WEBVTT - Jobs, Munis, and Ozempic 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.640 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market moven News. 0:00:48.720 --> 0:00:51.839 Find the Bloomberg Markets Podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:55.480 --> 0:00:58.520 Ben Emmons joins us here in our Bloomberg Interactive Broker studio. 0:00:59.040 --> 0:01:00.520 He doesn't mail it in or own it, and he's 0:01:00.520 --> 0:01:02.960 a principal, senior portfolio manager and head of fixed Income 0:01:03.240 --> 0:01:07.160 at New Edge wealth. Been lots of economic data today 0:01:07.240 --> 0:01:10.400 and really this week here I don't know. I mean 0:01:10.640 --> 0:01:13.119 this services data kind of took me by surprise. Here 0:01:13.160 --> 0:01:15.880 again the ism services data, and we talk about services, 0:01:16.120 --> 0:01:19.000 it's important. It's seventy percent of our economy came in 0:01:19.000 --> 0:01:21.800 at fifty point six, so it's still above fifty, still 0:01:21.840 --> 0:01:25.760 showing some expansion in the economy, but well below last 0:01:25.800 --> 0:01:28.440 month and well below the consensus of fifty two point five. 0:01:29.040 --> 0:01:32.640 That's kind of got the bonds here, yields coming in 0:01:32.680 --> 0:01:34.240 a little bit in stocks higher. What would you make 0:01:34.240 --> 0:01:36.120 of that services data, yep. 0:01:35.920 --> 0:01:38.560 Paul, I thought that the surprise there was that employment components, 0:01:38.600 --> 0:01:40.640 you know, dropping below fifty free sharply. 0:01:40.880 --> 0:01:41.119 Yep. 0:01:41.360 --> 0:01:44.280 I think that's what that triggered the rally in bonds 0:01:44.840 --> 0:01:48.200 because it's a bit contradicting to what we saw yesterday 0:01:48.200 --> 0:01:50.920 with the b ANDI services data. Now, the surveys a 0:01:50.960 --> 0:01:54.640 little different from each other, but nonetheless in the employment component, 0:01:54.720 --> 0:01:57.360 that survey was up and it was actually I think 0:01:57.440 --> 0:01:59.560 part of the reason why we saw about a payroll 0:01:59.640 --> 0:02:03.120 data this morning. So I guess this survey is indicating that, 0:02:03.200 --> 0:02:06.680 you know, some of the people in the supply management 0:02:07.280 --> 0:02:10.120 survey view that the economy is perhaps getting weaker or 0:02:10.120 --> 0:02:12.800 they're having less demand for labor. Either way, you're getting 0:02:12.800 --> 0:02:15.440 this whipsite on the market this morning. You goes up 0:02:15.440 --> 0:02:17.880 to four point ten on the ten year on the 0:02:17.919 --> 0:02:20.919 pay roverboard and reverse back down between ninety six. So 0:02:21.360 --> 0:02:23.520 I think what it tells us is that this is 0:02:23.520 --> 0:02:26.600 a good economy. There will be some ray cuts coming 0:02:26.639 --> 0:02:29.560 in the future, but it is not like a recession 0:02:29.600 --> 0:02:32.160 economy either, so you're not see much lower yields I 0:02:32.200 --> 0:02:32.720 think from here. 0:02:33.000 --> 0:02:35.239 Yeah, So but let's get into the rate cuts that 0:02:35.280 --> 0:02:37.040 you talked about. Because we have the jobs that we 0:02:37.080 --> 0:02:41.240 have ism, you also get resource from Wall Street firms, 0:02:41.280 --> 0:02:44.200 from banks, So when do you see these rate cuts 0:02:44.240 --> 0:02:45.200 possibly kicking in it? 0:02:45.919 --> 0:02:49.360 So I think the March raycut is probably too soon, 0:02:49.520 --> 0:02:52.000 and that's just because the way the Fed is communicated 0:02:52.000 --> 0:02:54.880 that so far, you know, they've given us an idea 0:02:54.960 --> 0:02:58.679 that they are in projections out that probably gives them 0:02:58.720 --> 0:03:01.400 the confidence that they can actually this year can lower 0:03:01.440 --> 0:03:04.280 rates compared to