Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe wasn't All and I'm Tracy Halloway. So, Tracy,
Speaker 1: you know, every once in a while, um, I feel
Speaker 1: like every few months we have to do like a
Speaker 1: like a sort of macro episode. I mean, we talk
Speaker 1: about topics in macro, but it's also good to just
Speaker 1: sort of take stock of like where we are right
Speaker 1: now with the economy, FED and markets. Yeah that's fair enough,
Speaker 1: but I feel like at this moment in time, I
Speaker 1: mean I should mention we're recording on March. There is
Speaker 1: a FED meeting coming up, so maybe things will change,
Speaker 1: But at this moment in time, the macro environment is
Speaker 1: really interesting because of course we've seen this big backup
Speaker 1: in yields which has impacted stocks, and now we're watching
Speaker 1: out to see what the central banks actually do about it. Yeah,
Speaker 1: it's just a very interesting environment for exactly that. In
Speaker 1: addition to the backup and rage, we've seen this fairly
Speaker 1: dramatic rotation the likes of which we haven't seen for
Speaker 1: a while, where we have a lot of like banks
Speaker 1: and Energy Company is leading the way, and a lot
Speaker 1: of the tech darlings for the last year, if not
Speaker 1: the last decade, arguably pretty pretty severely underperforming. We're seeing
Speaker 1: this commodity boom ongoing, something that we recently talked about
Speaker 1: with Jeff Curry. We're seeing expectations continue to get ratcheted
Speaker 1: up for what growth is going to look like in
Speaker 1: one and maybe so we're definitely like at a turning point,
Speaker 1: which makes a of some sorts, which makes a good
Speaker 1: time to like take stock of the macro right now. Yeah,
Speaker 1: And I guess whenever you have these big turning points
Speaker 1: in markets, or when it feels maybe like you're seeing
Speaker 1: a turning point in market, the question always comes up
Speaker 1: about how you should actually position for it, And it
Speaker 1: does seem in this particular environ ronament. I don't know
Speaker 1: how you feel about it, but like I feel that
Speaker 1: it's more difficult than normal, I guess because bonds are
Speaker 1: selling off because people are positioning for growth, and at
Speaker 1: the same time, all the stock market winners that we've
Speaker 1: seen for the past couple of years are also selling off.
Speaker 1: So I don't know, it feels a little bit tricky
Speaker 1: at the moment. If if you're in charge of allocating assets, yeah,
Speaker 1: I mean, you know, I think for the last for
Speaker 1: a long time. You could have had a real like
Speaker 1: sort of set it and forget it port portfolio, like
Speaker 1: a sixty forty type thing, or we have a bunch
Speaker 1: of stocks, you have a bunch of treasuries, and you
Speaker 1: just don't worry about it. But a there's a lot
Speaker 1: of talk that maybe the treasury component isn't gonna work
Speaker 1: that well, especially in an environment that's reflationary, higher rates
Speaker 1: that has impact on the stocks. So there is a
Speaker 1: a broad reckoning, or at least questioning of whether a
Speaker 1: lot of the strategies that have worked well for a
Speaker 1: very long time, longer than a decade, really are just
Speaker 1: going to continue to be so easy. M hm. Anyway,
Speaker 1: the good news for us is that we're just journalists
Speaker 1: and so we don't actually have to answer these questions
Speaker 1: ourselves because it's not our job to get it right.
Speaker 1: That's true. But our guest is very special episode today.
Speaker 1: So our guest Nat only used to be a journalist,
Speaker 1: but it actually used to work for me, and you're
Speaker 1: tracing this episode makes me very happy because we're going
Speaker 1: to have one of our old colleagues on and not
Speaker 1: only was he an excellent journalist, but he's gone on
Speaker 1: I think, to be an excellent strategist at a real bank.
