1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,680 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Very 5 00:00:33,680 --> 00:00:35,279 Speaker 1: happy that we could talk about the day, and now 6 00:00:35,280 --> 00:00:36,960 Speaker 1: we can. Head of it's a Michael McKee. He's in 7 00:00:37,000 --> 00:00:40,720 Speaker 1: conversation with a form of Fete President William Dudley. Thank 8 00:00:40,760 --> 00:00:42,720 Speaker 1: you very much, and welcome to all of our viewers 9 00:00:42,720 --> 00:00:46,080 Speaker 1: and listeners on Bloomberg Television and radio worldwide. We're joined 10 00:00:46,080 --> 00:00:48,600 Speaker 1: by William Dudley. He's the former president, of course of 11 00:00:48,640 --> 00:00:51,920 Speaker 1: the New York Federal Reserve, now in semi retirement as 12 00:00:52,120 --> 00:00:55,760 Speaker 1: senior scholar at Princeton University for the time being. Till you, uh, 13 00:00:56,320 --> 00:00:59,160 Speaker 1: until you come up with something more interesting to do. 14 00:00:59,600 --> 00:01:03,279 Speaker 1: There is press. It's plenty interesting. Well, you're keeping up, 15 00:01:03,280 --> 00:01:06,800 Speaker 1: I know, with everything that has been going on. One 16 00:01:06,840 --> 00:01:09,400 Speaker 1: of the questions that comes up here as people look 17 00:01:09,440 --> 00:01:12,160 Speaker 1: forward to what monetary policy is going to be the 18 00:01:12,240 --> 00:01:15,160 Speaker 1: rest of the years, where is neutral Because the Feds 19 00:01:15,160 --> 00:01:17,640 Speaker 1: seemed to think it was another fifty basis points are 20 00:01:17,680 --> 00:01:20,199 Speaker 1: so higher, but now we've got to pause, so maybe 21 00:01:20,240 --> 00:01:22,440 Speaker 1: it's come down a little. Maybe we're right at neutrals. 22 00:01:22,800 --> 00:01:24,640 Speaker 1: Where do you think we are like, I don't think 23 00:01:24,680 --> 00:01:27,000 Speaker 1: that anybody knows was any certainty. I mean, this has 24 00:01:27,040 --> 00:01:29,520 Speaker 1: been an unusual business cycle. Think about how long it's 25 00:01:29,560 --> 00:01:32,440 Speaker 1: taken us to get back to full employment. I think 26 00:01:32,480 --> 00:01:35,080 Speaker 1: generally what the FED is saying that in the language 27 00:01:35,120 --> 00:01:37,360 Speaker 1: of being patient is that they're going to take a 28 00:01:37,400 --> 00:01:39,319 Speaker 1: pause and wait for more data. I think there are 29 00:01:39,360 --> 00:01:41,760 Speaker 1: a number of things that push them off moving to 30 00:01:41,959 --> 00:01:45,959 Speaker 1: more tightening moves. Number one, you had a tightening of 31 00:01:45,959 --> 00:01:49,720 Speaker 1: financial conditions. Stock prices went down, credit spreads widened, so 32 00:01:49,760 --> 00:01:54,160 Speaker 1: that was one concern. Second, foreign growth looked a lot weaker, 33 00:01:54,280 --> 00:01:58,120 Speaker 1: especially in China and Europe. Number three, there wasn't any inflation. 34 00:01:58,280 --> 00:02:00,200 Speaker 1: You know, the inflation was the story of the dog 35 00:02:00,240 --> 00:02:02,720 Speaker 1: that did embark. Even though the unemployee rate was low, 36 00:02:02,840 --> 00:02:04,960 Speaker 1: you weren't seeing any acceleration much of much of an 37 00:02:04,960 --> 00:02:08,600 Speaker 1: acceleration in wages, and that wasn't feeding into prices. My 38 00:02:08,600 --> 00:02:11,560 Speaker 1: own personal view is that as long as inflation stays coiescent, 39 00:02:11,919 --> 00:02:14,600 Speaker 1: FED will probably be on hold. If though the economy 40 00:02:14,680 --> 00:02:17,960 Speaker 1: keeps growing at above trem pace, more pressure on resources, 41 00:02:18,000 --> 00:02:20,680 Speaker 1: inflation probably will start to drift back up again. So 42 00:02:20,800 --> 00:02:24,079 Speaker 1: my best judgment is the Fed's probably not done yet. 43 00:02:24,520 --> 00:02:27,600 Speaker 1: Well how far did they go? Uh, at what point 44 00:02:27,600 --> 00:02:30,359 Speaker 1: do you risk an accident? Well, that's why I think 45 00:02:30,400 --> 00:02:32,560 Speaker 1: they're being patient right now. They don't want to call 46 00:02:32,720 --> 00:02:36,000 Speaker 1: inadvertently cause a recession with inflation this law because people say, well, 47 00:02:36,000 --> 00:02:38,800 Speaker 1: what you do that for? If inflation actually were to 48 00:02:38,840 --> 00:02:41,639 Speaker 1: accelerate a bit, then they at least have a motivation 49 00:02:41,720 --> 00:02:45,240 Speaker 1: for why they're moving to a tighter monetary policy stance. Well, 50 00:02:45,280 --> 00:02:48,320 Speaker 1: once you did that for was to prevent downturn in 51 00:02:48,360 --> 00:02:52,079 Speaker 1: the economy, which this group here, according to a survey 52 00:02:52,120 --> 00:02:55,120 Speaker 1: of NAB members, suggests may come in two thousand twenty 53 00:02:55,160 --> 00:02:58,000 Speaker 1: or two thousand twenty one. But the FED doesn't have 54 00:02:58,000 --> 00:03:00,840 Speaker 1: a lot of ammunition if there's point to fight it. Well, 55 00:03:00,960 --> 00:03:03,359 Speaker 1: that's one concern that the FED is wrestling with is 56 00:03:04,040 --> 00:03:06,200 Speaker 1: if the peak federal funds rate in the cycle is 57 00:03:06,360 --> 00:03:08,040 Speaker 1: you know, two and a half three, three and a 58 00:03:08,080 --> 00:03:11,240 Speaker 1: half percent, there's not that much room between that and zero, 59 00:03:11,280 --> 00:03:14,200 Speaker 1: and so there's been a lot of discussion among FED 60 00:03:14,240 --> 00:03:17,840 Speaker 1: officials and other market observers on does the FED have 61 00:03:17,960 --> 00:03:21,120 Speaker 1: enough firepower to get us out of the next economic downturn. 62 00:03:21,360 --> 00:03:23,360 Speaker 1: My own view is I think there's more firepower than 63 00:03:23,440 --> 00:03:26,440 Speaker 1: people realize, because they FED has invented a whole bunch 64 00:03:26,440 --> 00:03:28,959 Speaker 1: of new tools to use if they're ever at the 65 00:03:29,040 --> 00:03:33,639 Speaker 1: zero or body again for guidance asset purchases, open ended 66 00:03:33,639 --> 00:03:36,200 Speaker 1: asset purchases, We'll just keep buying assets until we actually 67 00:03:36,200 --> 00:03:40,000 Speaker 1: achieve our objection objectives of an actual recovery. But one 68 00:03:40,000 --> 00:03:42,560 Speaker 1: of the arguments there is that a lot of that 69 00:03:42,920 --> 00:03:45,600 Speaker 1: success that the FED had with those tools came from 70 00:03:45,600 --> 00:03:49,320 Speaker 1: the announcement value. Now people know the tools are there, 71 00:03:49,360 --> 00:03:51,000 Speaker 1: so they may not have as much of effect. Well, 72 00:03:51,040 --> 00:03:53,040 Speaker 1: I think that if you let's imagine that we were 73 00:03:53,040 --> 00:03:55,800 Speaker 1: in an economic downturn and the FED had reduced interest 74 00:03:55,840 --> 00:03:58,240 Speaker 1: rates to zero, if the FED announced that we're going 75 00:03:58,320 --> 00:04:02,160 Speaker 1: to do by treasuries an agency mortgage backed securities until 76 00:04:02,240 --> 00:04:05,640 Speaker 1: we achieve us a given unemployment rate objective, that would 77 00:04:05,680 --> 00:04:08,320 Speaker 1: be also a good commitment strategy. Would make people realize 78 00:04:08,320 --> 00:04:09,760 Speaker 1: that rates are going to stay low for a long 79 00:04:09,800 --> 00:04:12,640 Speaker 1: time until the FED actually has success. That's actually quite 80 00:04:12,640 --> 00:04:15,680 Speaker 1: powerful in terms of supporting economic activity. Has the fact 81 00:04:15,680 --> 00:04:18,359 Speaker 1: gotten too intertwined with the markets. Now, one of the 82 00:04:18,400 --> 00:04:20,800 Speaker 1: reasons that the Fed, as you just said, when on 83 00:04:20,880 --> 00:04:24,320 Speaker 1: hold is the market problems and dislocations we saw in December. 