last year when they said resoundingly like 0:03:04.480 --> 0:03:08.200 there's no case for raycouts. But a March raycot would 0:03:08.280 --> 0:03:11.000 mean that inflation data we're getting out until that time 0:03:11.240 --> 0:03:15.160 would see such significant decline that they start reacting to 0:03:15.200 --> 0:03:17.400 that and then make the case that March is the 0:03:17.919 --> 0:03:20.959 live meeting. So I think from the here at LISA, 0:03:21.000 --> 0:03:24.359 it will be more about as we're getting several months 0:03:24.400 --> 0:03:26.960 of inflation employment data, and it could used to go 0:03:27.040 --> 0:03:29.639 towards the you know, the goal that they have two 0:03:29.639 --> 0:03:32.320 percent inflation and unemployment rate maybe a little bit above four. 0:03:32.919 --> 0:03:35.680 That probably is more close to the June to get 0:03:35.680 --> 0:03:38.320 the first ray cut and then we really are into 0:03:38.360 --> 0:03:40.160 the second half of the year, So I don't think 0:03:40.200 --> 0:03:43.080 you're going to see six raycouts this year. So, Ben, 0:03:43.120 --> 0:03:43.480 what did you. 0:03:43.600 --> 0:03:45.400 Make We haven't spoken to you in a while here. 0:03:45.400 --> 0:03:47.120 What did you make of that big move we've saw 0:03:47.160 --> 0:03:49.320 in the markets there in the last I don't know, 0:03:49.400 --> 0:03:51.360 ten weeks of the year. Last year, we just had 0:03:51.360 --> 0:03:53.640 the ten year ago from five percent to three and 0:03:53.680 --> 0:03:56.480 a quarter. We had the stocks just rip. I mean, 0:03:56.760 --> 0:03:57.440 what was that? 0:03:58.160 --> 0:03:58.400 Yeah? 0:03:58.760 --> 0:04:01.160 Actually the right right in a way to say, what 0:04:01.600 --> 0:04:04.600 was it really about? Was it just about yields going down? 0:04:04.720 --> 0:04:09.120 Because one CPI reports showed that the owner's equipmental event 0:04:09.240 --> 0:04:11.920 finally starts to decline. I don't see it in New York. 0:04:11.960 --> 0:04:15.320 But okay, it's it's finally declining. So that triggered the 0:04:16.080 --> 0:04:18.480 move down and yields and there was a relief, and 0:04:18.800 --> 0:04:21.080 you're getting all the high beta and small caps and 0:04:21.120 --> 0:04:24.600 everything start to pricing this idea that yeah, Okay, the 0:04:24.600 --> 0:04:26.440 economy is not going to go to a recession. It 0:04:26.440 --> 0:04:28.640 will be a soft landing, maybe even no landing. I think, 0:04:28.680 --> 0:04:30.880 because it's just simply an economy is staying on track. 0:04:31.839 --> 0:04:34.440 And at the same time, it's about those who had 0:04:34.560 --> 0:04:38.200 money on the sidelines redeploying in something that lacked relative 0:04:38.279 --> 0:04:41.160 to technology, so sort of a relative catch up that 0:04:41.320 --> 0:04:45.039 I think all I think what drove this rally. Now 0:04:45.480 --> 0:04:48.960 will it continue is to be seen because I think 0:04:49.040 --> 0:04:51.560 what we're coming into this year is that we're going 0:04:51.600 --> 0:04:54.279 to keep a fat still restricted for a bit of time. 0:04:54.480 --> 0:04:56.960 So the economy, if it does stay in the slower 0:04:57.000 --> 0:05:00.320 track than last year, you know, you may see stocks 0:05:00.400 --> 0:05:02.360 not perform so strongly. If it's a lie, she has 0:05:02.440 --> 0:05:04.320 yields to sort of stay where we are, And I 0:05:04.400 --> 0:05:07.360 think that there's a really important part about that story. Ultimately, 0:05:07.360 --> 0:05:08.640 it's all about interest rates. 