Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal.
Speaker 1: Joe, you know what one of the weirdest things about
Speaker 1: twenty twenty three was. I mean, I guess there's that's
Speaker 1: an unfair question, isn't it.
Speaker 2: Why don't you just tell me what's on your mind?
Speaker 2: And you know I could make many guesses, but why
Speaker 2: don't you just tell me?
Speaker 1: So after all the drama in the bond market, all
Speaker 1: the ups and downs, all the volatility, we basically ended
Speaker 1: the year kind of where we started, right around three
Speaker 1: point eight percent all the ten year yield. And I
Speaker 1: know it's picked up a little bit since then, but
Speaker 1: we basically had this really round trip, but a lot
Speaker 1: happened in between.
Speaker 2: That was a great choice, Tracy, for one of the
Speaker 2: weird things that happened. Yes, that was a huge story
Speaker 2: throughout the year, bond sell off, higher rates, et cetera.
Speaker 2: And then to get to the end of December and say, oh, yeah,
Speaker 2: the ten years basically where it started the year, extremely
Speaker 2: strange and unexpected. And when I saw that stat, I
Speaker 2: was like, I did not anticipate that at all.
Speaker 1: Yeah, and to me, maybe this is going to be
Speaker 1: a bit of a tortured analogy, but twenty twenty three
Speaker 1: is sort of emblematic of the bond market overall. People
Speaker 1: tend to look at it and think it's super boring. Normally,
Speaker 1: you know, before the wild years of twenty twenty one,
Speaker 1: twenty twenty two, twenty twenty three, it didn't move around
Speaker 1: that much. You know, bonds were supposed to be boring
Speaker 1: in that sense. And I think people have this view
Speaker 1: of like, Okay, you buy a ten year or maybe
Speaker 1: you buy a tip or something like that, you invest
Speaker 1: in t bills to get a little bit of pickup,
Speaker 1: or maybe you sell some bonds, and that's basically the
Speaker 1: extent of investing in the bond market. But there's this
Speaker 1: whole world when it comes to trading fixed income and
Speaker 1: interest rates that gets really interesting, really complicated in some ways,
Speaker 1: and I feel like we don't talk about enough. Like
Speaker 1: every once in a while it hits the headlines, Like
Speaker 1: you know, when Bill Gross was talking about selling volatility
Speaker 1: before he left PIMCO, everyone was like, oh, wait a second,
Speaker 1: there's a big bond investor selling volatility. I wonder how
Speaker 1: they're actually doing that. Yeah, but more often than not
Speaker 1: we talk about yields, we kind of connect them to
Speaker 1: what's going on in the macro economy and inflation and
Speaker 1: maybe the US debt and that's it.
Speaker 2: No, you're you're totally right. I mean, there's really two things.
Speaker 2: I mean, a part of the story for bonds over
Speaker 2: the last two years was the end of this incredible
Speaker 2: like forty year bond bullmarket or treasury bull market. And
Speaker 2: there were a few interruptions, of course in ninety four, etc.
Speaker 2: And we know about that, but by and large, bonds
Speaker 2: went up, yields went down, and bonds were like a
Speaker 2: nice heg hedge against your you know, your equity portfolio
Speaker 2: and sixty forty type portfolios were great. But then the
Speaker 2: other thing is you say, like if you talk to
Speaker 2: an equity manager, oh, I like tech docs this year,
Speaker 2: I like energy, you know though, just some rotation. We
Speaker 2: like big cabs, like small cabs. We like international. But
Speaker 2: it's like different flavors of being long. Whereas you know,
Speaker 2: when you look at how a lot of fixed income
Speaker 2: portfolio managers invest, as you say, it is often various
Speaker 2: flavors of derivatives around fixed income or you know, spreads
Speaker 2: and things like that. Rather than just sort of long here,
Speaker 2: long there exactly.
Speaker 1: So I am very pleased to say that today we do,
Speaker 1: in fact have the perfect guests to talk about the
Speaker 1: intricacies of fixed income. We have someone who actually used
Speaker 1: to work at PIMCO. He's now managing partner at Simplify
Speaker 1: Asset Management, perhaps better known as the convexity maven. So
Speaker 1: we're going to be speaking to Harley Bassman. Harley, thank
Speaker 1: you so much for coming on the show.
Speaker 3: Thank you, good morning.
Speaker 1: Very excited to have you here. I should have added
Speaker 1: to your intro that you are also a master of colors.
Speaker 2: Right, which we were going to get into the best
Speaker 2: color line charts in the business.
Speaker 3: Thank you.
Speaker 1: So I have a question to begin with, and this
Speaker 1: is completely out of self interest as a journalist who's
Speaker 1: had to write about convexity at many times during their
Speaker 1: career and has always struggled to define it in a
Speaker 1: way that satisfies my editors who want to encapsulate a
Speaker 1: financial relationship in as few words as possible. How would
Speaker 1: you describe it?
Speaker 3: You know, convexity. It's it's an ex word. So everyone
Speaker 3: gets a little rattle about that, but it's actually rather
Speaker 3: simple it's just unbalanced leverage, which was also a hard concept.
Speaker 3: Let's simplify it a little bit. If you have a bet,
Speaker 3: you're making a wager where you make a dollar or
Speaker 3: lose a dollar for equal up and down opposite payoffs,
Speaker 3: that's zero convexity. If you make two dollars and lose one,
Speaker 3: that's positive convexity. If you could lose three and make
Speaker 3: two negative convexity. The reason why we hired all these
Speaker 3: you know PhD you know quants in the nineties was
Speaker 3: to basically figure out what that's worth. Clearly, you'd rather
Speaker 3: own some makes two and loses one that is one
Speaker 3: to one, and if it's lose three make two, you
Speaker 3: better get paid for that. So all the mumbo jumbo
Speaker 3: we go do around pricing out these various paths and
Speaker 3: payoffs is just to make it up a fair bet
Speaker 3: when you have these different payoff profiles, and that's it.
Speaker 3: Covexy just means that the payoff is not linear, it's
Speaker 3: not one to one.
Speaker 1: Every once in a while you get to do something
Speaker 1: really great on this podcast, Joe and asking the convexity
Speaker 1: maven to define convexity is one of those things.