84 00:04:24,320 --> 00:04:27,200 Speaker 1: And now everybody's back to the Powell put, Well, can 85 00:04:27,240 --> 00:04:29,920 Speaker 1: you disentangle yourse? Well, it's tricky, right, because the Fed 86 00:04:29,960 --> 00:04:33,240 Speaker 1: doesn't care about the stock market for the stock market's sake, 87 00:04:33,600 --> 00:04:35,640 Speaker 1: cares about the stock market because of the stock market 88 00:04:35,640 --> 00:04:37,400 Speaker 1: wad to go to down a lot and stay down, 89 00:04:37,440 --> 00:04:40,000 Speaker 1: it would have consequences for the economy. So there isn't 90 00:04:40,000 --> 00:04:41,960 Speaker 1: a put in the sense that the Fed is trying 91 00:04:41,960 --> 00:04:44,560 Speaker 1: to support the stock market at given level, But there 92 00:04:44,640 --> 00:04:46,239 Speaker 1: is a point in the sense that the stock market 93 00:04:46,320 --> 00:04:49,159 Speaker 1: gets very weak that has consequences for the outlook and 94 00:04:49,160 --> 00:04:53,080 Speaker 1: therefore for monetary policy. Well, they also were worried about 95 00:04:53,080 --> 00:04:55,440 Speaker 1: the balance sheet. The balance sheet was supposed to be 96 00:04:55,680 --> 00:04:59,000 Speaker 1: watching paint dry. Did Wall Street get that wrong? Well, 97 00:04:59,040 --> 00:05:01,240 Speaker 1: I think all that happened there with the FED decided 98 00:05:01,279 --> 00:05:04,440 Speaker 1: that the banks have a greater demand for reserves, and 99 00:05:04,520 --> 00:05:06,599 Speaker 1: the FED had thought so. That just means that the 100 00:05:06,680 --> 00:05:09,280 Speaker 1: stopping point for when you stop shrinking the ballantree is 101 00:05:09,320 --> 00:05:12,400 Speaker 1: a little bit earlier in time than what they anticipated. 102 00:05:12,560 --> 00:05:15,080 Speaker 1: It's not a big policy adjustment. They never knew how 103 00:05:15,080 --> 00:05:17,320 Speaker 1: many banks, how many reserves banks we're going to demand, 104 00:05:17,560 --> 00:05:19,320 Speaker 1: and now they're finding out the banks look like they 105 00:05:19,560 --> 00:05:21,000 Speaker 1: are going to be in a little bit more reserves 106 00:05:21,000 --> 00:05:23,200 Speaker 1: than they thought. That just means the stopping point is 107 00:05:23,240 --> 00:05:24,920 Speaker 1: gonna be a little bit sooner, But it doesn't have 108 00:05:24,920 --> 00:05:27,599 Speaker 1: a huge consequences for does QT though, have the same 109 00:05:27,760 --> 00:05:30,679 Speaker 1: effect on the downside that it had. It doesn't seem 110 00:05:30,720 --> 00:05:33,839 Speaker 1: to be having the same effect at this point. Part 111 00:05:33,839 --> 00:05:35,480 Speaker 1: of the reason, I think is that people still are 112 00:05:35,480 --> 00:05:38,120 Speaker 1: worried about inflation being too low rather than inflation being 113 00:05:38,120 --> 00:05:40,880 Speaker 1: too high. So if you look at what what what 114 00:05:41,279 --> 00:05:44,000 Speaker 1: the market participants called bond term pre and the spread 115 00:05:44,040 --> 00:05:46,520 Speaker 1: between bonds and the spected path of short term rates, 116 00:05:46,760 --> 00:05:50,240 Speaker 1: that's very very tiny. That's quite different than in past 117 00:05:50,279 --> 00:05:52,800 Speaker 1: economic cycles. And let me ask you about a point 118 00:05:52,800 --> 00:05:56,320 Speaker 1: that both the Chairman Powell and Vice Chairman Clarative made 119 00:05:56,360 --> 00:05:57,680 Speaker 1: in the last couple of days, and that is that 120 00:05:57,800 --> 00:06:00,560 Speaker 1: the federal deficit is just way too high and it's 121 00:06:00,560 --> 00:06:02,960 Speaker 1: going to have an impact on the country. And yet 122 00:06:03,279 --> 00:06:06,120 Speaker 1: we've talked about that for decades and bond rates are 123 00:06:06,120 --> 00:06:08,520 Speaker 1: not going up. Well, I think it's partly because you 124 00:06:08,560 --> 00:06:10,520 Speaker 1: have to look at the US bond rates in the 125 00:06:10,560 --> 00:06:13,159 Speaker 1: context of rates elsewhere in the world, and we have 126 00:06:13,360 --> 00:06:16,200 Speaker 1: very very low rates in Europe and Japan, so that's 127 00:06:16,240 --> 00:06:19,200 Speaker 1: obviously a factor. And two people, Yeah, I think you're 128 00:06:19,200 --> 00:06:22,320 Speaker 1: absolutely right. People anxiety about budget devis has going down 129 00:06:22,320 --> 00:06:24,960 Speaker 1: a lot, but I'm sorry where they are. The budget 130 00:06:24,960 --> 00:06:27,800 Speaker 1: devs is not only going to keep increasing, the debt 131 00:06:27,839 --> 00:06:30,200 Speaker 1: service costs is going to start to climb very very rapidly, 132 00:06:30,279 --> 00:06:32,800 Speaker 1: because not only is debt growing, interest rates are higher 133 00:06:32,839 --> 00:06:34,760 Speaker 1: than they've been over the last ten years. So I 134 00:06:34,760 --> 00:06:36,599 Speaker 1: think that that it is going to be a problem. 135 00:06:36,680 --> 00:06:38,440 Speaker 1: It's not a problem right now. Well, what do you 136 00:06:38,440 --> 00:06:41,560 Speaker 1: think of the modern monetary theory mm T argument that 137 00:06:41,720 --> 00:06:44,240 Speaker 1: is getting so much attraction these days, particularly up on 138 00:06:44,320 --> 00:06:47,320 Speaker 1: Capel Hill lately, that if you print money in your 139 00:06:47,320 --> 00:06:51,040 Speaker 1: own currency you don't have to worry about deficits for 140 00:06:51,080 --> 00:06:53,600 Speaker 1: a while. At least, I know it's the squishy definition. 