0:05:08.880 --> 0:05:12.000 Now, but a strong drug jobs market. It's that main 0:05:12.160 --> 0:05:15.560 kind of engine for resilient consumer spending, and it's pushed 0:05:15.560 --> 0:05:18.719 a lot of economists to rethink their recession calls. What's 0:05:18.760 --> 0:05:19.680 what's your take on that. 0:05:20.520 --> 0:05:22.919 Yeah, I think the recession call, I've never been in 0:05:23.000 --> 0:05:25.320 that camp. I still think there's no recession this year. 0:05:25.400 --> 0:05:27.839 It may not even be next year. I think here's 0:05:28.040 --> 0:05:30.520 where I come from. This important point to make maybe 0:05:30.640 --> 0:05:33.760 is that the fiscal impulse that we have to the economy, 0:05:33.920 --> 0:05:36.880 fiscal spending is not going to change this year. They 0:05:36.920 --> 0:05:39.320 have agreed on the dead seating last year. They have 0:05:39.440 --> 0:05:42.840 one percent mandatory spending cut across the board. But that's 0:05:42.880 --> 0:05:45.359 so small if you think about back in twenty eleven 0:05:45.440 --> 0:05:47.920 twelve when they had a ten percent mandatory spending cut, 0:05:48.160 --> 0:05:51.240 which really slowed down the economy. One percent is just 0:05:51.320 --> 0:05:53.280 not going to do much for the economy. Especially I've 0:05:53.279 --> 0:05:56.560 seeing job stated like this coming out, and you're seeing 0:05:56.680 --> 0:06:00.960 confidence picking up and financial conditions being looser. So I 0:06:01.000 --> 0:06:04.600 think it's an economy that stays on track. What could 0:06:04.720 --> 0:06:06.760 change it is next year whomever was in the White House. 0:06:06.800 --> 0:06:09.440 But here's one other things about that White House race, 0:06:09.760 --> 0:06:13.000 the new president. But it's buy no Trump, which what 0:06:13.040 --> 0:06:15.880 it looks like either of them wants to stimulate the economy, 0:06:15.880 --> 0:06:18.600 either with text cuts or with more spending. So either way, 0:06:18.680 --> 0:06:20.640 I think this recession scenario is not going to play 0:06:20.640 --> 0:06:25.080 out unless we getting major fiscal spending contraction. As I mentioned, 0:06:25.080 --> 0:06:26.600 I don't think that's the case. 0:06:27.000 --> 0:06:31.240 So given that backdrop, Ben kind of what's your best 0:06:31.279 --> 0:06:33.960 idea here? Coming into twenty twenty four, A lot of 0:06:33.960 --> 0:06:35.880 folks were saying, hey, just be long equity markets, but 0:06:35.920 --> 0:06:37.680 then you had that huge run up in the end 0:06:37.720 --> 0:06:39.919 of the year and maybe some of the glory was 0:06:39.920 --> 0:06:42.080 taken out of there. What's your best idea or do 0:06:42.080 --> 0:06:42.960 you think about twenty four? 0:06:43.200 --> 0:06:46.640 Well, we do look carefully at new edge valuations, and 0:06:46.760 --> 0:06:49.800 you know MC colleague Cameron Dawson who was on Bloomberg's 0:06:49.800 --> 0:06:51.480 events the other day, she kind of make the case 0:06:51.480 --> 0:06:53.960 on that too. It's saying, look, we do have overvaluation 0:06:54.080 --> 0:06:57.599 in tech and the adjustment of interest rates a bit higher. 0:06:57.600 --> 0:07:00.000 For me, I guess economy, it's just better takes off 0:07:00.080 --> 0:07:02.839 some of that that that valuation fraft that's in there 0:07:03.640 --> 0:07:05.760 with those also some I think some level of frath 0:07:05.839 --> 0:07:10.120 coming into uh you know, really Higbida elements of the market, 0:07:10.240 --> 0:07:12.200 so I think you want to play it more a 0:07:12.240 --> 0:07:15.800 bit more defense. We like energy, we like utility sector, 0:07:16.040 --> 0:07:18.840 like some of the healthcare sector. You really pick your 0:07:18.840 --> 0:07:21.960 best parts there. There's very some stocks are very undervalued 0:07:22.000 --> 0:07:24.960 relative to the marketing, trading really at low multiples, and 0:07:25.000 --> 0:07:27.960 actually the earning forecast much were realistic. 0:07:27.600 --> 0:07:31.000 So not chasing. I guess those magnificent seven. 