Speaker 2: This was a historic moment. We're gonna clip that. But
Speaker 2: let's go further down that. So often you hear about,
Speaker 2: like the most common time you hear about the phenomenon
Speaker 2: of convexity in the fixed income world is often related
Speaker 2: to mortgage related securities. Can you then, uh, can you
Speaker 2: take it a step further and sort of give us
Speaker 2: what does it mean? So you describe, you know, the
Speaker 2: search for positive, naturally occurring positive leverage in the world.
Speaker 2: Give us sort of a concrete example. Why does this
Speaker 2: pop up when we talk about mortgages frequently?
Speaker 3: Well, you're probably backing into the idea of our mortgage
Speaker 3: is a good value right now or not. Let's just
Speaker 3: go one step back. Yeah, when you're in the bond market,
Speaker 3: cod equities, the bond market, you have three buttons you
Speaker 3: could push. That's it, okay, Duration, credit, convexity. Those are
Speaker 3: your three risks. You start with cash, overnight cash, and
Speaker 3: anything you do past there is taking one of those three.
Speaker 3: Duration is when you get your money back. Credit is
Speaker 3: if you get it back. Convexi is how you get
Speaker 3: it back. And what a bond manager is trying to
Speaker 3: do is move around those three buttons to find the
Speaker 3: best risk return, the best value. Presently, selling convexity in
Speaker 3: the bond market is the best thing to do out
Speaker 3: there right now. What's duration? It is when you get
Speaker 3: your money back, So a to your security'll move one
Speaker 3: point eight points for a one point move, So if
Speaker 3: rates go from four to five, to your bottle move
Speaker 3: by one point eight points, a tenure by about eight points,
Speaker 3: a thirty year by be seventeen points. You're usually paid
Speaker 3: more to take longer maturity risk because there's more uncertainty.
Speaker 3: An infinite curve is kind of upside downland because you're
Speaker 3: getting paid less to take more risk. We could talk
Speaker 3: why that is in a little bit, but right now,
Speaker 3: duration is a very weird place to take risk right now,
Speaker 3: because you're paid less to go out the curve, and
Speaker 3: by a tenure versus a two year versus overnight cash credit.
Speaker 3: Right now, investment grade credit is trading about fifty seven
Speaker 3: basis points. It's a little over half point over the
Speaker 3: over the yield curve, and you get that from looking
Speaker 3: at these interest rate derivatives. On your Bloomberg is gonna
Speaker 3: be CDX five year. That's actually tighter, a smaller number
Speaker 3: than its historic average of about sixty five sixty six
Speaker 3: you're paid fifty seven. Now junk bonds you're paid about
Speaker 3: three sixty three point fifty three seventy, which is also
Speaker 3: much tighter than it's usual for forty four to fifty
Speaker 3: four to sixty. So going into credit now, yeah, you
Speaker 3: know that's not a great bet. I mean, I would
Speaker 3: say it's a disaster, but I mean, considering we're concerned
Speaker 3: about the possibility of overtightening, a possibility of procession, which
Speaker 3: an inverted curve kind of signals I don't wantally want
Speaker 3: to go and take credit risk. Convexity right now. The
Speaker 3: move index, which is a measure of the price of
Speaker 3: convexity the same way.
Speaker 1: It's which you invented, right I did.
Speaker 3: It's the mix of bonds, plain and simple, the VIX
Speaker 3: of bonds. Its average is maybe ninety or one hundred.
Speaker 3: It's treating one twenty now, which averages out to about
Speaker 3: maybe seven eight basis points a day of market movement.
Speaker 3: That's higher, much higher than it's historical average. That's the
Speaker 3: kind of trade you want to go and do. And
Speaker 3: mortgage security is simply a glorified by right, That's it.
Speaker 1: Wait, can I ask at a moment like this, when,
Speaker 1: as you point out, there does seem to be a
Speaker 1: lot of uncertainty. You know, some people are still saying
Speaker 1: that there's a lot left to do when it comes
Speaker 1: to stamping out inflation, but the market is already pricing
Speaker 1: in rate cuts and some people are still worried about
Speaker 1: a recession. Is the important thing to choose which of
Speaker 1: those risks you want to take on duration, credit or convexity,
Speaker 1: or is the important thing to do to identify the
Speaker 1: exact right expression of the trade.
Speaker 3: Well, clearly, if you know where rates are going to go,
Speaker 3: you just go and buy futures contracts to call the day.
Speaker 3: I assume that we don't know where the market will
Speaker 3: be usually, and therefore, when you're building a portfolio, what
Speaker 3: you want to do is you're always going to have
Speaker 3: some exposure to all three of those. What you're trying
Speaker 3: to do is over or underweight these various sectors, depending
Speaker 3: upon your market view. So right now, what I'd be
Speaker 3: doing is overweighting the convexity, underweighting the credit, and then
Speaker 3: duration I'd be pulling into the five year or earlier
Speaker 3: on the curve. For a variety of.
Speaker 2: Reasons, explain this further when you say, okay, you want
Speaker 2: to be going long convexity, or that's where the opportunity
Speaker 2: is because if you say the move index, your creation
Speaker 2: is higher than normal. Unlike say, you know you're not
Speaker 2: getting paid for credit. How do you express that trade
Speaker 2: of going long convexity and what does that look like?
Speaker 3: Well, actually we're going short.
Speaker 2: Sorry.
Speaker 3: In general, I tend to be a long covexity person
Speaker 3: and I like the idea of making two losing one.
Speaker 3: So I've done most of my career owning covexity, owning optionality. However,
Speaker 3: as they say, no bad bonds, just bad prices, there
Speaker 3: is a level where I will sell it, and we're
Speaker 3: at that level right now. Before the FED came in
Speaker 3: scrambled things up in the last decade, the old rule
Speaker 3: was on the move you buy eighty, you sell one twenty.
Speaker 3: The problem with that is nobody would do it. Why
Speaker 3: is that when the move got down to you know,
Speaker 3: seventy eighty, that means the market's not moving that much.
Speaker 3: And therefore, who wants to go and buy optionality? Who
Speaker 3: wants to pay time decay when the maruk's not moving?
Speaker 3: No one does so no one buys it when it's low,
Speaker 3: and when once twenty or higher no one sells there
Speaker 3: you have some crazy event going on. People are hiding
Speaker 3: under their desks crying for mommy. So no one sells
Speaker 3: it at one twenty. But the reality is you're supposed
Speaker 3: to go and you know, not go naked short optionality.
Speaker 3: But you can go and just bias what you do
Speaker 3: to make yourself either short COVEXTI or maybe it's a
Speaker 3: little less long convexity in your portfolio, just.