141 00:06:53,720 --> 00:06:55,680 Speaker 1: I think they're overstanding that it's true that if you 142 00:06:55,920 --> 00:06:59,200 Speaker 1: print currency, print issue debt in your own currency, you 143 00:07:00,000 --> 00:07:02,599 Speaker 1: don't have to default, so there's no default risk, but 144 00:07:02,640 --> 00:07:04,760 Speaker 1: they're definitely an inflation risk. If you have too much 145 00:07:04,800 --> 00:07:07,080 Speaker 1: money through chasing too few goods and services, you're gonna 146 00:07:07,120 --> 00:07:09,600 Speaker 1: get inflation and that would be the consequence. So there, 147 00:07:09,680 --> 00:07:11,720 Speaker 1: you know, as in economics, there is no free lunch, 148 00:07:12,000 --> 00:07:15,760 Speaker 1: So this modern monetary theory I'm not buying a lot 149 00:07:15,800 --> 00:07:18,280 Speaker 1: of Last question on the inflation and that is where 150 00:07:18,280 --> 00:07:20,960 Speaker 1: do you think it goes from here? It disappeared in 151 00:07:21,040 --> 00:07:23,400 Speaker 1: the fourth quarter. Does it start to come back? Well, 152 00:07:23,400 --> 00:07:25,040 Speaker 1: I think it'll probably come back a little bit because 153 00:07:25,040 --> 00:07:27,720 Speaker 1: obviously oil prices have recovered, so that's something that you know, 154 00:07:28,160 --> 00:07:30,840 Speaker 1: moves in and out pretty quickly into the inflation numbers. 155 00:07:31,000 --> 00:07:34,000 Speaker 1: I think underneath the service you're seeing a very gradual 156 00:07:34,480 --> 00:07:37,400 Speaker 1: firming of inflation, driven really by the tightness of the 157 00:07:37,480 --> 00:07:40,000 Speaker 1: labor market and the firmness that was finally seeing in 158 00:07:40,240 --> 00:07:42,760 Speaker 1: wages enough for the FED to have to react. Well, 159 00:07:42,800 --> 00:07:44,720 Speaker 1: we'll see it's gonna you know, all this stuff is 160 00:07:44,720 --> 00:07:46,840 Speaker 1: slow moving, so we'll see. I don't think the Fed 161 00:07:46,880 --> 00:07:48,920 Speaker 1: is gonna do anything in the near term. Second half 162 00:07:48,920 --> 00:07:52,640 Speaker 1: of the year, maybe FED starts hiking rates again. Bill Dudley, 163 00:07:52,640 --> 00:07:54,520 Speaker 1: thank you very much for joining us this morning. Bloomberg 164 00:07:54,560 --> 00:07:57,720 Speaker 1: Television and Radio worldwide. We'll send it back to you. Oh, 165 00:07:57,800 --> 00:08:00,000 Speaker 1: Michael McKee, thank you so much. For the former president 166 00:08:00,240 --> 00:08:02,760 Speaker 1: of the New York Fellow Reserved ACAS, Bill Dudley at 167 00:08:02,760 --> 00:08:05,240 Speaker 1: Goldman Saxon. I should say he wrote with Ed mcclvie 168 00:08:05,320 --> 00:08:09,160 Speaker 1: a wonderful chapter in my book. This was Mike John Farrell. 169 00:08:09,240 --> 00:08:12,440 Speaker 1: This was forty five years ago. This was after, you know, 170 00:08:12,560 --> 00:08:15,600 Speaker 1: just sort of early Thatcher when that book came out. 171 00:08:30,160 --> 00:08:33,000 Speaker 1: One of the stories off the mark today Brexit. There's 172 00:08:33,040 --> 00:08:36,559 Speaker 1: really not much there. You're a sterling. Rather one thirty 173 00:08:36,600 --> 00:08:40,719 Speaker 1: three is weaker one? Two thirty nine right now? And 174 00:08:41,160 --> 00:08:44,240 Speaker 1: yeah wow, would a move on five? John? I missed 175 00:08:44,240 --> 00:08:48,719 Speaker 1: that Japanese Yeah, weaker one. I just flat out and 176 00:08:48,720 --> 00:08:52,880 Speaker 1: missed that. It was yields right, US. Yields are right 177 00:08:52,960 --> 00:08:54,959 Speaker 1: up against resistance. Had a bit of a drift free 178 00:08:55,040 --> 00:08:56,840 Speaker 1: this week, a bit of a drift. Why don't you 179 00:08:56,880 --> 00:09:00,800 Speaker 1: bring our wonderful guests in on the yields. I'm very 180 00:09:00,800 --> 00:09:03,080 Speaker 1: happy to catch up with pre Misery till Security's head 181 00:09:03,080 --> 00:09:06,640 Speaker 1: of Global interest rates Strategy. One of my guiding lights 182 00:09:06,679 --> 00:09:09,400 Speaker 1: for the bond market, the real yields. Look for it 183 00:09:09,480 --> 00:09:12,920 Speaker 1: this afternoon. Great summer there on Bloomberg. Thank you Tom, 184 00:09:12,920 --> 00:09:15,000 Speaker 1: and thank you Prere. Let's start Prere with the range 185 00:09:15,000 --> 00:09:17,240 Speaker 1: that we've been in for treasuries, a very tight range. 186 00:09:17,240 --> 00:09:19,760 Speaker 1: We're actually still in it, but this week we've started 187 00:09:19,800 --> 00:09:24,199 Speaker 1: to drift higher. Your thoughts, Hi, Johan uh and I Toma, 188 00:09:24,360 --> 00:09:26,920 Speaker 1: thanks for having me on. So yes, I think we 189 00:09:27,000 --> 00:09:29,440 Speaker 1: have drifted a little bit higher. Um. I think what's 190 00:09:29,440 --> 00:09:31,800 Speaker 1: been interesting is over the last couple of months we've 191 00:09:31,800 --> 00:09:35,600 Speaker 1: had a significant risk on move and yet interest rates 192 00:09:35,720 --> 00:09:38,560 Speaker 1: have stayed in this extremely narrow range like two sixty 193 00:09:38,640 --> 00:09:41,880 Speaker 1: to seventy. We've been, you know, very tightly bound there, 194 00:09:42,160 --> 00:09:44,560 Speaker 1: and I think it's it's a function of the macro 195 00:09:44,679 --> 00:09:47,360 Speaker 1: market sort of move from a policy mistake or a 196 00:09:47,360 --> 00:09:50,200 Speaker 1: FED policy mistake perception in the fourth quarter to now 197 00:09:50,400 --> 00:09:53,360 Speaker 1: de wish fed um and and which is why even 198 00:09:53,360 --> 00:09:56,640 Speaker 1: though equities were able to rally, uh, you know, credit 199 00:09:56,679 --> 00:09:59,880 Speaker 1: spreads compressed interestrates were unable to sell off because essentially 200 00:09:59,880 --> 00:10:02,440 Speaker 1: the market raced in the stubbish FED. I think now 201 00:10:02,480 --> 00:10:05,360 Speaker 1: going forward it has to come back to fundamentals, and 202 00:10:05,440 --> 00:10:07,560 Speaker 1: that's where we might have more of a moving interest 203 00:10:07,640 --> 00:10:10,520 Speaker 1: rates rather than uh than risk asset. So if we 204 00:10:10,559 --> 00:10:14,320 Speaker 1: start seeing the first look of February data in the 205 00:10:14,440 --> 00:10:17,640 Speaker 1: US and we start seeing that actually growth is not decelerating, 206 00:10:17,880 --> 00:10:21,280 Speaker 1: we're still growing above potential, I think we should be, uh, 207 00:10:21,320 --> 00:10:23,600 Speaker 1: you know, back to talking about FED hikes and then 208 00:10:23,600 --> 00:10:25,800 Speaker 1: on the global growth front um, you know, if we 209 00:10:25,840 --> 00:10:28,880 Speaker 1: do get a China trade deal, if we do see 210 00:10:28,960 --> 00:10:31,800 Speaker 1: China stimulus, I think we're then talking about a little 211 00:10:31,800 --> 00:10:34,400 Speaker 1: bit of an upside moving rates. So we are we 212 00:10:34,800 --> 00:10:37,720 Speaker 1: are actually short duration here, looking for a small increase 213 00:10:37,960 --> 00:10:41,840 Speaker 1: in rates, you know, closest level at the moment. I 214 00:10:41,840 --> 00:10:44,200 Speaker 1: think most people would conclude it's far too premature to 215 00:10:44,240 --> 00:10:46,800 Speaker 1: call the turn in the global economy with any real conviction. 