0:07:31.240 --> 0:07:34.640 Not not really so to the call like, yeah, jefferis 0:07:34.800 --> 0:07:37.520 like Microsoft. We all know that Microsoft is a great company. 0:07:37.560 --> 0:07:39.640 It's good and strong, but you will be chasing it 0:07:39.720 --> 0:07:43.920 probably here at these valuation levels. But I like and 0:07:44.000 --> 0:07:46.280 fixed income, and also I think inequity is that emerging 0:07:46.320 --> 0:07:49.360 markets is an interesting story because we are coming off 0:07:49.440 --> 0:07:53.200 really restrictive rates in emerging markets and inflation is really moderated. 0:07:53.240 --> 0:07:53.440 There. 0:07:54.120 --> 0:07:56.560 There's some really good earning growth stories both Asia and 0:07:56.720 --> 0:07:59.960 Latin America, so I think there's an opportunity. We like Japan, 0:08:00.160 --> 0:08:04.160 there's another market that's contasued to be outperformer. And international equity. 0:08:05.200 --> 0:08:07.640 And then lastly, we gotta watch what the dollar is 0:08:07.680 --> 0:08:09.760 going to do this year. If the Fat's going to 0:08:09.840 --> 0:08:12.000 lower rates, it's gonna lead like into a week a 0:08:12.120 --> 0:08:15.400 dollar environment every time the dollar does go below a 0:08:15.480 --> 0:08:18.360 haunted on the index, it leads to significant rally and 0:08:18.480 --> 0:08:21.440 energy and commodities. It's been that historically that way. I 0:08:21.440 --> 0:08:24.080 don't think it's going to be different this way this 0:08:24.240 --> 0:08:28.280 year and now whatever happens with ge politically, Energy is 0:08:28.360 --> 0:08:30.760 I think a bit unvalued from where it is currently. 0:08:30.960 --> 0:08:34.720 Same thing some someone in commodities. Lastly, gold could actually 0:08:34.760 --> 0:08:37.360 be a strong air for gold given uncertainty and fat 0:08:37.400 --> 0:08:40.320 easy it performs quite well in that environment. 0:08:41.080 --> 0:08:42.760 And just a quick I want to get an idea 0:08:42.800 --> 0:08:45.319 of sentiment out there. I mean, you think rising interest 0:08:45.400 --> 0:08:47.800 rates makes it more expensive for companies to operate. I 0:08:47.840 --> 0:08:51.719 mean some of your clients, they're entrepreneurs, their corporate executives. 0:08:51.760 --> 0:08:54.040 What's the feeling that they're getting out there? 0:08:54.040 --> 0:08:57.760 Now, Wow, there's caution and nowice this. Obviously, we do 0:08:57.840 --> 0:09:01.679 deal with this election and it's it's uncertainty. We also 0:09:01.960 --> 0:09:04.040 just do the fat discussion. It's not clear right if 0:09:04.040 --> 0:09:06.240 you're actually going to get these raycouts and how many 0:09:06.800 --> 0:09:10.280 uncertainty while watching what's going on in the Middle East, 0:09:10.360 --> 0:09:12.800 and we don't know how that's going to exactly play out. 0:09:12.880 --> 0:09:16.920 So uncertainty. On the other hand, there doesn't seem to 0:09:16.920 --> 0:09:19.800 be this slowdown that everybody can teach to talk about 0:09:20.000 --> 0:09:22.319 that the solda and that tips us into a recession. 0:09:22.800 --> 0:09:25.360 So I think that our clients are more about, you know, 0:09:25.520 --> 0:09:28.440 we like risk. We'd like to not be out of 0:09:28.440 --> 0:09:31.560 the market. We still like some of the areas like 0:09:31.640 --> 0:09:34.360 private credit or private equity. That's not something we want 0:09:34.400 --> 0:09:37.360 to necessarily skill completely out of it because of recession risk. 0:09:37.920 --> 0:09:39.520 But we don't want you to play the high beta 0:09:40.600 --> 0:09:43.000 trade either, and meaning you know, going reading in high 0:09:43.080 --> 0:09:46.040 risk really small small small caps or you know, go 0:09:46.200 --> 0:09:49.040 into I don't know crypto and things like that. You know, 0:09:49.480 --> 0:09:51.960 we don't want to play the liquidity high risk game 0:09:52.040 --> 0:09:55.080 that way, and be mindful that we do have fixed income. 