Speaker 2: So that we can like when you say, like, okay,
Speaker 2: short convexity, what is the type of instrument that allows
Speaker 2: any trade or investor to express that?
Speaker 3: Well, the most simple strategy would be for an investor
Speaker 3: on the stock portfolio to go and sell covered calls.
Speaker 3: I mean that's that's I mean you're selling options, selling
Speaker 3: AVEXDI when you when you go, when you sell covered calls,
Speaker 3: what are you really doing? You're kind of converting potential
Speaker 3: capital gains to current income. You're limiting your upside, you're downside.
Speaker 3: Of course you're still large, but stock can go down
Speaker 3: a lot, but you're basically kind of doing a conversion
Speaker 3: there of taking risk off the table. For current income,
Speaker 3: and there's a price where you want to go and
Speaker 3: do that, and there's prices where you don't. When the
Speaker 3: VICS is at forty or fifty, I mean, you probably
Speaker 3: want to sell covered calls. Of course you won't do
Speaker 3: it because you'll be a panic, but that's kind of
Speaker 3: the idea. And theoretically, portfolio managers supposed to have no
Speaker 3: blood in their veins and they can go and do
Speaker 3: these various trades when the time is right.
Speaker 1: This is why I'm not a portfolio manager, Jery, I
Speaker 1: in fact have blood. But actually this brings me to
Speaker 1: a question I always wanted to ask, because a lot
Speaker 1: of your trade ideas, I think they're publicly available. So
Speaker 1: like every year you publish stocking stuffers, which is kind
Speaker 1: of a series of trade ideas, and I'm never quite
Speaker 1: certain who those trade ideas are aimed at. And the
Speaker 1: reason I say that is because you will say stuff
Speaker 1: in them, like you know, and if you don't have
Speaker 1: an is to credit agreement, here's a way to get
Speaker 1: around that. But then the trade itself is still quite complicated,
Speaker 1: so I assume it's not aimed at your average retail investor.
Speaker 1: Who is the target audience? For some of these things, well.
Speaker 3: I'll say that as my career's gone by, I used
Speaker 3: to target high institutions and hedge funds. I've now moved
Speaker 3: more towards I would call it reasonably intellectually sophisticated high
Speaker 3: networth retail as if you're towards an average person, probably not.
Speaker 3: But you can still take these ideas and take the
Speaker 3: flavor of them. You don't have to do the exact idea.
Speaker 3: You could just do the flavor. So if it's a
Speaker 3: duration concept, you can take your portfolio from a ten
Speaker 3: year area to a five year area. If it's a
Speaker 3: credit area, you can move into single A from double A,
Speaker 3: things like that. But yes, you're right, a lot of
Speaker 3: ideas are a little a little tricky and entertaining hopefully
Speaker 3: also but yeah, yeah, it could be a challenge.
Speaker 1: They are always entertaining, that is definitely true. But you know,
Speaker 1: if you say something like short convexity for a simplified trade,
Speaker 1: I would think do something with the MBS index. But
Speaker 1: that's not what you're advocating at all.
Speaker 3: Not right now. Well, my new job I'm with I
Speaker 3: hate to give a plug over here, but I'm at
Speaker 3: simplify asset management. And what we are doing is we're
Speaker 3: taking a lot of the ideas that I've had and
Speaker 3: putting them into ETFs. There was a SEC rule change
Speaker 3: a few years ago that allowed people to put drives
Speaker 3: of futures options, all these various things into ETFs, and
Speaker 3: what we've been doing is putting these derivatives into ETFs
Speaker 3: which you could basically point and click on Robinhood. So,
Speaker 3: for instance, two and a half years ago, I created
Speaker 3: an ETF where I put a seven year put option
Speaker 3: on the thirty year treasury more or less into an ETF.
Speaker 3: And this was actually I think Bloomberg rank is one
Speaker 3: of the highest return trades for a while.
Speaker 2: I mean from is this the pfix ETF.
Speaker 3: Yep, it was up to two hundred percent for a while,
Speaker 3: and it's basically a straight up, you know, way to
Speaker 3: make money if rates go up. That was it, and
Speaker 3: it was a way for civilians to get to institutional products.
Speaker 3: And I have a new product out there where it
Speaker 3: allows civilians to go and buy mortgage bonds. Mortgage bonds
Speaker 3: are it's the second biggest asset class of bonds after treasuries,
Speaker 3: and it's almost impossible to buy them for ordinary people
Speaker 3: for a variety of reasons. And what we've done is
Speaker 3: we have institutional quality trading abilities that we could put
Speaker 3: into ETFs. We're allowing enabling civilian investors to buy mortgage
Speaker 3: bonds that are trading, you know, near near par and
Speaker 3: right now, these par mortgage bonds, bonds trading near ninety
Speaker 3: eight nine nine one hundred are what I view to
Speaker 3: be the best fixed income investment on the planet right now,
Speaker 3: they're trading about one and a half points O.
Speaker 2: Wait, sorry, what instruments are the best fixed income in
Speaker 2: in the planet?
Speaker 3: Near par So near us right now? Five five and
Speaker 3: a half percent of mortgage bonds.
Speaker 2: Okay, and how come sorry you were about to explain it.
Speaker 2: Why are they the best investment right now?
Speaker 3: Well, mortgage bonds, for all intents and purposes, are US
Speaker 3: government guaranteed. Fany and Freddy are not guaranteed per se,
Speaker 3: Jinny May are. I can assure you Fannie May will
Speaker 3: never go bankrupt. If it was to go bankrupt, my
Speaker 3: advice then is to go buy cans of tuna, a gun,
Speaker 3: and small denomination gold coins because it will be the
Speaker 3: end of civilization. Okay, So Fano Ma is not going bust.
Speaker 3: You could buy these mortgage bonds yielding about five and
Speaker 3: a half percent right now, which I can help you
Speaker 3: go and do, which is about one and a half
Speaker 3: percent over treasuries. Corporate bonds that can default are only
Speaker 3: fifty seven basis points over treasuries. And this is kind
Speaker 3: of crazy town where you could buy full faith and
Speaker 3: credit of the US government almost one percent higher than
Speaker 3: a corporate bond that can default, and if you are
Speaker 3: a believer in a hard landing, will default. Okay.