Speaker 1: And it's really nice when you see someone who has
Speaker 1: who has expertise in markets, who sort of translates that
Speaker 1: expertise into UH I guess something other than writing about it,
Speaker 1: and actually takes an active role or position in it,
Speaker 1: putting theory into practice. Right, So we just write about it,
Speaker 1: we just talk about it. But our guest today used
Speaker 1: to do that and now he actually has to make
Speaker 1: these calls. So we're going to be speaking with Luke Kala,
Speaker 1: our longtime colleague. He is UH asset allocation strategist at
Speaker 1: UBS Asset Management. We references work a lot. We talked
Speaker 1: about his business. We cover ones which will probably come
Speaker 1: up today. Luke, thank you very much for joining us. Guys,
Speaker 1: it's a it's my pleasure in the warm, fuzzy feelings
Speaker 1: are very much mutual here. So is this a tough time,
Speaker 1: like as Tracy set out, like, does this seem like
Speaker 1: a particularly sort of tricky moment for thinking through problems
Speaker 1: in the question of asset allocation? I mean, this is
Speaker 1: the thing about uncertainty, right, It's always supposed to be
Speaker 1: above average, but at the at the risk, at the
Speaker 1: risk of you know, contradicting tracy, which I guess I'm
Speaker 1: allowed to do now. It's uh, it almost seems that
Speaker 1: one of the one of the more difficult parts right
Speaker 1: now dealing with this environment is is letting it fully
Speaker 1: play out. We know that we have, you know, some
Speaker 1: incredible fiscal stimulus in the pipeline. We're pretty sure we
Speaker 1: have you know, sustained monetary support over a reasonable enough
Speaker 1: forecast horizon. So now it's a lot about just making
Speaker 1: sure that you know, the fundamentals are still aligned with
Speaker 1: with your thesis coming into this year and you know
Speaker 1: so far, I think I think that's that's been the key.
Speaker 1: And if you look at kind of the current environment
Speaker 1: we're in, something that it reminds me of a lot,
Speaker 1: not in macro implications, but in terms of just letting
Speaker 1: it play out. Would be the kind of the oil
Speaker 1: shock whose ramifications in terms of, you know, how what
Speaker 1: it did to what it did for bond yields, what
Speaker 1: it did for commodities generally commodity currencies, that that essentially
Speaker 1: lasted for like an eighteen month period in which it
Speaker 1: was a chief catalyst for performance across the board. Right now.
Speaker 1: That's that's kind of how I'm envisioning the degree of
Speaker 1: fiscal that's in the system right now, and the kind
Speaker 1: of earnings rotation that's that it's supporting underlying underlying markets.
Speaker 1: So I have a ton of questions just based on that.
Speaker 1: But I think maybe to begin with, we have to
Speaker 1: start with your or at least talk about it a
Speaker 1: little bit, your transition to the real world, you know,
Speaker 1: moving away from journalism actually putting what you write about
Speaker 1: in practice, Like what made you want to do that
Speaker 1: to start with? And obviously obviously you can avoid saying
Speaker 1: bad things about Bloomberg, but you know, why were you
Speaker 1: interested in making that switch? Yeah? And nothing, nothing but
Speaker 1: nothing but love on my end for former and current
Speaker 1: current employers on that front. But yeah, I think it
Speaker 1: just there there was time in my in my career
Speaker 1: where I wanted to definitely take a take a learning
Speaker 1: step and you know, figure out whether kind of my
Speaker 1: ideas and the way I thought about things could uh,
Speaker 1: you know, could translate into the real world. But also
Speaker 1: to uh, you know, to start fresh again and be
Speaker 1: the definitely be the dumbest guy in the room. And
Speaker 1: that's that's a position I I relish and I enjoy
Speaker 1: and I'm in in every meeting i'm in. So just
Speaker 1: the ability to really to learn to rewire my brain
Speaker 1: and to you know, to solve problems on a on
Speaker 1: a more prolonged basis, because I think, you know, one
Speaker 1: of the things with with journalism that's fun and exciting
Speaker 1: and what I what I loved about it when I
Speaker 1: was doing it, is that when you when you go
Speaker 1: in every day, you have really no clue what you're doing.
Speaker 1: The market is going to dictate kind of what you're doing,
Speaker 1: and you know whether whether you're covering commodities that day
Speaker 1: or options or bonds, etcetera, etcetera. I do like the
Speaker 1: idea of of a little more structure and working to
Speaker 1: solve problems where you know, the half life and the
Speaker 1: payoff period is going to be longer than that one
Speaker 1: day where we're going to have some stay in power,
Speaker 1: we're going to be building results for for our clients
Speaker 1: together over a prolonged period of time. So that's something
Speaker 1: that really appealed to me. And you know, I love
Speaker 1: the people I worked with when I was at Bloomberg
Speaker 1: and I love the team I'm on here. So talk
Speaker 1: through a little bit more the process. I mean, it's
Speaker 1: one thing to like have calls, right, It's like, okay,
Speaker 1: rates are going to rise or commodities are going to
Speaker 1: continue to rally or whatever. Butbviously to make a call
Speaker 1: like that, you have to have some sort of like
Speaker 1: deeper you know, something has to proceed that some sort
Speaker 1: of like process for incorporating new information into a call.