0:09:55.240 --> 0:09:57.679 We can we can finally get some additional income that's 0:09:57.679 --> 0:09:59.559 still really important in the portfolio this year. 0:10:00.080 --> 0:10:03.040 Thanks so much for joining us, Benham's principal at New 0:10:03.240 --> 0:10:03.840 Edge Wealth. 0:10:05.600 --> 0:10:08.360 You're listening to the team Ken's a our live program, 0:10:08.480 --> 0:10:12.480 Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot com, 0:10:12.520 --> 0:10:15.679 the iHeartRadio app, and the Bloomberg Business app, or listen 0:10:15.720 --> 0:10:17.840 on demand wherever you get your podcasts. 0:10:20.120 --> 0:10:22.720 There is no greater friend to the municipal bond market 0:10:22.720 --> 0:10:25.160 than me. I tell every governor of the State of 0:10:25.200 --> 0:10:28.240 New Jersey, I'm probably the largest private creditor to the 0:10:28.240 --> 0:10:31.120 State of New Jersey through my municipal bond holdings. Chris 0:10:31.160 --> 0:10:33.800 Burgante Brigatti, he thinks he knows a thing or two 0:10:33.840 --> 0:10:38.000 about it. But Senior vice president Director Strategic Planning at SWBC, Hey, Chris, 0:10:38.040 --> 0:10:41.280 thanks so much for joining us here in studio. Fixed 0:10:41.320 --> 0:10:44.160 income actually had a positive year last year in terms 0:10:44.200 --> 0:10:46.439 of total return. How did the municipal bond market do? 0:10:46.720 --> 0:10:49.040 The municipal bond market had a very good year, and 0:10:49.080 --> 0:10:51.040 it all really happened in the last two months of 0:10:51.040 --> 0:10:53.440 the year. It was negative coming into and through October, 0:10:53.600 --> 0:10:56.240 so the performance actually turned quite positive about six point 0:10:56.240 --> 0:10:57.959 four percent to the positive by the end of the 0:10:58.040 --> 0:11:01.559 year with over seven percent return is coming in November December. 0:11:02.440 --> 0:11:03.839 All right, So what are we doing here with the 0:11:03.920 --> 0:11:07.720 unicipal bond market in twenty twenty four. What's the call here? 0:11:08.640 --> 0:11:10.760 The call is to be very strategic in terms of 0:11:10.800 --> 0:11:13.720 how you approach a market and delegate your capital. A 0:11:13.720 --> 0:11:15.360 lot of the investors that we're talking to and a 0:11:15.360 --> 0:11:17.320 lot of the people that we engaged directly, are really 0:11:17.400 --> 0:11:20.959 kind of being very cautious on their credit approach, not 0:11:21.000 --> 0:11:22.959 really going too far out on the credit curve because 0:11:23.000 --> 0:11:25.439 those credit spreads and narrow significantly in the rally through 0:11:25.480 --> 0:11:28.120 November and December. So now it's a matter of when 0:11:28.160 --> 0:11:30.520 can you re engage the market in a more strategic 0:11:30.559 --> 0:11:32.600 manner further out the curve or down the credit curve, 0:11:32.760 --> 0:11:35.000 And I think both of those opportunities could happen this year. 0:11:35.040 --> 0:11:37.600 But I do expect this to be another quite constructive 0:11:37.679 --> 0:11:38.840 year for the market in general. 0:11:39.440 --> 0:11:41.160 So what else are we doing in the fixed the 0:11:41.160 --> 0:11:45.120 gum space here, because I you know, twenty twenty two 0:11:45.240 --> 0:11:47.720 is so brutal for across fixed income space, double digit 0:11:47.760 --> 0:11:50.560 declines declient is like the fixing the market had never 0:11:50.600 --> 0:11:54.240 really seen had some positive results in twenty twenty three. 0:11:54.720 --> 0:11:56.960 Any reason for me to own bonds here in twenty twenty. 