216 00:10:46,840 --> 00:10:49,319 Speaker 1: But how encouraged are you by some of the data 217 00:10:49,360 --> 00:10:53,120 Speaker 1: points this week when the headline data has been terrifically underwhelming. 218 00:10:53,160 --> 00:10:56,320 Speaker 1: But we're just clinging to these little elements, these little 219 00:10:56,360 --> 00:10:58,160 Speaker 1: components of p M I that show a bit of 220 00:10:58,240 --> 00:11:02,400 Speaker 1: encouragement right now, that's fair. I think it's it is 221 00:11:02,400 --> 00:11:04,440 Speaker 1: too early to say whether it's we're actually turning. I 222 00:11:04,440 --> 00:11:08,000 Speaker 1: think we're looking for momentum, though, is the momentum decelerating? 223 00:11:08,240 --> 00:11:10,160 Speaker 1: And I think the early read is that maybe the 224 00:11:10,240 --> 00:11:14,559 Speaker 1: momentum is stabilizing, and we're also looking at policymakers globally 225 00:11:15,000 --> 00:11:18,680 Speaker 1: that seem to have changed their stands for normalization, tightening 226 00:11:18,720 --> 00:11:22,360 Speaker 1: to now, you know, being accommodative. What are people doing 227 00:11:22,640 --> 00:11:28,320 Speaker 1: with their money? It's tough. I mean I think, um, 228 00:11:28,360 --> 00:11:31,040 Speaker 1: you know, they're staying in cash. Cash is king in 229 00:11:31,200 --> 00:11:35,000 Speaker 1: the US front end. Cash is giving you positive real rates. 230 00:11:35,040 --> 00:11:37,800 Speaker 1: So I think you keep risk light. Um, you know, 231 00:11:37,840 --> 00:11:41,880 Speaker 1: you certainly have some cash for liquidity reasons, and then 232 00:11:41,960 --> 00:11:44,840 Speaker 1: you start dipping back into risks. And this is where 233 00:11:44,880 --> 00:11:46,560 Speaker 1: I think it's hard to say that you should just 234 00:11:46,600 --> 00:11:49,760 Speaker 1: be buying all risk asses. You start doing more credit work, 235 00:11:49,800 --> 00:11:53,600 Speaker 1: and you you pick you know, sectors or issues that 236 00:11:54,760 --> 00:11:58,240 Speaker 1: or other issuers that that still may look fundamentally strong. 237 00:11:58,559 --> 00:12:01,040 Speaker 1: But it's a tough market. I'm hearing this from every 238 00:12:01,080 --> 00:12:03,680 Speaker 1: investor I meet. The tight range in the fact that 239 00:12:03,800 --> 00:12:07,440 Speaker 1: risk is valid, I think, you know, means that it's 240 00:12:07,440 --> 00:12:10,079 Speaker 1: it's hard to work now putting money to work. This 241 00:12:10,120 --> 00:12:12,240 Speaker 1: is fascinating. And someone that would agree with pre a 242 00:12:12,320 --> 00:12:16,360 Speaker 1: miserable TV securities is Daniel Fuss, who was just on 243 00:12:16,360 --> 00:12:22,200 Speaker 1: Bloomberg Television, the acclaimed really the giant of total return investing. 244 00:12:22,200 --> 00:12:25,080 Speaker 1: Bill Gross has always said that Mr Fuss at Lomas 245 00:12:25,120 --> 00:12:28,920 Speaker 1: Sales was out front on this. Can you exist now 246 00:12:29,040 --> 00:12:33,360 Speaker 1: after the last ten years we've experienced investing like Mr 247 00:12:33,440 --> 00:12:37,199 Speaker 1: Fuss or you grabbed the coupon and wait for credit 248 00:12:37,280 --> 00:12:42,240 Speaker 1: recovery and price appreciation of a note or bond. Is 249 00:12:42,240 --> 00:12:45,440 Speaker 1: that game still out there? Or all the young turks 250 00:12:45,480 --> 00:12:48,880 Speaker 1: like you become so sophisticated you can't do what Damn 251 00:12:48,960 --> 00:12:54,040 Speaker 1: Fuss did. Um. I appreciate you calling me young, so 252 00:12:54,160 --> 00:12:56,400 Speaker 1: we but we won't talk about that. UM. But I 253 00:12:57,120 --> 00:12:59,760 Speaker 1: do think there's you know, that trade still exists. The 254 00:13:00,040 --> 00:13:02,560 Speaker 1: very trade is there. You look at demographics in the 255 00:13:02,640 --> 00:13:05,160 Speaker 1: U S so globally, I think demand for fixed income 256 00:13:05,520 --> 00:13:08,319 Speaker 1: should be there. Now you have to diversify your portfolio. 257 00:13:08,679 --> 00:13:11,240 Speaker 1: I think the difference in what I was recommending, you know, 258 00:13:11,320 --> 00:13:13,960 Speaker 1: ten years ago, was to be out the curve. I 259 00:13:13,960 --> 00:13:16,120 Speaker 1: don't think you're getting paid up that much more to 260 00:13:16,360 --> 00:13:18,839 Speaker 1: interociation risk, so I think the front end actually is 261 00:13:18,880 --> 00:13:22,319 Speaker 1: more attractive. I would mention John that Mr First, the 262 00:13:22,440 --> 00:13:27,160 Speaker 1: history of like buying all of Ontario's utility bands or 263 00:13:27,200 --> 00:13:31,400 Speaker 1: buying all of New Zealand's paper huge bets fast and 264 00:13:31,480 --> 00:13:34,360 Speaker 1: i'd continue with pretty much. So I pray something you 265 00:13:34,440 --> 00:13:36,680 Speaker 1: touched on earlier that I think it's quite interesting. A 266 00:13:36,679 --> 00:13:39,120 Speaker 1: lot of people have been quite bearish the global economy 267 00:13:39,160 --> 00:13:41,480 Speaker 1: and encouraged to take on juration pick up at the 268 00:13:41,520 --> 00:13:44,120 Speaker 1: long end of say the treasury curve. What I hear 269 00:13:44,160 --> 00:13:46,560 Speaker 1: from you is not that creer. Why is your view 270 00:13:46,640 --> 00:13:50,480 Speaker 1: so different? I think you know, if you look at 271 00:13:50,480 --> 00:13:54,120 Speaker 1: a risk adjusted return, you're taking on a lot more 272 00:13:54,240 --> 00:13:56,480 Speaker 1: risk and not really earning that much more. I mean, 273 00:13:56,520 --> 00:13:58,199 Speaker 1: if I look at the two year at two fifty 274 00:13:58,400 --> 00:14:01,040 Speaker 1: versus the ten year at two seven, if you have 275 00:14:01,160 --> 00:14:04,400 Speaker 1: any interest rate increase, you're much more at risk the 276 00:14:04,440 --> 00:14:06,560 Speaker 1: further out the curve you are. So I would say, 277 00:14:06,640 --> 00:14:08,720 Speaker 1: you know, if you have some risk assets on on 278 00:14:08,840 --> 00:14:11,960 Speaker 1: the front and own bills or twos, rather than you know, 279 00:14:12,040 --> 00:14:14,679 Speaker 1: taking on all that duration risk for not earning that 280 00:14:14,760 --> 00:14:17,800 Speaker 1: much more. Let me speak for our audience. That's all great, 281 00:14:17,920 --> 00:14:22,720 Speaker 1: and it sounds brilliant, except I need yield. If I 282 00:14:22,760 --> 00:14:27,000 Speaker 1: need yield, where do I get it? So I think credit, 283 00:14:27,080 --> 00:14:29,200 Speaker 1: there are there are pockets of credit where I think, 284 00:14:29,240 --> 00:14:31,800 Speaker 1: you know, you can dip your toes back in um 285 00:14:31,920 --> 00:14:34,160 Speaker 1: and you know, take some credit, take on some front 286 00:14:34,240 --> 00:14:37,960 Speaker 1: end duration, keep risk light because I think, um, you know, 287 00:14:38,040 --> 