WEBVTT - Single Best Idea with Tom Keene: George Bory & Dean Curnutt

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

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<v Speaker 2>It's single best idea today was absolutely extraordinary. Moody's cut

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<v Speaker 2>the rating, you know whatever, it's old news now coming

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<v Speaker 2>out on Friday afternoon, and we decided and Eric and

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<v Speaker 2>the team were just brilliant and really taking a bond focus.

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<v Speaker 2>What a bonds mean the debt and the deficit? What

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<v Speaker 2>a bonds you mean for equities? What do they mean

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<v Speaker 2>for currencies? What do they mean for commodities? And we're

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<v Speaker 2>just a fascinating bond geek. Monday Strong was George Bori

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<v Speaker 2>at all Spring. He's got decades and decades of experience,

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<v Speaker 2>and we talked to him about this partition between price

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<v Speaker 2>decline of Bill's notes and bonds and yield increase.

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<v Speaker 3>The gield dominates in this environment. And even if bond yields,

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<v Speaker 3>so if the thirty year were to go up to

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<v Speaker 3>say five and a half percent, which is not out

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<v Speaker 3>of the realm of possibility, you're still looking at positive

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<v Speaker 3>returns in bonds. And that's why year to date bonds

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<v Speaker 3>have been done exactly what they're supposed to do. That

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<v Speaker 3>income is carrying the day. Your sort of average bond

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<v Speaker 3>performance is up about two percent year to date, not

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<v Speaker 3>wildly exciting, but enough to beat cash and certainly enough

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<v Speaker 3>to beat equities in a market where the market's trying

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<v Speaker 3>to figure out what the growth trajectory is going to

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<v Speaker 3>be on the back of tariffs. So what I tell investors,

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<v Speaker 3>I tell our investors is two things. One, income is

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<v Speaker 3>your friend. Number two, diversify that duration, and then let

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<v Speaker 3>the bonds do their job. They're doing exactly what they're

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<v Speaker 3>supposed to do. Income, coupon, compound through time. If I

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<v Speaker 3>can compound my portfolio today at say five to eight percent,

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<v Speaker 3>depending on what kind of bond I buy, but if

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<v Speaker 3>it's five and a half to six, I'm doing just

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<v Speaker 3>fine and just sort of You can't ignore price changes

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<v Speaker 3>in bonds. The price change only matters if you decide

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<v Speaker 3>to sell it. If you hold onto the bond and

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<v Speaker 3>you continue to compound your performance and the return improves

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<v Speaker 3>as you move through time. And that's the very powerful

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<v Speaker 3>message in bond.

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<v Speaker 2>George Boy replay that if you'd like to, I think

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<v Speaker 2>there's a lot of wisdom there. Mister borri is within

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<v Speaker 2>all Spring. Dan Kerry came in today just outstanding outstanding

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<v Speaker 2>work at Macro Risk advisors. It's very very financy derivatives,

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<v Speaker 2>all sorts of forecross moments. It's a good place to

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<v Speaker 2>mention that we protect the copyright of all of our guests.

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<v Speaker 2>Get their research from them, a kind note, a kind

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<v Speaker 2>of email, a kind phone call. You'd be amazed how

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<v Speaker 2>they give you a flavor of their genius. Dan Kurrent

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<v Speaker 2>and I were talking about dollar dynamics, and that of

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<v Speaker 2>course goes to my book of the Summer in Economics

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<v Speaker 2>with Kenneth Rogoff, and that would be our Dollar Year Problem,

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<v Speaker 2>dancing off of John Connolly from decades and decades ago.

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<v Speaker 2>Dean currentive mri On Rogueff.

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<v Speaker 4>So Ken reached out to me on this book as well.

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<v Speaker 4>I had him speak post the twenty eleven Eurozone crisis

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<v Speaker 4>at a couple of events I hosted. You know, our

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<v Speaker 4>dollar year problem, our debt our problem, and I think,

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<v Speaker 4>so that's a little bit of a different take on it.

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<v Speaker 4>I would say, you know, up at five and a

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<v Speaker 4>half six percent, the math of running the interest costs

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<v Speaker 4>through that debt structure is just remarkably different. You know,

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<v Speaker 4>there's really no resemblance to the current structure of US

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<v Speaker 4>interest rates relative to when we took on all the

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<v Speaker 4>debt in twenty twenty, which look was an emergency we

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<v Speaker 4>were trying to push back against COVID. But I think

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<v Speaker 4>the ten year traded as low as fifty five basis

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<v Speaker 4>points into twenty twenty one. The tenure yield was one

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<v Speaker 4>point two percent at the lows, and so this bears

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<v Speaker 4>no resemblance to that, and these interest costs are punishing.

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<v Speaker 4>You know, Tom, you have me on here to talk

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<v Speaker 4>about the vis and you know, whenever we talk about volatility,

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<v Speaker 4>we talk about things like nonlinearity, and with regard to treasuries,

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<v Speaker 4>I think that's a facet of the market that we

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<v Speaker 4>typically wouldn't characterize as having a risk of. But you know,

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<v Speaker 4>things gradually then suddenly.

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<v Speaker 2>The most cautious I've ever heard being current, no question

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<v Speaker 2>about it. Just a brilliant day. Really looking forward to

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<v Speaker 2>the rest of the We quieter economic data this week,

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<v Speaker 2>but lots of good conversation to be had across the nation.

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<v Speaker 2>best idea,