0:11:56.720 --> 0:11:58.600 Four, I think there still are. You know, you look 0:11:58.600 --> 0:12:01.199 at the fact that we've got real good yields that 0:12:01.240 --> 0:12:03.440 we have not seen in well over a decade. So 0:12:03.520 --> 0:12:05.880 for a longer term perspective, you start looking at that, 0:12:05.960 --> 0:12:08.040 and you know, if you're going to be clipping coupons 0:12:08.040 --> 0:12:09.880 and be able to grab that four percent yield if 0:12:09.960 --> 0:12:14.120 rates remained unchanged, barring the expectation for lower rate environment, 0:12:14.120 --> 0:12:16.280 which would add additional performance to a bond. If you 0:12:16.320 --> 0:12:18.800 can lock in four percent or better type of yields 0:12:18.800 --> 0:12:21.760 in this market, you're really looking at strong performance in chase. 0:12:21.800 --> 0:12:24.240 Dig a little bit deeper into what banks are doing 0:12:24.320 --> 0:12:26.000 with some of them munity teams. 0:12:26.720 --> 0:12:29.079 Your city they announced at getting out of the municipal 0:12:29.080 --> 0:12:30.800 ball market. They did they can't do that. 0:12:31.679 --> 0:12:34.720 It's amazing they've they've made that announcement in backing out 0:12:34.760 --> 0:12:36.560 of the market. I mean the market is becoming tougher 0:12:36.600 --> 0:12:39.679 and tougher, spreads are narrow, it's becoming much more constrained. 0:12:39.679 --> 0:12:42.240 Regulators aren't helping. I'm not going to really kind of 0:12:42.240 --> 0:12:44.600 go down that path too deeply, but it's a challenging 0:12:44.640 --> 0:12:47.160 market for banks to make money in. And so the 0:12:47.200 --> 0:12:49.240 strategy and the way you approach it is how can 0:12:49.280 --> 0:12:51.960 you embed yourself deeper and better with clients to provide 0:12:51.960 --> 0:12:54.480 better service. And that's one of the goals that we're 0:12:54.480 --> 0:12:57.200 trying to produce at SWBC is how can we ingrain 0:12:57.240 --> 0:12:59.280 ourselves as a partner to those clients and really add 0:12:59.320 --> 0:13:02.640 value SBbc stand for Southwest Business Court. 0:13:02.880 --> 0:13:04.479 Southwest where you guys based. 0:13:04.360 --> 0:13:06.000 San Antonio, Texas's headquarter. 0:13:06.280 --> 0:13:06.520 Nice? 0:13:06.640 --> 0:13:07.280 Is that where you're from? 0:13:07.480 --> 0:13:07.680 No? 0:13:07.679 --> 0:13:08.720 No, I'm Northern New Jersey. 0:13:08.720 --> 0:13:10.360 Here in northern New Jersey. Okay, I'm a big fan 0:13:10.400 --> 0:13:15.080 of San anton all right. So in the I don't 0:13:15.080 --> 0:13:16.679 know where are we going to see a new issuance 0:13:16.720 --> 0:13:17.800 this year? I mean, am I going to see a 0:13:17.800 --> 0:13:22.360 bunch of new fixed income issueans, credit issuance? High yield 0:13:22.480 --> 0:13:24.280 municipal bonds? Am I going to see a bunch of issuance? 0:13:24.280 --> 0:13:25.839 Now that interest rates are coming down? Do you think? 0:13:26.040 --> 0:13:26.480 I think so? 0:13:26.720 --> 0:13:29.559 I think the opportunity for issuance to rise is twofold 0:13:30.040 --> 0:13:32.559 when you look at what happened with the taxable municipal 0:13:32.559 --> 0:13:34.480 market last year, which was down about thirty percent in 0:13:34.520 --> 0:13:36.959 terms of issuance. So I expect that to rebound a 0:13:37.000 --> 0:13:39.880 little bit. Last year, issuance came in around three hundred 0:13:39.880 --> 0:13:42.440 and eighty billion dollars, which was a few percentage points 0:13:42.440 --> 0:13:44.640 lower than the previous year in twenty two. I expect 0:13:44.640 --> 0:13:46.960 this year to be a little bit north of four hundred. 0:13:47.200 --> 0:13:49.000 And an average year is like five six hundred. 0:13:49.320 --> 0:13:51.160 No, an average year of late has been somewhere in 0:13:51.160 --> 0:13:51.560 that mid to. 0:13:51.559 --> 0:13:53.040 Low force mid force. 0:13:53.080 --> 0:13:54.880 Yeah, yeah, so I expect to get more towards the 0:13:54.920 --> 0:13:58.480 average and the opportunity for investors who engage that should 0:13:58.520 --> 0:13:59.360 be well stated. 