WEBVTT - Single Best Idea with Tom Keene: John Ryding & Amanda Lynam

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Single best idea on

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<v Speaker 1>a really really interesting Monday. Really just can't say enough

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<v Speaker 1>about if the team started putting the guest list together Friday,

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<v Speaker 1>blew it up in the vicinity of Sunday with all

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<v Speaker 1>we saw in China, always saw in Russia, but just

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<v Speaker 1>as importantly what we saw in the markets. I really

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<v Speaker 1>can't emphasize enough how nuance, not odd and not scary,

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<v Speaker 1>but just how nuanced the markets are. And we had

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<v Speaker 1>just a terrific balance today in economics, inequities, in bonds,

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<v Speaker 1>in foreign exchange, looking at particularly EU again, and of

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<v Speaker 1>course the international relations of the moment. Major shout out

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<v Speaker 1>Alex Brideaux at Eurasia Group on very short notice his

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<v Speaker 1>wisdom on actually how does the Kremlin run? And it

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<v Speaker 1>also just Henrietta Trees was beyond brilliant with Veda partners

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<v Speaker 1>about split ticketing where our parents all voted Republican or

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<v Speaker 1>they all voted Democrat and is now is there going

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<v Speaker 1>to be split ticketing within the Democratic Party And she

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<v Speaker 1>was just brilliant on that. Brilliant as well in economics

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<v Speaker 1>and framing out the choice set that our central bank

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<v Speaker 1>has was John writing he has experienced at the Bank

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<v Speaker 1>of England, at the Federal Reserve, truly iconic at bear

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<v Speaker 1>Stearn's years ago now with Green Capital, and it was

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<v Speaker 1>just a spirited conversation with John writing, let's listen.

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<v Speaker 2>The problem with if the FED moved to high rates,

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<v Speaker 2>it will be a tweak. But markets aren't very good

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<v Speaker 2>at detecting tweaks as opposed to new trends, because the

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<v Speaker 2>Fed has been not very good at explaining the latest

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<v Speaker 2>monetry policy moves, and so that was the problem. I

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<v Speaker 2>in December when Allison was natural for us to talk

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<v Speaker 2>about rate cuts, and the market, which had three rate

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<v Speaker 2>cuts priced in at that December meeting, which is aligned

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<v Speaker 2>with the fed's SEP projections, suddenly priced in six to

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<v Speaker 2>seven rate cuts, and you got a massive rally and

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<v Speaker 2>a massive easing of financial conditions. So on the other side,

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<v Speaker 2>if the Fed would a high because why hike just

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<v Speaker 2>wants it's got to be the start of something.

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<v Speaker 1>John writing there on the Fed speak, I've really tried

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<v Speaker 1>to downplay it. I don't have a big view of

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<v Speaker 1>the parlor game of it. I get it's about making

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<v Speaker 1>money in futures and all that, but I think John

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<v Speaker 1>writing there on the constraints that the FED has. He

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<v Speaker 1>also mentioned that he much prefers a transparency the dialogue

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<v Speaker 1>of the Bank of England right now under Governor Bailey

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<v Speaker 1>than what we see with the endless FED. Speaking in America,

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<v Speaker 1>we did look at equities, thank you, Lori Calvissina, Cameron

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<v Speaker 1>Dawson starting in Strong and New Edge both you know,

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<v Speaker 1>very optimistic. There's a bid to the market. But I

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<v Speaker 1>think the richest conversation today was on bonds, and I'm

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<v Speaker 1>gonna explain this right now. I think it's really important.

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<v Speaker 1>And then a spread, which the media talks about a spread, spread, spread, spread, spread,

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<v Speaker 1>It's not orange marmalatter nutella. A spread is the comparison

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<v Speaker 1>of yield of whatever bond, a corporate bond to the

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<v Speaker 1>full faith and credit sovereign US government bond. And so

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<v Speaker 1>as the yield comes down of the corporate piece closer

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<v Speaker 1>to the full faith and credit sovereign piece, that's the

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<v Speaker 1>phrase spreads narrowing. We have spreads narrowing truly in an

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<v Speaker 1>historic manner. Now, Greg Peters at Pigeum was really quite

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<v Speaker 1>good on this last week that we are upper deathcile

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<v Speaker 1>ten percentile of the history of spreads narrow, and they

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<v Speaker 1>narrow in China, they narrow across all the Pacific of

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<v Speaker 1>the Damien SASA or world, and they narrow in the

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<v Speaker 1>full faith and credit Western world as well. Amanda Lineum

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<v Speaker 1>of Blackrock unspreads.

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<v Speaker 3>I think at an aggregate level, we think that spreads

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<v Speaker 3>can remain pretty range bound. The exception, though, Tom, is

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<v Speaker 3>that we are not expecting Triple c's to catch a bid.

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<v Speaker 3>So far, they've lagged the overall rally in spreads. If

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<v Speaker 3>you just zoom in on US high yield highield spreads

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<v Speaker 3>are below three hundred basis points that would argue for

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<v Speaker 3>Triple C spreads somewhere in the seven somewhere in the

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<v Speaker 3>six hundreds. They're in the seven twenties range now. So

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<v Speaker 3>it just goes to show you that the market is efficient.

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<v Speaker 3>The market is telling you that not all corporates can

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<v Speaker 3>navigate this high cost of capital. We don't expect a

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<v Speaker 3>material spread widening, but I think for further tightening, you

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<v Speaker 3>need to see participation from that Triple C cohort, and

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<v Speaker 3>we just don't really see that.

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<v Speaker 1>And then your term Amandlione at Blackrock, she was just

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<v Speaker 1>brilliant there and really the dominant theme of the moment,

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<v Speaker 1>which is what fixed income is doing in the signals

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<v Speaker 1>that can give over to the equity market. Final shout

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<v Speaker 1>out Christopher own a Statigius with us today. Look for

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<v Speaker 1>the whole replay of the show, not a single best idea,

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<v Speaker 1>six minutes, two hours, fifty six minutes, the complete replay.

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<v Speaker 1>It comes out eleven is twelve ish. They got to

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<v Speaker 1>read the Yankees box scores, you know, before they get

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<v Speaker 1>to it, but we get that out midday. You can

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<v Speaker 1>see a complete replay of what we do from seven

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<v Speaker 1>to ten am Wall Street Time. We're on Apple car Play,

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<v Speaker 1>day on a Monday before a very eventful Wednesday, single

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<v Speaker 1>best idea