00:14:40,000 Speaker 1: this is an environment where we're going to get these 288 00:14:40,000 --> 00:14:42,040 Speaker 1: stale events. I mean just look at the fourth quarter, 289 00:14:42,800 --> 00:14:45,080 Speaker 1: and you know that's when if you have some powder dry, 290 00:14:45,200 --> 00:14:47,600 Speaker 1: you can go back and invest. The moment that some 291 00:14:48,160 --> 00:14:50,400 Speaker 1: you know risk off, that's the time to you know, 292 00:14:50,440 --> 00:14:52,880 Speaker 1: go back in. It's hard to say you should be 293 00:14:52,960 --> 00:14:56,000 Speaker 1: hundred percent invested right now, just given that all risk 294 00:14:56,040 --> 00:14:58,960 Speaker 1: premiums have compressed. So I think keep some keep some 295 00:14:59,000 --> 00:15:02,800 Speaker 1: powder dry, and invest in some mix within the fixed 296 00:15:02,880 --> 00:15:05,720 Speaker 1: in compole that I that I look at credit versus 297 00:15:05,760 --> 00:15:09,040 Speaker 1: some front end bills, I think it's attractive. John Farrell, 298 00:15:09,120 --> 00:15:11,400 Speaker 1: John Herman just publishes at m U f J. I'd 299 00:15:11,400 --> 00:15:14,440 Speaker 1: love to have pre a comment on this. Mr Herman 300 00:15:14,560 --> 00:15:20,160 Speaker 1: pre n notices a little bit of inflation stickiness within 301 00:15:20,240 --> 00:15:24,840 Speaker 1: his micro analysis. Do you agree? Do you see inflations 302 00:15:24,840 --> 00:15:28,400 Speaker 1: stickiness out there that bears a close watch through March 303 00:15:28,480 --> 00:15:33,880 Speaker 1: and particularly to the March twenty meeting. Um, you know, 304 00:15:33,960 --> 00:15:36,280 Speaker 1: by stickiness you mean in the fundamental data or the 305 00:15:36,320 --> 00:15:41,280 Speaker 1: market price, the fundamental data leading to a misjudgment by 306 00:15:41,360 --> 00:15:46,800 Speaker 1: the disinflation crew. As John Farrell mentioned, early in the segment, right, 307 00:15:46,880 --> 00:15:49,760 Speaker 1: So I think, yes, there's even the data suggests that 308 00:15:49,800 --> 00:15:53,560 Speaker 1: there's significant inflation in Ussia. And we're in an environment 309 00:15:53,560 --> 00:15:55,520 Speaker 1: where none of these models have done a great job 310 00:15:55,680 --> 00:15:58,960 Speaker 1: predicting inflation, and so are we at some inflection point 311 00:15:59,000 --> 00:16:00,880 Speaker 1: where there's going to be a big pick up an inflation. 312 00:16:01,320 --> 00:16:03,840 Speaker 1: I think the market has sort of is in the 313 00:16:03,920 --> 00:16:06,680 Speaker 1: show me mode, and so unless we start seeing that 314 00:16:06,760 --> 00:16:09,840 Speaker 1: pick up an inflation, I don't know if the market 315 00:16:09,880 --> 00:16:12,480 Speaker 1: is going to say or or that even the Fed 316 00:16:12,840 --> 00:16:14,720 Speaker 1: seems to be losing a little bit of faith in 317 00:16:14,800 --> 00:16:17,360 Speaker 1: this big pick up inflation. So I would have to agree, yes, 318 00:16:17,400 --> 00:16:20,800 Speaker 1: there is just wonderful premise that we're going to thank 319 00:16:20,800 --> 00:16:37,160 Speaker 1: you for their TV security is just wonderful perfect. I mean, 320 00:16:37,200 --> 00:16:40,080 Speaker 1: you know, it's Friday, we're looking at the themes that 321 00:16:40,120 --> 00:16:44,440 Speaker 1: matter from Seattleton, New York, which can only mean Amazon, 322 00:16:44,640 --> 00:16:46,880 Speaker 1: and you know the quality of the guests we have, 323 00:16:47,520 --> 00:16:49,680 Speaker 1: you know, John, in America, I don't know about in England, 324 00:16:49,960 --> 00:16:53,200 Speaker 1: you have to take Western of one oh one when 325 00:16:53,200 --> 00:16:56,800 Speaker 1: you go to school if you go to that common institution, 326 00:16:56,960 --> 00:17:01,280 Speaker 1: have a for down in Pennsylvania that com wired requirement 327 00:17:01,640 --> 00:17:05,040 Speaker 1: you need to take socialism one oh one, just to 328 00:17:05,119 --> 00:17:09,240 Speaker 1: get in the door from Haverford. Sure overdate joins us. 329 00:17:09,320 --> 00:17:11,960 Speaker 1: What is it like freshman year at Haverford. I do 330 00:17:12,040 --> 00:17:17,160 Speaker 1: not remember any communist propaganda. Oh, freshman year of courses. 331 00:17:17,280 --> 00:17:19,639 Speaker 1: If that's the question. It's a great school. It's a 332 00:17:19,640 --> 00:17:24,520 Speaker 1: fabulous Quaker institution and wildly eclectic. But it's great preparation 333 00:17:24,640 --> 00:17:28,040 Speaker 1: for the Battle of Queens, which is the class, cultural 334 00:17:28,440 --> 00:17:31,879 Speaker 1: and political battle. Let's just frame it between the gentlewoman 335 00:17:31,960 --> 00:17:34,960 Speaker 1: from the Bronx and the governor in Albany. Give us 336 00:17:35,000 --> 00:17:39,359 Speaker 1: an update, I'm Bezos and Queens given the cultural battle 337 00:17:39,640 --> 00:17:42,040 Speaker 1: of the New York Times this morning. Yeah, well, the 338 00:17:42,280 --> 00:17:45,440 Speaker 1: New York Times is reporting that Andrew Cuomos, the governor 339 00:17:45,520 --> 00:17:48,879 Speaker 1: of the state of New York, has basically made overtures 340 00:17:48,920 --> 00:17:53,480 Speaker 1: to Amazon executives, including Jeff Bezos himself, to get Amazon 341 00:17:53,560 --> 00:17:58,240 Speaker 1: to reconsider their decision to pull back from this HQ 342 00:17:58,400 --> 00:18:01,520 Speaker 1: two or whatever HQ one and a half that Amazon 343 00:18:01,600 --> 00:18:06,600 Speaker 1: was opiniata a second time. That's what's gonna happen. Yeah, 344 00:18:06,640 --> 00:18:08,960 Speaker 1: I mean, it does seem, at least from the reporting, 345 00:18:08,960 --> 00:18:12,440 Speaker 1: that the conversation is rather one sided. It's basically Quomo 346 00:18:12,560 --> 00:18:17,120 Speaker 1: making assurances that if Amazon reconsiders that, Cuomo will sort 347 00:18:17,119 --> 00:18:21,439 Speaker 1: of shepherd the political, the messy political process himself, and 348 00:18:21,520 --> 00:18:24,840 Speaker 1: take some more responsibility over that. Sure, I make jokes 349 00:18:24,880 --> 00:18:27,160 Speaker 1: about it. You are wired into this store like no 350 00:18:27,200 --> 00:18:31,160 Speaker 1: one can that happen. Can the governor in Albany tell 351 00:18:31,240 --> 00:18:34,120 Speaker 1: the state senator what to do and and the others 352 00:18:34,160 --> 00:18:37,640 Speaker 1: that have driven forward this exit of plans? I don't 353 00:18:37,640 --> 00:18:40,680 Speaker 1: think so. So. The the issue here is that both 354 00:18:40,800 --> 00:18:45,320 Speaker 1: Amazon and local political leaders, including Cuomo and mayor build 355 00:18:45,320 --> 00:18:49,919 Speaker 1: the Blasio, they botched this right. It was this complicated, 356 00:18:50,160 --> 00:18:56,200 Speaker 1: secretive process for for a year, highly public and secretive, 357 00:18:56,240 --> 00:18:59,159 