0:14:00.040 --> 0:14:01.880 But the municipal bond like I've been told in the 0:14:01.920 --> 0:14:06.839 past that municipal bond issuers, municipalities, they don't issue money 0:14:06.840 --> 0:14:10.319 when rates are low per se, they issue money when 0:14:10.320 --> 0:14:13.480 they need it. Correct, So aren't we having a bunch 0:14:13.480 --> 0:14:17.240 of like infrastructure acts and things like that. Don't have 0:14:17.280 --> 0:14:18.959 a bunch of stuff going from the federal grim that 0:14:19.440 --> 0:14:21.400 needs to be funded in municipal bond market. 0:14:21.200 --> 0:14:23.120 There are You know, it's funny when the infrastructure bill 0:14:23.160 --> 0:14:25.760 came out several years ago, the market got all heady 0:14:25.920 --> 0:14:27.480 and for lack of a better way of putting it, in 0:14:27.520 --> 0:14:30.000 terms of the opportunity for more issuance to come. But 0:14:30.120 --> 0:14:33.600 those infrastructure things take time to build. It takes years 0:14:33.640 --> 0:14:36.440 to get through the system through the process at local 0:14:36.600 --> 0:14:39.080 or even larger municipalities to be able to construct that 0:14:39.200 --> 0:14:42.040 new road, to do something with a bridge. All those 0:14:42.080 --> 0:14:45.280 infrastructure projects take time to even get started. So once 0:14:45.280 --> 0:14:47.240 they get started, that's when the borrowing is going to happen, 0:14:47.480 --> 0:14:49.520 and I think that we kind of got through twenty 0:14:49.560 --> 0:14:52.000 twenty three with the huge spiking yields we saw in 0:14:52.040 --> 0:14:54.200 October that scared a lot of people. Now that it's 0:14:54.280 --> 0:14:56.720 kind of more normalized, I think that the issuers are 0:14:56.720 --> 0:14:58.640 going to come back into the market, and they, like 0:14:58.640 --> 0:14:59.880 you said, they're going to come in when they have 0:15:00.280 --> 0:15:02.200 and when they don't have to and rates are high, 0:15:02.240 --> 0:15:05.280 they stayed as far away as they can. So now 0:15:05.280 --> 0:15:06.520 it's the opportunity is going to be there, and I 0:15:06.520 --> 0:15:08.080 think they're going to come in quite strongly. 0:15:08.280 --> 0:15:11.800 So who are buyers of municipal bonds these days? I'm 0:15:12.000 --> 0:15:14.760 likely retail versus institutional. How does that split look today 0:15:14.840 --> 0:15:16.800 and maybe how's that changed over the last decade or so. 0:15:17.000 --> 0:15:18.680 Yeah, you know, that's one of the most interesting things, 0:15:18.680 --> 0:15:19.880 and that's one of the things we're trying to be 0:15:19.880 --> 0:15:23.520 aware of at SWBC is the retail investor has historically 0:15:23.600 --> 0:15:27.640 been a strong participant in the municipal market. Their participation 0:15:27.720 --> 0:15:32.680 has shifted less away from the funds. ETFs have kind 0:15:32.680 --> 0:15:35.360 of picked up some of the fund bandwidth and fund opportunity, 0:15:35.640 --> 0:15:40.280 but the small accounts that are managed by portfolio managers, 0:15:40.320 --> 0:15:43.360 so they're professionally managed, but it's an SMA. Those types 0:15:43.400 --> 0:15:45.360 of accounts are really where most of the opportunity is, 0:15:45.400 --> 0:15:47.680 and that has grown by more than double in the 0:15:47.720 --> 0:15:51.880 past several years. So those investors are really participating strongly 0:15:51.920 --> 0:15:54.200 and reaping the benefits tax for yield. 0:15:54.200 --> 0:15:57.160 What's not to like, Yeah, exactly. And so what's the 0:15:57.200 --> 0:15:59.800 credit quality in the municipal space. I'm actually surprised. I mean, 0:16:00.080 --> 0:16:02.680 always the Puerto Rico issue or something out of Illinois 0:16:02.760 --> 0:16:04.520 or something like that. But other than some of those 0:16:04.560 --> 0:16:08.200 weird situations, I haven't heard of any cracks of note 0:16:08.640 --> 0:16:11.280 in the municipal bond market really for years. 