Speaker 4: I had him speak post the twenty eleven Eurozone crisis

54
00:03:22,440 --> 00:03:25,399
Speaker 4: at a couple of events I hosted. You know, our

55
00:03:25,480 --> 00:03:28,519
Speaker 4: dollar year problem, our debt our problem, and I think,

56
00:03:28,919 --> 00:03:31,040
Speaker 4: so that's a little bit of a different take on it.

57
00:03:31,080 --> 00:03:33,320
Speaker 4: I would say, you know, up at five and a

58
00:03:33,360 --> 00:03:38,320
Speaker 4: half six percent, the math of running the interest costs

59
00:03:38,400 --> 00:03:42,480
Speaker 4: through that debt structure is just remarkably different. You know,

60
00:03:42,480 --> 00:03:46,960
Speaker 4: there's really no resemblance to the current structure of US

61
00:03:47,000 --> 00:03:49,720
Speaker 4: interest rates relative to when we took on all the

62
00:03:49,760 --> 00:03:52,760
Speaker 4: debt in twenty twenty, which look was an emergency we

63
00:03:52,760 --> 00:03:56,000
Speaker 4: were trying to push back against COVID. But I think

64
00:03:56,080 --> 00:03:58,200
Speaker 4: the ten year traded as low as fifty five basis

65
00:03:58,240 --> 00:04:01,120
Speaker 4: points into twenty twenty one. The tenure yield was one

66
00:04:01,200 --> 00:04:04,680
Speaker 4: point two percent at the lows, and so this bears

67
00:04:04,680 --> 00:04:08,200
Speaker 4: no resemblance to that, and these interest costs are punishing.

68
00:04:09,240 --> 00:04:11,000
Speaker 4: You know, Tom, you have me on here to talk

69
00:04:11,000 --> 00:04:13,520
Speaker 4: about the vis and you know, whenever we talk about volatility,

70
00:04:13,520 --> 00:04:18,200
Speaker 4: we talk about things like nonlinearity, and with regard to treasuries,

71
00:04:18,240 --> 00:04:22,440
Speaker 4: I think that's a facet of the market that we

72
00:04:22,480 --> 00:04:27,520
Speaker 4: typically wouldn't characterize as having a risk of. But you know,

73
00:04:27,600 --> 00:04:29,800
Speaker 4: things gradually then suddenly.

74
00:04:29,720 --> 00:04:33,559
Speaker 2: The most cautious I've ever heard being current, no question

75
00:04:34,160 --> 00:04:36,560
Speaker 2: about it. Just a brilliant day. Really looking forward to

76
00:04:36,560 --> 00:04:38,760
Speaker 2: the rest of the We quieter economic data this week,

77
00:04:38,800 --> 00:04:42,760
Speaker 2: but lots of good conversation to be had across the nation.

78
00:04:42,920 --> 00:04:46,000
Speaker 2: On your commute, look to Android Auto, I'm looking at

79
00:04:46,040 --> 00:04:50,000
Speaker 2: that every day. Really improving the software capabilities of Android Auto,

80
00:04:50,040 --> 00:04:54,160
Speaker 2: Apple car Play, all the other services as well. On YouTube,

81
00:04:54,279 --> 00:05:00,800
Speaker 2: subscribe to Bloomberg podcasts, and of course Outfit YouTube podcast single,

82
00:05:00,839 --> 00:05:04,000
Speaker 2: best idea,