Speaker 1: Bloomberg Audio Studios, podcasts, radio news, nerdfest.
Speaker 2: It's single best idea today was absolutely extraordinary. Moody's cut
Speaker 2: the rating, you know whatever, it's old news now coming
Speaker 2: out on Friday afternoon, and we decided and Eric and
Speaker 2: the team were just brilliant and really taking a bond focus.
Speaker 2: What a bonds mean the debt and the deficit? What
Speaker 2: a bonds you mean for equities? What do they mean
Speaker 2: for currencies? What do they mean for commodities? And we're
Speaker 2: just a fascinating bond geek. Monday Strong was George Bori
Speaker 2: at all Spring. He's got decades and decades of experience,
Speaker 2: and we talked to him about this partition between price
Speaker 2: decline of Bill's notes and bonds and yield increase.
Speaker 3: The gield dominates in this environment. And even if bond yields,
Speaker 3: so if the thirty year were to go up to
Speaker 3: say five and a half percent, which is not out
Speaker 3: of the realm of possibility, you're still looking at positive
Speaker 3: returns in bonds. And that's why year to date bonds
Speaker 3: have been done exactly what they're supposed to do. That
Speaker 3: income is carrying the day. Your sort of average bond
Speaker 3: performance is up about two percent year to date, not
Speaker 3: wildly exciting, but enough to beat cash and certainly enough
Speaker 3: to beat equities in a market where the market's trying
Speaker 3: to figure out what the growth trajectory is going to
Speaker 3: be on the back of tariffs. So what I tell investors,
Speaker 3: I tell our investors is two things. One, income is
Speaker 3: your friend. Number two, diversify that duration, and then let
Speaker 3: the bonds do their job. They're doing exactly what they're
Speaker 3: supposed to do. Income, coupon, compound through time. If I
Speaker 3: can compound my portfolio today at say five to eight percent,
Speaker 3: depending on what kind of bond I buy, but if
Speaker 3: it's five and a half to six, I'm doing just
Speaker 3: fine and just sort of You can't ignore price changes
Speaker 3: in bonds. The price change only matters if you decide
Speaker 3: to sell it. If you hold onto the bond and
Speaker 3: you continue to compound your performance and the return improves
Speaker 3: as you move through time. And that's the very powerful
Speaker 3: message in bond.
Speaker 2: George Boy replay that if you'd like to, I think
Speaker 2: there's a lot of wisdom there. Mister borri is within
Speaker 2: all Spring. Dan Kerry came in today just outstanding outstanding
Speaker 2: work at Macro Risk advisors. It's very very financy derivatives,
Speaker 2: all sorts of forecross moments. It's a good place to
Speaker 2: mention that we protect the copyright of all of our guests.
Speaker 2: Get their research from them, a kind note, a kind
Speaker 2: of email, a kind phone call. You'd be amazed how
Speaker 2: they give you a flavor of their genius. Dan Kurrent
Speaker 2: and I were talking about dollar dynamics, and that of
Speaker 2: course goes to my book of the Summer in Economics
Speaker 2: with Kenneth Rogoff, and that would be our Dollar Year Problem,
Speaker 2: dancing off of John Connolly from decades and decades ago.
Speaker 2: Dean currentive mri On Rogueff.
Speaker 4: So Ken reached out to me on this book as well.
Speaker 4: I had him speak post the twenty eleven Eurozone crisis
Speaker 4: at a couple of events I hosted. You know, our
Speaker 4: dollar year problem, our debt our problem, and I think,
Speaker 4: so that's a little bit of a different take on it.
Speaker 4: I would say, you know, up at five and a
Speaker 4: half six percent, the math of running the interest costs
Speaker 4: through that debt structure is just remarkably different. You know,
Speaker 4: there's really no resemblance to the current structure of US
Speaker 4: interest rates relative to when we took on all the
Speaker 4: debt in twenty twenty, which look was an emergency we
Speaker 4: were trying to push back against COVID. But I think
Speaker 4: the ten year traded as low as fifty five basis
Speaker 4: points into twenty twenty one. The tenure yield was one
Speaker 4: point two percent at the lows, and so this bears
Speaker 4: no resemblance to that, and these interest costs are punishing.
Speaker 4: You know, Tom, you have me on here to talk
Speaker 4: about the vis and you know, whenever we talk about volatility,
Speaker 4: we talk about things like nonlinearity, and with regard to treasuries,
Speaker 4: I think that's a facet of the market that we
Speaker 4: typically wouldn't characterize as having a risk of. But you know,
Speaker 4: things gradually then suddenly.
Speaker 2: The most cautious I've ever heard being current, no question
Speaker 2: about it. Just a brilliant day. Really looking forward to
Speaker 2: the rest of the We quieter economic data this week,
Speaker 2: but lots of good conversation to be had across the nation.
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