0:16:11.440 --> 0:16:13.200 It's been several years, you know. You look at the 0:16:13.200 --> 0:16:16.560 fact that the federal government allowed for some of the 0:16:16.600 --> 0:16:20.120 infrastructure bill, some of the opportunity for federal aid or 0:16:20.200 --> 0:16:22.880 during the pandemic and COVID, so a lot of issuers 0:16:22.880 --> 0:16:25.520 have built up a reserve of funds as a result 0:16:25.560 --> 0:16:28.160 of that. So the credits are actually quite high, higher 0:16:28.160 --> 0:16:31.120 than they possibly would otherwise be. But generally the municipal 0:16:31.160 --> 0:16:33.960 market is really really solid footing. I mean, most of 0:16:33.960 --> 0:16:36.200 the space could take most of the investment and opportunity 0:16:36.240 --> 0:16:38.400 to take space in the double triple B and higher 0:16:38.560 --> 0:16:41.400 investment grade. That's where the vast majority of issuance is 0:16:41.760 --> 0:16:45.040 and the default rate on those is less than one percent. 0:16:45.280 --> 0:16:47.080 So the only thing time you hear about something like 0:16:47.120 --> 0:16:51.680 that is sketch your credits in odd different markets. Healthcare 0:16:51.760 --> 0:16:54.640 is notoriously a challenge some of the housing market as well. 0:16:54.640 --> 0:16:56.520 And then you get the odd issuers and the Puerto 0:16:56.600 --> 0:16:58.240 Rico story I always rears its head. 0:16:58.440 --> 0:17:00.000 Then there's the ball across the river there. 0:17:00.160 --> 0:17:01.360 Exactly what's going on with that? 0:17:01.360 --> 0:17:04.840 What's the dream mall? I think, yeah, yeah, somebody would. 0:17:04.880 --> 0:17:07.040 I mean, that is fascinating to me. I remember when 0:17:07.080 --> 0:17:10.120 that issue came to market, I said, I know nothing 0:17:10.119 --> 0:17:12.360 about the dream mall. I know nothing about the municipal 0:17:12.359 --> 0:17:15.120 bond market, but I wouldn't go near that bond issuance. 0:17:15.119 --> 0:17:18.040 I mean, I couldn't see how that thing would actually 0:17:18.040 --> 0:17:20.040 be successful, much less pay me back my principle. 0:17:20.119 --> 0:17:20.720 Have you been there? 0:17:21.040 --> 0:17:22.200 No, that's still nice. 0:17:22.359 --> 0:17:23.320 That's the point either. 0:17:23.640 --> 0:17:25.840 I know, you know, it's in a tough location for 0:17:26.200 --> 0:17:29.680 New Yorkers especially, it's it's not easier fund to go 0:17:29.760 --> 0:17:32.040 over the bridge and then travel through there. And you know, 0:17:32.359 --> 0:17:33.720 my kids have been there to go on some of 0:17:33.760 --> 0:17:35.199 the rides and do some of those things, and they 0:17:35.280 --> 0:17:37.720 enjoy it. But I haven't stepped foot in myself either. 0:17:37.760 --> 0:17:39.640 And it's a tough credit, that's for sure. 0:17:39.720 --> 0:17:39.959 All Right. 0:17:40.000 --> 0:17:41.680 What are some of the sectors that you think are 0:17:41.680 --> 0:17:44.520 going to be interesting in twenty twenty four? 0:17:45.160 --> 0:17:48.720 You know, I always mention things that are quality revenue 0:17:48.720 --> 0:17:50.399 bonds that I really like, and you know, you go 0:17:50.440 --> 0:17:52.520 down the path of water and sewer bonds. Everyone has 0:17:52.520 --> 0:17:54.320 to pay their water bill, it needs to or so 0:17:54.400 --> 0:17:56.919 I think in terms of higher credit quality, that's definitely 0:17:57.000 --> 0:17:59.280 on the plate. I think that office opportunity, other things 0:17:59.280 --> 0:18:01.720 that make sense, or some of the better higher quality 0:18:01.800 --> 0:18:04.280 education bonds the well known names for lack of a 0:18:04.320 --> 0:18:07.800