Speaker 1: But the risk with the ns, like the normal mbs
Speaker 1: that you would see in the index, not the stuff
Speaker 1: that's trading really close to par that you're picking out,
Speaker 1: is pre payment risk, right, That's what you're trying to avoid.
Speaker 3: So I think the better question is, excuse me, why
Speaker 3: are these mortgage bonds trading one percent higher than corporate
Speaker 3: bonds when clearly they are smart people in the world.
Speaker 3: The reason why is a mortgage bond looks and barks
Speaker 3: a covered call like you're selling this big call option
Speaker 3: on a ten year treasury and with the move at
Speaker 3: one twenty, that's the way you basically do a covered call.
Speaker 3: This is the way you go and take convexy risk.
Speaker 3: As opposed to credit risk, these par mortgage bonds can
Speaker 3: be prepaid. Therefore, a bond trading at ninety nine, maybe
Speaker 3: you can go to one oh two, one oh three,
Speaker 3: one oh four before it gets called. That's what you're
Speaker 3: giving up when you buy a mortgage bond, is you're
Speaker 3: giving away the big upside. So if rates go from
Speaker 3: four to two, a par mortgage bond not gonna be
Speaker 3: so good. I mean you'll make money, you'll just a
Speaker 3: lot less. And if rates go up, these bonds will
Speaker 3: go down like a seven year treasury.
Speaker 1: Uh, you mentioned credit risk just then, at this point
Speaker 1: in the economic cycle, how worried are you about credit risk?
Speaker 1: Given that, you know, going into twenty twenty three, there
Speaker 1: were a lot of recession fears. There were a lot
Speaker 1: of credit experts that explicitly said they thought that defaults
Speaker 1: were going to pick up substantially, things were going to
Speaker 1: start to fall apart in the credit market. And instead,
Speaker 1: you know, November December we saw a pretty big rally
Speaker 1: in the space, leading to very low spreads, which you've
Speaker 1: already pointed out are kind of in crazy town territory
Speaker 1: at least compared to some other possible investments. So how
Speaker 1: worried are you about things like defaults in twenty twenty four.
Speaker 3: Defaults in twenty twenty four not going to happen next year.
Speaker 3: They might when we have to refinance all the debt
Speaker 3: that was taken out. This is called the maturity wall,
Speaker 3: and there's plenty of grass and.
Speaker 1: Charge on this podcast. You have to say looming maturity wall.
Speaker 3: That's okay, looming. Yes, well it's looming, but it's coming.
Speaker 3: So I'm more interested in inflation than in default than
Speaker 3: in hard landing ideas. And the reason why is I
Speaker 3: think that the demographic of these boomers retiring retiring with
Speaker 3: a lot more money than their parents had, which means
Speaker 3: they're gonna keep on spending. The old rule was when
Speaker 3: you got older and you retired, you're spending was reduced
Speaker 3: because you had lower income. The boomers, well, we took
Speaker 3: all the money. Okay, I'm sorry.
Speaker 1: At least you're honest about it. I appreciate that we.
Speaker 3: Took all the money with the stocks, with the bonds,
Speaker 3: with the housing, with everything else. And so we're gonna
Speaker 3: keep on spending, but we're not going to work anymore.
Speaker 3: So we're pulling out the supply of labor. Right, the millennials,
Speaker 3: they're working, and they're getting married, they're having kids, so
Speaker 3: they have just demand they need. They're going to buy
Speaker 3: stuff as they form households, and that's what I think
Speaker 3: is going to keep inflation pressures up the same way
Speaker 3: we had inflation in the seventies as the boomers right matured,
Speaker 3: formed households baugh cars. So I'm a believer that inflation
Speaker 3: the two percent target is not coming anytime soon. There's
Speaker 3: a good story why it, Mike, I'm not a believer
Speaker 3: in that. And I also think that the Fed is
Speaker 3: not gonna take rates down nearly as much as the
Speaker 3: market is implying by the futures market. And I think
Speaker 3: that J. Powell good guy, bad guy. I don't know.
Speaker 3: What I know is this. He has a lot of money,
Speaker 3: his nice family, nice kids, probably a nice house. Also,
Speaker 3: what does he care about? What do we think of?
Speaker 1: That is?
Speaker 3: What is humanity all about? We still read the Greek tragedies,
Speaker 3: we still read Shakespeare. What did these guys all talk
Speaker 3: about that it's still so interesting three thousand years later.
Speaker 3: Hubris ego, that's what drives humanity. It's always the fault
Speaker 3: of humanity. And I think what Jay Peale's thinking about
Speaker 3: now is really not inflation per se. But what's my
Speaker 3: tombstone going to say?
Speaker 1: Yeah, legacy is a nicer way of saying, Ego.
Speaker 3: Is it gonna be Arthur Burns, who basically we all
Speaker 3: as the post your child for inflation getting out of hand?
Speaker 3: Or is it going to be Paul Vulgar the Saints
Speaker 3: who saved it from inflation. Some people will say that
Speaker 3: it wasn't him, it was demographics, but whatever, whatever, he
Speaker 3: wants to be Vulgar, not Burns, and therefore he's going
Speaker 3: to go. And I think hold rates up longer than
Speaker 3: people might think to go and ensure inflation is truly
Speaker 3: wouldn't stake in the heart dead.
Speaker 2: So I mean, I definitely want to get more into
Speaker 2: the sort of I don't know, maybe a psychological approach
Speaker 2: to forecasting defense. Maybe we spend the rest of the
Speaker 2: show on that. But I do want to go back
Speaker 2: and talk the sort of boring stuff about the mechanics
Speaker 2: of mortgages real quickly on spreads. So the spread between
Speaker 2: the thirty year I just did like a subtraction function,
Speaker 2: the most crude thing, but you know, thirty year mortgage
Speaker 2: minus thirty year treasury. You know a few years ago
Speaker 2: that spread was I don't know, like around one percent.
Speaker 2: It got as high, you know, got around three and
Speaker 2: a quarter. It's come down a bit two point eight.
Speaker 2: So just why are spreads as high as they are?
Speaker 2: How would you describe that gap between mortgage spreads and
Speaker 2: treasuries right now? Why is it still such historic hize?
Speaker 3: Okay, you're supposed to you the par mortgage rate on
Speaker 3: Bloomberg mtge fncl use that, okay, versus the tenure swap
Speaker 3: rate or the tenure treasury rate.
Speaker 2: The very much different. Right.