Speaker 1: kind of a toxic mix involving one of the world's 358 00:18:59,160 --> 00:19:01,920 Speaker 1: most valuable come bunize, and I think it just left 359 00:19:01,920 --> 00:19:07,200 Speaker 1: a bitter taste in everyone's mouth, including local politicians, local residents, 360 00:19:07,240 --> 00:19:09,800 Speaker 1: Amazon executives. And it doesn't seem like there's a do over. 361 00:19:09,960 --> 00:19:12,280 Speaker 1: And it's very public this morning once again with this 362 00:19:12,280 --> 00:19:15,200 Speaker 1: big letter in the New York Times, dear Mr Bezos, 363 00:19:15,200 --> 00:19:18,720 Speaker 1: please come back, essentially share My issue is this whole HQ, 364 00:19:18,840 --> 00:19:21,600 Speaker 1: as you put at one point five, Why did they 365 00:19:21,640 --> 00:19:24,480 Speaker 1: do this both so publicly and then so privately to 366 00:19:24,520 --> 00:19:26,520 Speaker 1: get the states to fight with each other, as you say, 367 00:19:26,560 --> 00:19:29,359 Speaker 1: it's toxic. Why didn't they just do what Google are 368 00:19:29,440 --> 00:19:33,920 Speaker 1: doing in Manhattan, pick somewhere by it invest Yeah, I 369 00:19:33,920 --> 00:19:37,800 Speaker 1: I I wonder I hope that Amazon learned their lesson 370 00:19:38,040 --> 00:19:41,280 Speaker 1: from this process that they basically set up a reality 371 00:19:41,320 --> 00:19:46,080 Speaker 1: television competition saying, please all US cities, all North American 372 00:19:46,080 --> 00:19:49,320 Speaker 1: cities come and um, you know, lay flowers at our 373 00:19:49,320 --> 00:19:52,240 Speaker 1: feet and tell us why your city should be graced 374 00:19:52,280 --> 00:19:54,920 Speaker 1: with Amazon's presence. And that might have been a good 375 00:19:54,960 --> 00:19:59,439 Speaker 1: idea in late when Amazon kicked off that process, but 376 00:19:59,520 --> 00:20:03,000 Speaker 1: it just kind of got more and more distasteful as 377 00:20:03,040 --> 00:20:07,040 Speaker 1: the process went on. And also, look Amazon, the story 378 00:20:07,080 --> 00:20:09,480 Speaker 1: of Amazon also got a little bit more complicated in 379 00:20:09,480 --> 00:20:13,800 Speaker 1: in that year that the process took Amazon became more valuable, 380 00:20:13,880 --> 00:20:17,560 Speaker 1: more powerful, Bezos became the world's richest person. And then 381 00:20:17,560 --> 00:20:19,960 Speaker 1: when they kind of decided, oh, we're not going to 382 00:20:20,080 --> 00:20:22,439 Speaker 1: make an HQ two, We're going to make two or 383 00:20:22,600 --> 00:20:26,480 Speaker 1: three HQ two's, I think it just it just seemed 384 00:20:26,480 --> 00:20:29,520 Speaker 1: a little gross. So share going forward. I mean, so 385 00:20:29,600 --> 00:20:31,400 Speaker 1: much work has been done here in New York City 386 00:20:31,400 --> 00:20:34,000 Speaker 1: to attract tech firms, some tremendous work has been done 387 00:20:34,040 --> 00:20:37,320 Speaker 1: and you can see the results. Does this episode spill 388 00:20:37,359 --> 00:20:40,160 Speaker 1: over into anything more broadly or is it just an Amazon, 389 00:20:40,640 --> 00:20:45,120 Speaker 1: uniquely Amazon episode. I think it's mostly a uniquely Amazon episode. 390 00:20:45,119 --> 00:20:48,600 Speaker 1: The reason that the tech community, that the tech hiring 391 00:20:48,960 --> 00:20:54,080 Speaker 1: has flourished in New York City is not necessarily about 392 00:20:54,119 --> 00:20:59,160 Speaker 1: you know, tax breaks and showy political press conferences. It's 393 00:20:59,240 --> 00:21:03,080 Speaker 1: because this city has a lot to offer the tech industry, 394 00:21:03,080 --> 00:21:08,000 Speaker 1: including highly talented people in good infrastructure. At least in theory, 395 00:21:08,400 --> 00:21:10,080 Speaker 1: this is a place that a lot of people still 396 00:21:10,160 --> 00:21:14,680 Speaker 1: want to live and that isn't changing just because Amazon 397 00:21:14,840 --> 00:21:17,200 Speaker 1: kind of got its fingers burned on the stove. Share 398 00:21:17,240 --> 00:21:20,640 Speaker 1: I get to see you, You've got to come back happy. 399 00:21:20,760 --> 00:21:24,200 Speaker 1: I was happy to be here overday Bloomberg opinion columnist 400 00:21:24,280 --> 00:21:27,280 Speaker 1: and Tom Kine with quite an introduction that it's it's true. 401 00:21:27,359 --> 00:21:29,240 Speaker 1: I mean, I'm jealous. I wish can I go to 402 00:21:29,320 --> 00:21:35,959 Speaker 1: Haverford Domains of knowledge, analysis of the social world, individuals, institutions, 403 00:21:35,960 --> 00:21:39,879 Speaker 1: and cultures. You're trying to say that communist. She is 404 00:21:39,920 --> 00:21:45,040 Speaker 1: not comic meaning interpretation. Have you read anything but I've 405 00:21:45,080 --> 00:21:49,639 Speaker 1: taken analytical geometry and shar is diving into meaning in 406 00:21:49,760 --> 00:21:55,960 Speaker 1: terms I think. I think that I don't know. It's 407 00:21:55,960 --> 00:22:01,680 Speaker 1: analytical geometry. Really I'm the one that geometry. And but 408 00:22:01,880 --> 00:22:04,520 Speaker 1: you know it's great good morning down in Philadelphia and Hamford. 409 00:22:04,960 --> 00:22:07,120 Speaker 1: Would you think the Phillies picked up a good player there. 410 00:22:07,160 --> 00:22:10,560 Speaker 1: I'm excited about Bryce Bryce Harbor in Philadelphia. See that 411 00:22:12,119 --> 00:22:16,040 Speaker 1: she could do it all. Share overthing on Amazon, on socialism, 412 00:22:16,040 --> 00:22:34,920 Speaker 1: on Bryce Harper mint. This is a joy. We're scheduled 413 00:22:34,920 --> 00:22:38,200 Speaker 1: here to talk to Eric Shatzker about one William Gross. 414 00:22:38,240 --> 00:22:41,880 Speaker 1: You'll recall that Mr Gross move bonds, made coupon did 415 00:22:41,920 --> 00:22:44,879 Speaker 1: a total return act of PIMCO, went to Janice. He 416 00:22:44,960 --> 00:22:47,280 Speaker 1: decided to retire a couple of weeks ago. We chatted 417 00:22:47,320 --> 00:22:50,640 Speaker 1: him up then and this is a really important conversation. 418 00:22:50,720 --> 00:22:53,119 Speaker 1: But before we get to that, we gotta do what's important. 419 00:22:53,560 --> 00:22:56,280 Speaker 1: That we have Eric Shatzker in the studio who believes 420 00:22:56,640 --> 00:22:59,960 Speaker 1: Toronto maple lice blue. For those of you globally, here's 421 00:23:00,160 --> 00:23:02,960 Speaker 1: you need to know. The giant of the New York 422 00:23:03,000 --> 00:23:08,720 Speaker 1: Islanders just east of Manhattan, left the Islanders and joined 423 00:23:08,800 --> 00:23:12,440 Speaker 1: up with the excitement of the iconic Toronto maple leaves, 424 00:23:12,920 --> 00:23:15,240 Speaker 1: and for the first time last night, I went home. 425 00:23:15,280 --> 00:23:18,760 Speaker 1: You happen to be wearing Islanders blue and orange today. 