Speaker 1: Talk to us about how you and your colleagues begin
Speaker 1: to think through these problems translating inputs and the markets
Speaker 1: in the economy and policy and turning them into the
Speaker 1: question of um, you know, decisions on asset allocation. Basically yes.
Speaker 1: So I think there's a really actually good tie into
Speaker 1: journalism here because I think, Bloomberg, the interview question you're
Speaker 1: always asked, I think there is one of the most
Speaker 1: important things as a journalist, and it's accuracy and accuracy
Speaker 1: are the two most important because I think what you're
Speaker 1: supposed to answer, and then when it when it comes
Speaker 1: to investing, I think the the answer there would be
Speaker 1: accuracy and asymmetry. So essentially what we're trying to doing
Speaker 1: is is trying to identify convex opportunities that are based
Speaker 1: on underlying macro themes we expect to play out. Now,
Speaker 1: what is something that provides, you know, the convexity or
Speaker 1: the outsized return or the the best expression of a thesis,
Speaker 1: so to speak. It's probably going to be a combination
Speaker 1: of both valuation and catalyst. So it's it's really working,
Speaker 1: working through and doing doing the work to identify assets
Speaker 1: that do appear undervalued and that we do believe have
Speaker 1: like a reasonable macro case to expect these valuation gaps
Speaker 1: to remedy based on an improvement in the underlying fundamentals.
Speaker 1: And I think that's key. It's not just hoping that
Speaker 1: this valuation gap will close if you have that, but
Speaker 1: you don't have the here's how part, And that's what
Speaker 1: we spend a lot of our time doing. It's easy too,
Speaker 1: It's easy to kind of identify and just know where
Speaker 1: the valuation gaps are. How you avoid value traps is
Speaker 1: really finding that catalyst and making sure it will be
Speaker 1: there within a reasonable period of time, so you have
Speaker 1: your your mergence safety built on valuation, and you have
Speaker 1: your the list that provides for meaningful upside exposure. The
Speaker 1: catalyst point is interesting because I always thought that this
Speaker 1: is probably one of the things that I I would
Speaker 1: certainly struggle with if I made the switch. You know,
Speaker 1: it's one thing to write you think rates are too
Speaker 1: low or the dollar is miss priced or something, but
Speaker 1: it's a whole other thing to actually come up with
Speaker 1: an actionable trade based on that idea. And the other
Speaker 1: thing I've been thinking about is you could argue that,
Speaker 1: you know, markets get stuff wrong. Um, although I guess
Speaker 1: some people would take issue with that, but you could
Speaker 1: argue that markets, you know, stay irrational longer they then
Speaker 1: you can say, solvent things like that. That's probably why
Speaker 1: the catalysts becomes so important. But how do you sort
Speaker 1: of deal with that aspect of it. Especially in recent
Speaker 1: months or years, we have seen this frothiness in markets
Speaker 1: and you can say that valuations are way too high,
Speaker 1: but they can just keep going up and up and
Speaker 1: up without you know, a catalyst on the horizon. I
Speaker 1: think this is something that plays in very well to
Speaker 1: the kind of the the biggest debate that you alluded
Speaker 1: to and the in the preamble, which is essentially the
Speaker 1: growth versus value trade right now, because I think that
Speaker 1: you know that essentially is a good parallel for for
Speaker 1: you know, what underlies your question there, and for the
Speaker 1: longest time you could say, well, you know, these these
Speaker 1: valuations are getting to the most stretched since the dot
Speaker 1: com bubble, totera, etcetera. At certain point this is going
Speaker 1: to snap back the situation we have here, and people
Speaker 1: can people can point to the rates market as a
Speaker 1: you know, as a catalyst for this rotation or as
Speaker 1: accentuating this rotation. When you really look at this under
Speaker 1: the hood, it's it's just the fact that the earnings
Speaker 1: the bottom line for value stocks are expected to grow
Speaker 1: at a faster pace than growth stocks for the first
Speaker 1: time in quite quite a while. So if you look
Speaker 1: at finally getting the catalyst to realize some of that
Speaker 1: some of that out performance, and that's you know, that's
Speaker 1: unlocked byvaccinations, that's unlocked by fiscal stimulus. So right now, I,
Speaker 1: you know, I I view that as much more fundamental
Speaker 1: to the cause of value versus growth performance. Then then
Speaker 1: the rates market. If you're going to run like correlations
Speaker 1: for three month rolling performance of NASDAC versus SMP five
Speaker 1: D versus the movement and tenure rates or real rates,
Speaker 1: you're not going to get incredibly strong signals. That's it's
Speaker 1: a bit of a a quasi myth. So it's it's
Speaker 1: really looking into what's been driving the out performance. Is
Speaker 1: it the earnings growth? And do we expect that's reversed?