Speaker 3: You'll see about a seventy five seventy basis points spread
Speaker 3: historically back you know, thirty forty years. Okay, it's now
Speaker 3: one fifty. Why is it? There? Two reasons. The easy
Speaker 3: one is vall is high, the moves at one twenty.
Speaker 3: That's the easy one. The harder one is that the
Speaker 3: curves inverted. That's going to require a lot of explanation
Speaker 3: that you can go look at my commentary on my
Speaker 3: website to go read about. But those two things, the
Speaker 3: inverted deal curve and high volatility, and you're gonna see
Speaker 3: when this curve steepens out, which means a two year
Speaker 3: rate comes down below the ten year rate, you're gonna
Speaker 3: see mortgage bonds in general go up. You'll see mortgage
Speaker 3: yields come down, You'll see the retail mortgage rate come down.
Speaker 3: So that's coming, not yet, that's coming.
Speaker 2: Wait.
Speaker 1: But one of the questions about the recent dynamic and
Speaker 1: mortgage rates is it has fallen quite quickly, even though
Speaker 1: the spread between mortgages and treasuries is quite wide. I
Speaker 1: think that's the question, like, why is it? It moved
Speaker 1: up really quickly in twenty twenty two to twenty twenty three,
Speaker 1: shot above seven percent and then eventually eight percent, But
Speaker 1: now it seems to be falling really quickly, even though
Speaker 1: a lot of people thought there were structural changes in
Speaker 1: the market that meant rates were not going to be
Speaker 1: able to come down that fast.
Speaker 3: Look, as I said, the mortgage bond market is the
Speaker 3: second biggest market after treasuries. That spread of one point
Speaker 3: fifty drives the retail rate, and the retail rate is
Speaker 3: going to be let's say another three quarters to one
Speaker 3: percent over that rate. It's a business, and it's a
Speaker 3: competitive business, and it kind of grinds along. And so
Speaker 3: as you see the mortgage bonds tightened have a smaller
Speaker 3: spread to treasuries, you will see the retail mortgage rate
Speaker 3: come down. You're also going to see the spread between
Speaker 3: the retail rate the rate the homeowners take versus the
Speaker 3: mortgage bond rate that's going to come pressed in also
Speaker 3: for a variety of market reasons.
Speaker 1: This might be a slightly unfair question, but do you
Speaker 1: have an estimate for how far the mortgage rate could
Speaker 1: come down?
Speaker 3: Oh? Yeah, I mean eventually the Fed will cut rates
Speaker 3: and you can see easily another hundred based points in
Speaker 3: mortgage rates, haven't.
Speaker 1: I wanted to ask you about something else that you
Speaker 1: sort of threw in there, the inverted yield curve, And
Speaker 1: this has been a massive topic of conversation for the
Speaker 1: past couple of years. I mean, even before the pandemic,
Speaker 1: the yield curve was inverted, and so the joke was
Speaker 1: that the treasury market predicted COVID nineteen and things like that.
Speaker 1: But when you look at the yield curve now it's
Speaker 1: been inverted for a while, there's this big discussion over
Speaker 1: whether or not it is still valid as a recessionary indicator.
Speaker 1: What economic information, if any, are you getting out of
Speaker 1: the inverted yield curve. What is it telling you?
Speaker 3: If you go look at various derivatives, It's indicates right
Speaker 3: now that are to cut rates, you know, four or
Speaker 3: five six times so called one hundred and twenty bent
Speaker 3: basis points of cutting in the next year, which seems
Speaker 3: kind of crazy unless we crash market. We have a
Speaker 3: market crash. I think what's happening is this. I don't
Speaker 3: think it's the market predicting that rates are going to
Speaker 3: come down by one hundred and a quarter base points.
Speaker 3: I don't think that's it. I think what's happening here
Speaker 3: is like an eighty five percent chance their rates don't
Speaker 3: move and a fifteen percent chance their rates go to
Speaker 3: one percent that we have some kind of disaster. It's
Speaker 3: it's a bimodal and if you add those two things together,
Speaker 3: that's how you get the down one twenty five. No
Speaker 3: one's saying one twenty five. I think it's zero and
Speaker 3: four hundred and people are using the two year rate
Speaker 3: or the five year rate as an insurance policy against
Speaker 3: a bad thing happening. If you think in those terms,
Speaker 3: it kind of makes sense because we only quote one number,
Speaker 3: but how do we get that number right?
Speaker 2: So the idea is if your long risk assets, which
Speaker 2: most people are most of the time, one way to
Speaker 2: hedge that would be to sort of, you know, make
Speaker 2: big bets on rates coming down sharply. It doesn't mean
Speaker 2: that that's your main view. It just means that if
Speaker 2: your your bullish view is going to go wrong, a
Speaker 2: way to hedge that is to you know, place big
Speaker 2: bets on rate.
Speaker 3: Yeah. Well that's why the curves inverted. But I mean,
Speaker 3: I think buying tenure rates is kind of silly right now.
Speaker 3: I mean, if you're gonna go and buy this theoretical
Speaker 3: insurance policy of the FED doing a massive cut because
Speaker 3: of a hard landing, you want by the two year rate.
Speaker 3: And that's why we created another product that's basically at
Speaker 3: five times levered two year. That way you get the
Speaker 3: duration of the.
Speaker 2: Ten's just a ticker on that. I want to look
Speaker 2: at that.
Speaker 3: Well, t u A to you. So it's a very
Speaker 3: in theory. Civilians could do it. They can just buy
Speaker 3: their own futures contracts, but civilians usually don't have futures
Speaker 3: contracts accounts, so we are off for them for very
Speaker 3: small fee.
Speaker 1: Got it, Oh, t u A, I think I remember
Speaker 1: this one. I used it to compare the performance of
Speaker 1: the treasury market to a bitcoin.
Speaker 2: Now I want to go look that up. Let's go
Speaker 2: back to your outlook for the year. So I really
Speaker 2: do love this sort of thinking. It's like, okay, on
Speaker 2: his epitaph, on his obituary, Powell may have this sort
Speaker 2: of like human impulse to not be Arthur Burns two
Speaker 2: point zero. But you know, there also is the chance
Speaker 2: for not to just avoid being Arthur Burns, but to
Speaker 2: deliver the soft landing that every economist has said impossible.