426 00:23:18,800 --> 00:23:21,800 Speaker 1: But he has met John tavarrus is Phill emails in 427 00:23:21,840 --> 00:23:24,440 Speaker 1: and says is a total class act in the game 428 00:23:24,440 --> 00:23:27,879 Speaker 1: of hockey. What does tavirus meant for the Maple Leafs 429 00:23:28,280 --> 00:23:31,119 Speaker 1: and all those young kids that they have? Oh wow, 430 00:23:31,160 --> 00:23:34,240 Speaker 1: that's an interesting point place for us to start the conversation. Look, 431 00:23:34,240 --> 00:23:37,880 Speaker 1: he's got experience. He's this is gonna sound like locker 432 00:23:37,960 --> 00:23:40,080 Speaker 1: room talk. He's got to do that all day here. 433 00:23:40,720 --> 00:23:47,320 Speaker 1: He's got experience. Obviously he has faced adversity like last night. Yes, yes, 434 00:23:47,760 --> 00:23:50,920 Speaker 1: fair enough, fair enough, But it's a young team. So 435 00:23:51,080 --> 00:23:54,640 Speaker 1: a guy with not just his skill set but his disposition, 436 00:23:55,080 --> 00:23:59,399 Speaker 1: his humility is going to help those young kids play hockey. 437 00:23:59,480 --> 00:24:02,040 Speaker 1: And there's the difference that you grew up with that 438 00:24:02,160 --> 00:24:05,919 Speaker 1: I had, folks when I was I mean little, a 439 00:24:06,119 --> 00:24:09,479 Speaker 1: sweater hockey jersey used to be sweaters and I had 440 00:24:09,520 --> 00:24:13,720 Speaker 1: a Toronto Maple Leaves blue sweater. And there's something magical 441 00:24:13,760 --> 00:24:16,040 Speaker 1: about the leafs. What do the original what do the 442 00:24:16,160 --> 00:24:20,920 Speaker 1: leafs mean for Canada? Everything? I mean that on Montreal right, 443 00:24:21,320 --> 00:24:25,680 Speaker 1: well sure not Montreal is look the the the rub 444 00:24:25,760 --> 00:24:27,920 Speaker 1: if you will about Montreal is that it's in Quebec, 445 00:24:27,960 --> 00:24:30,439 Speaker 1: and teams in Quebec just don't inspire the rest of 446 00:24:30,440 --> 00:24:32,840 Speaker 1: the country the way, very nice team. You could be 447 00:24:32,920 --> 00:24:36,760 Speaker 1: running for Mr Trudeau slot. Oh and and there may 448 00:24:36,800 --> 00:24:38,680 Speaker 1: be somebody else running for that slot in the not 449 00:24:38,800 --> 00:24:41,480 Speaker 1: too distant future. That's the issue, right If the Leafs 450 00:24:41,560 --> 00:24:45,480 Speaker 1: end up winning the cup, the whole country celebration sat 451 00:24:45,760 --> 00:24:48,440 Speaker 1: with us. This conversation with Bill Gross was important. Why 452 00:24:48,520 --> 00:24:50,960 Speaker 1: was it important? Well, it was an opportunity to ask 453 00:24:51,000 --> 00:24:53,760 Speaker 1: Bill Gross, as he has one foot out the door. 454 00:24:53,800 --> 00:24:56,280 Speaker 1: Today is his last day at Janie Henderson, the end 455 00:24:56,359 --> 00:25:00,320 Speaker 1: of an unbelievable forty eight your career, Uh what we 456 00:25:00,400 --> 00:25:03,920 Speaker 1: don't yet know? And you talked to him a couple 457 00:25:03,920 --> 00:25:05,879 Speaker 1: of weeks ago the day he announced his retirement. I 458 00:25:05,920 --> 00:25:08,520 Speaker 1: went out there to see what was still left to 459 00:25:08,600 --> 00:25:11,359 Speaker 1: learn from Bill Gross and to ask the kinds of 460 00:25:11,480 --> 00:25:14,399 Speaker 1: questions that we may not have asked yet. We have 461 00:25:14,520 --> 00:25:18,959 Speaker 1: all read about the trials of his nasty divorce, right 462 00:25:19,000 --> 00:25:21,359 Speaker 1: it was tabloid fodder thousands of miles away here in 463 00:25:21,359 --> 00:25:23,520 Speaker 1: New York City. And so one of the questions I 464 00:25:23,560 --> 00:25:26,600 Speaker 1: asked Bill was you know to what degree if any 465 00:25:26,720 --> 00:25:31,680 Speaker 1: did that distract you, because it's the burden is heavy 466 00:25:31,720 --> 00:25:34,080 Speaker 1: to manage hundreds of millions of dollars of client money, 467 00:25:34,160 --> 00:25:36,040 Speaker 1: not to mention hundreds of millions of dollars of your 468 00:25:36,080 --> 00:25:38,000 Speaker 1: own money when you're going through that kind of thing. 469 00:25:38,520 --> 00:25:41,520 Speaker 1: And here is what Bill Gross had to say in response, 470 00:25:41,560 --> 00:25:47,320 Speaker 1: It was really surprising my personality, um, not to get personal. 471 00:25:47,840 --> 00:25:54,600 Speaker 1: I'm an Asperger, uh, and Aspergers can compartmentalize, they can 472 00:25:54,800 --> 00:26:01,760 Speaker 1: operate um in in different universes with the other universes 473 00:26:01,800 --> 00:26:04,560 Speaker 1: affecting them as much. And so, yeah, I had a 474 00:26:04,640 --> 00:26:09,400 Speaker 1: nasty divorce and uh, I still had you know, feelings 475 00:26:09,400 --> 00:26:13,840 Speaker 1: about temko um, but I think he did pretty well 476 00:26:14,240 --> 00:26:18,000 Speaker 1: um and compartmentalize them. Not that I didn't wake up 477 00:26:18,000 --> 00:26:22,080 Speaker 1: in the middle of night and start damning one side 478 00:26:22,160 --> 00:26:25,320 Speaker 1: or the other. But but when I came to work, 479 00:26:25,359 --> 00:26:30,840 Speaker 1: it was all business and I don't think it affected 480 00:26:30,880 --> 00:26:32,679 Speaker 1: me is that much. But you know, it's hard to 481 00:26:32,720 --> 00:26:37,280 Speaker 1: know you are not your best witness when it comes 482 00:26:37,320 --> 00:26:41,600 Speaker 1: to trying to figure out whether something is affecting you 483 00:26:41,720 --> 00:26:48,480 Speaker 1: or not. And so that's a possibility. I didn't know 484 00:26:48,560 --> 00:26:54,200 Speaker 1: you have Asperger's. Is that what you meant in February 485 00:26:54,240 --> 00:26:57,000 Speaker 1: of two thousand sixteen, in one of your outlooks, you 486 00:26:57,080 --> 00:27:01,600 Speaker 1: wrote about Michael Lewis's book and the movie it spawned 487 00:27:01,600 --> 00:27:04,040 Speaker 1: The Big Short, and you said that you shared an 488 00:27:04,080 --> 00:27:07,360 Speaker 1: attribute or an affliction I think, with one of the heroes, 489 00:27:07,400 --> 00:27:10,200 Speaker 1: if you will, of that book, Michael Berry, Dr. Michael Burry. 490 00:27:10,240 --> 00:27:14,600 Speaker 1: And it wasn't his glass eye exactly. Um, if you 491 00:27:14,680 --> 00:27:16,720 Speaker 1: got a minute and a half is a fascinating story. 