Speaker 2: So not just avoiding being one of history's sort of
Speaker 2: scape goods, but actually being a legend and being the
Speaker 2: central banker who fought the crisis in twenty twenty and
Speaker 2: then delivered the soft landing when everyone said it was
Speaker 2: impossible and that we'd have to have employment go to
Speaker 2: six percent in order to get inflation down. Like, do
Speaker 2: you put any weight on this possibility that the sort
Speaker 2: of FMC goes for the let's be legends outcome?
Speaker 3: Oh? Sure, I think they're they're there. They're going to
Speaker 3: try and do it, and they it may well work.
Speaker 3: I'm gonna say it's not gonna be six cuts. It'll
Speaker 3: be two or three and it's not gonna happen in March.
Speaker 3: It'll happen in July. That's all I'm saying.
Speaker 2: So not radically different. Your sort of view of where
Speaker 2: what the Fed does in twenty twenty four is not
Speaker 2: radically different than what a lot of pundits are thinking.
Speaker 3: Cruggling back to the duration credit convects. The idea duration
Speaker 3: is I buy it here, it ends up there. Credit
Speaker 3: I buy it here, it ends up there. It doesn't
Speaker 3: matter how it gets to the found destination. Convexity is
Speaker 3: path dependent. It matters how you get there. And so
Speaker 3: what we're arguing about now is not where we're going
Speaker 3: to be, but how we get there. And I'm saying
Speaker 3: that we're gonna get there much slower than the market thinks.
Speaker 3: And I want to go and invest accordingly. And if
Speaker 3: I do that, this is where mortgage bonds come in.
Speaker 3: I'll say you. If you want to want the big
Speaker 3: prediction here, it is the Fed once a two percent
Speaker 3: inflation rate, they'll get it eventually. I presume they're gonna
Speaker 3: put the funds rate at two and a half over
Speaker 3: for a fifty basis point real return. Historically, like if
Speaker 3: you're a you know, bond geezer like, I am funds
Speaker 3: rate to two years fifty basis points so now worth
Speaker 3: three twos tens one hundred basis points so now worth four.
Speaker 3: So we're kind of looking at the tenure right now.
Speaker 3: Is what three eighty three ninety four four whatever it is?
Speaker 3: I mean, it's done, it's stick a forgative man. The
Speaker 3: tens aren't moving, and I think the three of yr
Speaker 3: rate probably goes up from here as the curve re
Speaker 3: steepens again all the actions the front end that's for
Speaker 3: all the action is going to be and when it happens.
Speaker 3: And so the trade that the geeky quants, the complex people,
Speaker 3: as you might say, are yelling about right now is
Speaker 3: how do I go and bet on a yield curved steepening.
Speaker 3: That's very tricky to do. Fortunately, I do have products
Speaker 3: that we'll do that.
Speaker 1: Also, Wait, don't you just do a steepener tart? Like
Speaker 1: how what are you recommending here?
Speaker 3: Oh? Sure, a steepid exactly what you do. But who
Speaker 3: can do that? I go shure, you people on this
Speaker 3: podcast can't do that.
Speaker 1: Yeah, well we can't do anything because we work at Bloomberg.
Speaker 3: To be clear, if you bought my pifix ETF that
Speaker 3: trade actually will make a lot of money if the
Speaker 3: yield kurt steepens as I've described it, which is the
Speaker 3: ten you're not moving, the two you're coming down, the
Speaker 3: thirty year going up. That'll be a very profitable trade
Speaker 3: if that happens, And the cost of holding that trade
Speaker 3: is rather slim for a variety of reasons that don't matter.
Speaker 1: You know. One of the other things that happened in
Speaker 1: twenty twenty three and twenty twenty two, and one of
Speaker 1: the reasons it was so painful for a lot of
Speaker 1: investors was bonds and stocks became positively correlated. Right, Everything
Speaker 1: sold off all at once, and this was bad news
Speaker 1: for anyone who had constructed a sixty to forty portfolio,
Speaker 1: or who had bought bonds as a hedge for riskier assets.
Speaker 1: How are you viewing that relationship going into twenty twenty four.
Speaker 1: I think there's still an assumption that things are sort
Speaker 1: of moving together. But could we get a situation where
Speaker 1: maybe they become invert correlated again.
Speaker 3: If you were reading my covecs they maven commentaries long
Speaker 3: enough to notice the colors I have there, you would
Speaker 3: notice that quite a number of years ago, I was
Speaker 3: talking about this exact notion of the correlation of stocks
Speaker 3: to bonds, and what you saw was prior to ninety eight,
Speaker 3: ninety nine to two thousand, you saw stocks and bonds
Speaker 3: go up and down together. And for the last twenty
Speaker 3: years they went inverse. They were hedging each other. Yeah,
Speaker 3: and now they're back to being positive correlated again. The
Speaker 3: driver of that has been the level of interest rates.
Speaker 3: And if you go to my website, I have a
Speaker 3: number of charts that show exactly this, that when inflations
Speaker 3: blow two and a half and tenure rates are below
Speaker 3: three and a half, you tend to see them work
Speaker 3: in oppsit directions. When they're above that, they work in
Speaker 3: the same direction. So I think you're gonna see stocks
Speaker 3: and bonds correlated until we get rates and inflation back
Speaker 3: down again.
Speaker 2: I love that. I mean, there's like an intuition if
Speaker 2: inflation is low, fed is more on fed put mode,
Speaker 2: et cetera. You sort of get those like buoyancy under equities.
Speaker 2: I want to go back to the idea of the
Speaker 2: steepener and right now, if you just were to put
Speaker 2: on it, make a chart, a dual life access chart,
Speaker 2: or I guess even one you know, two year ten
Speaker 2: year yields, they kind of look the same. But as
Speaker 2: you point out, and as people have been discussed, you
Speaker 2: could get to this point eventually or the FED cuts
Speaker 2: and that is viewed as reflationary or you know, creates
Speaker 2: this positive impulse and you could have the decline at
Speaker 2: the short end and then the long end is the
Speaker 2: rates go up? When does that happen? At what point? Like,
Speaker 2: we haven't seen it yet, right, So we've had these
Speaker 2: expectations of cuts, this pricing end of short end cuts,
Speaker 2: and we've seen the long end go right down along
Speaker 2: with it as the two year fell. At what point
Speaker 2: does that change such that the expectation of cuts in
Speaker 2: the short term leads to higher rates of the long term.
Speaker 3: Well, there is the expression of don't fight the Fed,
Speaker 3: and the reason is they're bigger than you are, man,
Speaker 3: They're the casino. The FED will cut rates. Yeah, I'm
Speaker 3: not sure when I think July, but they will cut rates,
Speaker 3: and as they eventually start to cut rates, the curve
Speaker 3: will steepen out. The question is how much of this
Speaker 3: steepening will be the two year coming down versus a
Speaker 3: rotation of twos down in tens and thirties up. I
Speaker 3: tend to think it'll be a rotation for the reasons
Speaker 3: you've described when's going to happen.
Speaker 2: It's fun they cut, So right now we have markets
Speaker 2: sort of coming down with the pricing and of cuts,
Speaker 2: but you're saying when they're actually realized cuts is when
Speaker 2: we would start to see that relationship change.
Speaker 3: Tracy was talking about this notion of the curve predicting
Speaker 3: the economy, and it's predicted the last I guess eight recessions.
Speaker 3: It's been spought on for forty years. We us here
Speaker 3: always talk twos tens because it's kind of fun. The
Speaker 3: actual research was the three month rate versus the ten
Speaker 3: year rate in treasuries, not in swaps, and the three
Speaker 3: month rate is the FED rate. The market can't go
Speaker 3: and pull the three month down with the FED rate
Speaker 3: up where it is, so you need the actual Fed
Speaker 3: to cut the interest rates to go and pull the
Speaker 3: three month versus ten years down, and that's what will happen.
Speaker 3: And all that's happening right now is people are in
Speaker 3: theory placing these bets on when this will occur. I
Speaker 3: think they're over their skis on this, but you know,
Speaker 3: we'll see.
Speaker 1: I just have a couple more questions, but one of
Speaker 1: them is slightly outside the world of fixed income. But
Speaker 1: I think given your experience in derivatives and you know
Speaker 1: things where the tail is sometimes wagging the dog, maybe
Speaker 1: you have an opinion on this. But zero day options,
Speaker 1: is that something you've been following at all in the
Speaker 1: stock market.
Speaker 3: I find them very interesting and they're important to the
Speaker 3: extent of when these options are trading, there's a buyer,
Speaker 3: there's a seller. It's a closed system. The world has
Speaker 3: not gone more or less optional or convex. It's a
Speaker 3: closed system. However, the two parties may act differently. So
Speaker 3: once upon time when you would see huge options selling
Speaker 3: in the bond market or option trading, that might reduce
Speaker 3: volatility because the seller very often would be my ex
Speaker 3: employer and they would not be adjusting their portfolio, whereas
Speaker 3: the buyers, people like me when I was a trader
Speaker 3: on Wall Street, I would be delta hedging, adjusting my portfolio.
Speaker 3: And if I'm trading against the option but the seller isn't,
Speaker 3: that'll drive the market towards the strike at xpery. The
Speaker 3: question is now, is those zero day options are the buyers.
Speaker 3: Are the sellers trading them? Are they adjusting them? And
Speaker 3: is that I'm gonna guess their retails by selling the options.
Speaker 3: But in games Stop they're buying it. And so what
Speaker 3: you saw there was Game Stop they buy the option,
Speaker 3: sit elt Sasquahana would sell the option they were hedging.
Speaker 3: Retail wasn't. And that's what drove the market to be
Speaker 3: more volatile. Right now, you probably retail selling the options.
Speaker 3: It s tis Quanta retail buying it, and therefore that's
Speaker 3: reducing volatility. So you got to figure out who's the buyer,
Speaker 3: who's the seller, who's trading it, and who's not. Can
Speaker 3: we know that I see these guys on Wall Street
Speaker 3: all the time saying, you know, this is the net
Speaker 3: Gama of the world. Like do I believe them? Not? Really?
Speaker 3: It just sells newspapers.
Speaker 2: Can I just go a quick question? And I'm asking
Speaker 2: you this because you mentioned a handful of tickers that
Speaker 2: your firms Simplify Asset Management has created, like prefix. Are
Speaker 2: these instruments that at different times you would recommend go
Speaker 2: long or short? I mean, so you have this desk
Speaker 2: where you can convert institutional quality trading of futures and swaps,
Speaker 2: et cetera into a retail package that one could buy
Speaker 2: even on a platform like Robinhood. You know, and when
Speaker 2: I think of asset management in general, you know, I
Speaker 2: think of like basically managers who want to create products
Speaker 2: that will go up. But is the idea here that
Speaker 2: you want to create products that allow people to have
Speaker 2: exposure in both directions.
Speaker 3: Some of our products are more strategic, some are more permanent.
Speaker 3: One could argue that that Pifix was strategic. You know,
Speaker 3: it came on two years ago, riach, we're you know,
Speaker 3: one two percent, and they went a lot highers that worked.
Speaker 3: I might add, though, although they desire to buy this product,
Speaker 3: is less now because clearly we're kind of this, you know,
Speaker 3: great paradigm of flat to low. I'd argue that it
Speaker 3: still makes sense to own it, maybe less of it.
Speaker 3: Because you don't buy insurance because you think you're going
Speaker 3: to crash. It's because you might be wrong and you
Speaker 3: might do it. You don't buy pifix because you're embarrassed
Speaker 3: on rates. You buy it because your bullshy might be wrong.
Speaker 3: And so as an insurance policy, a very low cost
Speaker 3: insurance policy that makes sense. MTBA, which is our mortgage product.
Speaker 3: That's more of a lifetime product. I mean that yields
Speaker 3: one hundred and fifty over the curvature. You will always
Speaker 3: have exposure in the mortgage market. If you are in
Speaker 3: fixed income, you'll have some amount of money there. You
Speaker 3: should have a lot of it now in the mortgage market,
Speaker 3: and after the curve steepens involves come down, you should
Speaker 3: have less of it. Yeah.
Speaker 1: The p fix chart looks fantastic if you got in
Speaker 1: in twenty twenty one and got out sort of like
Speaker 1: last year. Yeah, but uh, feller's extremely painful if you
Speaker 1: got in just before the end of the year.
Speaker 3: We've had a huge thirty four dollars distribution.
Speaker 1: Oh is that what it is? This is my fault.
Speaker 1: I should adjusted for distributions.
Speaker 2: So you still didn't want to get it in October
Speaker 2: thirty first, No, the line is distorted at the end
Speaker 2: by that distribution.
Speaker 3: Yeah, since the distribution is the product has been re
Speaker 3: restructured to the very similar to what it was its
Speaker 3: original entry points two and a half years ago.
Speaker 2: So it's you kind of have to reload.