492 00:27:16,760 --> 00:27:20,399 Speaker 1: And so I read that book and and Lewis is 493 00:27:20,400 --> 00:27:25,680 Speaker 1: a great writer, and he within that chapter about Michael Berry, 494 00:27:26,880 --> 00:27:32,240 Speaker 1: he listed ten things um that Asperger's have, um, that 495 00:27:32,440 --> 00:27:35,000 Speaker 1: Michael had as well. And I read them and I 496 00:27:35,040 --> 00:27:37,440 Speaker 1: go and some of them were not being able to 497 00:27:37,520 --> 00:27:39,800 Speaker 1: look somebody in the eye, which I'm not doing very 498 00:27:39,840 --> 00:27:43,919 Speaker 1: well well at the moment. Um. Uh, you know, singular 499 00:27:44,240 --> 00:27:49,840 Speaker 1: hobbies like stamp collecting, Etcetera's under etcetera. Um, And I go, alright, 500 00:27:50,119 --> 00:27:53,399 Speaker 1: that's me, I go. Um. And so I took the 501 00:27:53,440 --> 00:27:58,480 Speaker 1: book out to my ex wife. I said, um, I 502 00:27:58,520 --> 00:28:02,000 Speaker 1: read this, and she read it. I think Asperger's and 503 00:28:02,080 --> 00:28:07,199 Speaker 1: she said you do not not you do? But she 504 00:28:07,280 --> 00:28:10,480 Speaker 1: said you do. I said, how would you know that? 505 00:28:10,960 --> 00:28:14,080 Speaker 1: She said, well, you know when we were having dinner 506 00:28:14,119 --> 00:28:17,400 Speaker 1: with Bill Gates and Melinda, and that was like five 507 00:28:17,480 --> 00:28:21,920 Speaker 1: years before, at a Duke reunion fundraiser at his home. 508 00:28:22,640 --> 00:28:25,119 Speaker 1: She said, we were sitting at the table and I 509 00:28:25,119 --> 00:28:26,680 Speaker 1: looked at Gates and I looked at you. And I 510 00:28:26,680 --> 00:28:28,639 Speaker 1: looked at Gates and I looked at you. I said, 511 00:28:29,080 --> 00:28:31,520 Speaker 1: you were doing exactly the same thing at the same time. 512 00:28:31,920 --> 00:28:35,280 Speaker 1: Her mannerisms are all the same. And so I had 513 00:28:35,320 --> 00:28:38,080 Speaker 1: heard that he had Asperger's in a mild for him. 514 00:28:38,240 --> 00:28:41,040 Speaker 1: So I went to a psychologist and I described it 515 00:28:41,480 --> 00:28:45,760 Speaker 1: and the psychologist said, he has Asperger's. So I said, Uh, 516 00:28:46,200 --> 00:28:50,120 Speaker 1: why didn't you tell me? And she said, because I 517 00:28:50,120 --> 00:28:54,120 Speaker 1: thought it might hurt your feelings. Ah, you didn't know 518 00:28:54,200 --> 00:28:58,160 Speaker 1: this about yourself. M hm. So I read it in 519 00:28:58,200 --> 00:29:01,920 Speaker 1: a book, Um, until you were in your early seventies. Yeah, 520 00:29:02,160 --> 00:29:05,440 Speaker 1: but it explained a lot. Not not that I'm I'm 521 00:29:05,480 --> 00:29:07,000 Speaker 1: sort of proud of it, or else I wouldn't be 522 00:29:07,080 --> 00:29:09,960 Speaker 1: telling you. Um, I'm sort of proud of it because 523 00:29:10,000 --> 00:29:12,800 Speaker 1: it explains a lot about me. Not that you know, 524 00:29:12,880 --> 00:29:16,520 Speaker 1: all Aspergers are not geniuses. You know, the intelligence thing 525 00:29:16,600 --> 00:29:20,680 Speaker 1: is not necessarily a big part of it. But you know, 526 00:29:20,800 --> 00:29:26,200 Speaker 1: my personal behavior and ability to relate to people. My 527 00:29:26,280 --> 00:29:30,840 Speaker 1: singular hobbies stand collecting this and this and this and this. UM. Yeah, 528 00:29:30,840 --> 00:29:35,719 Speaker 1: I said, hey, uh, and so maybe I do UM. 529 00:29:35,760 --> 00:29:40,200 Speaker 1: And so I did go to a psychiatrist. And on 530 00:29:40,280 --> 00:29:43,040 Speaker 1: the first meeting, at the end of it, I just 531 00:29:43,160 --> 00:29:45,480 Speaker 1: through it. I said, do you think I have Aspergers? 532 00:29:46,320 --> 00:29:51,680 Speaker 1: And she said, oh yeah. Imagine finding out seven decades 533 00:29:51,760 --> 00:29:55,280 Speaker 1: into your life, a rich life and exciting life, a 534 00:29:55,320 --> 00:29:58,880 Speaker 1: life of extraordinary achievement, but a complex life that some 535 00:29:59,040 --> 00:30:03,600 Speaker 1: of it maybe explained by what is termed, if if 536 00:30:03,600 --> 00:30:06,800 Speaker 1: not fairly, a disorder. And and you heard him say 537 00:30:06,800 --> 00:30:09,840 Speaker 1: it there. He says, it explains a lot. One of 538 00:30:09,840 --> 00:30:12,280 Speaker 1: the great things I've seen Eric over the years is 539 00:30:12,280 --> 00:30:14,960 Speaker 1: people that struggle with total return and they get moved 540 00:30:14,960 --> 00:30:17,880 Speaker 1: out of institutions for whatever reason. There's a guy named 541 00:30:17,920 --> 00:30:21,440 Speaker 1: Jeffrey Vinnick who happens to run the most successful franchise 542 00:30:21,480 --> 00:30:23,960 Speaker 1: in hockey now that down in Tampa Bay, who's an 543 00:30:24,000 --> 00:30:30,320 Speaker 1: absolute textbook example. Weeks or months or quarters later, whatever 544 00:30:30,360 --> 00:30:33,640 Speaker 1: their theory was or bet pays off in spades. Is 545 00:30:34,280 --> 00:30:36,640 Speaker 1: does Bill have any feeling of he's leaving the game 546 00:30:36,720 --> 00:30:39,360 Speaker 1: now and that it could all turn around in a 547 00:30:39,400 --> 00:30:42,600 Speaker 1: Bill gross manner. Yeah, he does. He thinks that his 548 00:30:42,640 --> 00:30:44,680 Speaker 1: trades are still good, but it's going to take too 549 00:30:44,720 --> 00:30:48,920 Speaker 1: long for them to be money good. And and that's 550 00:30:48,960 --> 00:30:51,040 Speaker 1: the issue. He said, he needs to give his clients 551 00:30:51,080 --> 00:30:53,920 Speaker 1: a break. They've been hanging on for too long. He's 552 00:30:53,960 --> 00:30:55,760 Speaker 1: going to continue managing his own money. He's going to 553 00:30:55,800 --> 00:30:58,560 Speaker 1: do it more conservatively. He's going to continue selling volatility, 554 00:30:58,640 --> 00:31:01,200 Speaker 1: which he acknowledges may now and then look like a mistake. 555 00:31:01,720 --> 00:31:04,760 Speaker 1: But he's going to be investing in closed and funds. 556 00:31:05,160 --> 00:31:08,920 Speaker 1: He's going to be investing in muni's for example. Um, 557 00:31:09,040 --> 00:31:12,760 Speaker 1: he's not going to be uh making levered bets on 558 00:31:12,800 --> 00:31:15,840 Speaker 1: the convergence of you know, German buns and U S treasuries. 559 00:31:15,880 --> 00:31:19,000 Speaker 1: You've been done two things today successfully. You're wonderful interview 560 00:31:19,000 --> 00:31:22,240 Speaker 1: with Mr Gross And also four twenty two New York 561 00:31:22,360 --> 00:31:26,520 Speaker 1: Rangers fans have emailed in on your leafs Islanders and 562 00:31:26,560 --> 00:31:30,120 Speaker 1: it's all about conversion, we said, Jonathan, good morning out there. 563 00:31:30,120 --> 00:31:34,520 Speaker 1: And then many other Ranger fansitive looking for their tavirus 564 00:31:34,640 --> 00:31:37,719 Speaker 1: if you will, Eric Shaftsker, and look for that tonight 565 00:31:37,760 --> 00:31:40,800 Speaker 1: on Bloomberg Television nine pm and much through the weekend, 566 00:31:41,080 --> 00:31:48,560 Speaker 1: as well as Shaftsker in conversation with Close. Thanks for 567 00:31:48,680 --> 00:31:53,080 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 568 00:31:53,200 --> 00:31:58,960 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 569 00:31:59,480 --> 00:32:02,840 Speaker 1: I'm on Winter at Tom Keane before the podcast. You 570 00:32:02,880 --> 00:32:06,280 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.