Speaker 3: You're supposed to reload now. It's actually a little better
Speaker 3: product now than before. Although clearly, you know from one
Speaker 3: fourteen down to forty looks challenging, but remember thirty five
Speaker 3: bucks of that is distribution.
Speaker 1: I just have one more question. It is the most
Speaker 1: important question.
Speaker 2: Are you going to steal my question of this conversation question?
Speaker 1: Oh yeah, Joe, still one of my questions. I don't
Speaker 1: think I am okay good, But you can claim that
Speaker 1: I have and then show me the evidence. But this
Speaker 1: is very important. What's your favorite color? Was that your
Speaker 1: question was?
Speaker 2: It was close? So I'm just gonn we just can Yeah,
Speaker 2: you could tweak it, just like answer the question. So
Speaker 2: for those who have never read Harley's notes, you know
Speaker 2: here in Bloomberg we have the gold line sometimes in
Speaker 2: a white line. I sort of leave it at that.
Speaker 2: Harley these notes, I'd see. I'm looking at the most
Speaker 2: recent grabag. There's the Kiddorooki line which I had, Zimbibu line,
Speaker 2: the kahaweel line, and these are apparently all colors. So
Speaker 2: I was like chatting with Tracy's like do you like
Speaker 2: go down through like the pantone catalog each time to
Speaker 2: come up with new catalog? Like what are these colors?
Speaker 2: And I guess, like what is your favorite but how
Speaker 2: did you or what is all this sol about?
Speaker 3: I started writing a commentary nearly twenty years ago. You
Speaker 3: can go to convexdemaven dot com. That's my entire inventory
Speaker 3: of commentaries. I published every six to eight weeks. It's free,
Speaker 3: semi email the list. I'll talk about macro concepts. I
Speaker 3: started doing colors because I hated the all the charts
Speaker 3: of Marylynch. We're all various shades of bling it out.
Speaker 2: Of that sort of like the strict cell side like
Speaker 2: styled guides for.
Speaker 3: We had just created this new charting system that allowed
Speaker 3: you to actually pick all the colors available. So I
Speaker 3: started doing that just to get attention. And then after
Speaker 3: a while I started naming the colors. That was fun,
Speaker 3: that was crazy to do. And then after about you know,
Speaker 3: fifteen years for colors, so I started going to actually
Speaker 3: now foreign languages is the trick.
Speaker 2: Oh, got it?
Speaker 3: But my favorite color that was when I used hemoglobin
Speaker 3: for red like that.
Speaker 1: Have you considered starting your own line of paints inspired
Speaker 1: by your chart colors, because I have to say, aspergen
Speaker 1: is a very few color that I would consider for
Speaker 1: a kitchen something like that.
Speaker 3: Someday.
Speaker 1: All right, a new area of diversification. Harley Basman, that
Speaker 1: was an absolute pleasure. I'm so glad we finally had
Speaker 1: you on the podcast. We wanted to have you on
Speaker 1: for a very long time and this was the perfect
Speaker 1: time to do it. So thank you so much. Thank you, Joe.
Speaker 1: That was really fun. I'm glad we finally had Harley on.
Speaker 1: I'm glad we got him to explain convexity to us,
Speaker 1: given that a lot of his trade ideas for twenty
Speaker 1: twenty four seem to be all about convexity.
Speaker 3: Yeah.
Speaker 2: No, that was a lot of fun. And I really
Speaker 2: appreciate the balance of sort of big picture macro thinking
Speaker 2: about like, you know, the sort of the reputational impulses
Speaker 2: for the FED, the sources of inflation going forward, so
Speaker 2: these big picture macro things, and then how one goes
Speaker 2: about connecting that or, as they say in the expressing
Speaker 2: that in the form of like very specific trades. Was
Speaker 2: really interesting to hear us thinking on that.
Speaker 1: Yeah, and this is really what I think differentiates Harley's
Speaker 1: work from some others on Wall Street. It's the attention
Speaker 1: paid to the construction of the trade and the technicals
Speaker 1: and how exactly you're expressing a particular view because very often,
Speaker 1: and you know on this podcast included, you will have
Speaker 1: people coming on who say like sell credit, yeah, or
Speaker 1: buy credit or whatever, but they don't actually go into
Speaker 1: how one can or should do that, and it makes
Speaker 1: such a huge difference to returns and investors ultimately, and
Speaker 1: to get back to the sort of zero day option question,
Speaker 1: it can have an impact on the overall market as well,
Speaker 1: like the way these popular trades are actually constructed.
Speaker 2: Yeah, and as you've been talking about for a long time,
Speaker 2: like really large scale portfolio managers, like it's not like
Speaker 2: stocks now just in like, you know, even something simple
Speaker 2: about like expressing a view on rates. If you're bullish,
Speaker 2: you buy stocks, right, I mean some people may, right,
Speaker 2: but you know, even if you have some sort of
Speaker 2: view on rates, like you know, these big names that
Speaker 2: you know, like Pimco's of the world, like this is
Speaker 2: what they are doing. They're coming up with different ways
Speaker 2: of expressing this that is not maybe as sort of
Speaker 2: straightforward as their peers on the equity side.
Speaker 1: Absolutely, there is a whole hidden and wonderful world of
Speaker 1: total return swaps, index options or swaptions, lots of stuff
Speaker 1: that just doesn't get as much airtime totally. All right,
Speaker 1: shall we leave it there?
Speaker 2: Let's leave it.
Speaker 1: There has been another episode of the Oddlots podcast. I'm
Speaker 1: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: I'm Jill Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guest Harley Bassman, He's at the Convexity Maven.
Speaker 2: Also go to his website, check out his writings, send
Speaker 2: him an email, get on his list. See all the
Speaker 2: different colors he uses for charts. Follow our producers Carmen
Speaker 2: Rodriguez at Carmen Arman, Dashel Bennett at Dashbot and Kelbrooks
Speaker 2: at Kelbrooks. And thank you to our producer Moses Ondam.
Speaker 2: From our Oddlows content. Go to Bloomberg dot com slash
Speaker 2: odd Lots, where we have a blog, transcripts of all
Speaker 2: our episodes, and a newsletter, and you can talk about
Speaker 2: this episode, along with any other twenty four seven in
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Speaker 1: And if you enjoy odd Lots, if you want us
Speaker 1: to advocate for hemoglobin to be Pantones color of the Year,
Speaker 1: then please leave us a positive review on your favorite
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