Speaker 1: And that's that's our view that based on just the
Speaker 1: the amount of physcal stimulus in this in the system,
Speaker 1: given vaccinations, laying the groundwork for return to economic normality,
Speaker 1: that that's going to happen. And so that's the that's
Speaker 1: the kind of scenario that I'm talking about. Just letting
Speaker 1: it play out because the earnings in this case are
Speaker 1: the catalyst, and you come late this year midpoint of
Speaker 1: this year, we'll be talking about, Okay, how can this
Speaker 1: be sustained? Do we have the policy action to sustain this?
Speaker 1: Or are we going to migrate back into the into
Speaker 1: the regime we have before? And that's when you you
Speaker 1: return to monitoring your policy milestones and how do you
Speaker 1: know attempt to attempt to you discern the tea leaves here.
Speaker 1: I mean you you basically anticipated my next question, so
Speaker 1: expected to be blistering fast growth. I mean we might
Speaker 1: get I think I've seen estimates for like potential GDP
Speaker 1: growth of like eight percent for the year. It's like
Speaker 1: going to be something nuts because the reopening, the vaccine,
Speaker 1: the stimulus. I think two will probably have some of
Speaker 1: that and also be pretty decent. But then there's a
Speaker 1: question about what's next. So how do you start thinking about,
Speaker 1: as you say, those policy milestones and the degree to
Speaker 1: which they'll sort of like continue to affect the like
Speaker 1: what's next? The weather value continues to outperform what do
Speaker 1: you like getting? What do you what are you gonna
Speaker 1: be thinking about? Thinking ahead? What are you gonna be
Speaker 1: thinking about for the end of In terms of that
Speaker 1: what's next? I think the important part is not to
Speaker 1: not to think ahead too much, not to not to
Speaker 1: think too fast, like the kind of the the biggest
Speaker 1: mistake that could be made in the in the coming
Speaker 1: months is essentially saying, okay, we've had peak policy support,
Speaker 1: what's next to the kind of the kind of show
Speaker 1: me story and using that as a reason to get
Speaker 1: you know, bearish when you know, we know it's a
Speaker 1: it's a popular to quote another of our former colleague,
Speaker 1: samro you know stocks usually go up, that's the that's
Speaker 1: the thing. So I think importantly kind of anchoring, anchoring
Speaker 1: on that and realizing that, you know, as long as
Speaker 1: we're still expected to get earnings growth. It's just you know,
Speaker 1: a matter of making sure you're on the right side
Speaker 1: of the rotation. But in terms of things to watch,
Speaker 1: I think an encouraging development lately has been the degree
Speaker 1: of Chinese policy support that hasn't really contracted as significantly
Speaker 1: as you know some may have feared coming into the year.
Speaker 1: That's that's removed a pretty pretty key downside risk. A
Speaker 1: second would be the the continuation of US fiscal support,
Speaker 1: not only through the anticipated infrastructure bill that we know
Speaker 1: then Congress will begin to work on soon and hash
Speaker 1: out over the course of the year, but also whether
Speaker 1: some of the provisions and the most recently past one
Speaker 1: point nine trillion stimulus are actually extended and made more permanent.
Speaker 1: Those kind of things they do add up, and they
Speaker 1: just do show that the policy boat is you know,
Speaker 1: continuing to move in the right direction, and that that
Speaker 1: allows kind of the more cyclical traits to continue to
Speaker 1: have the wind at their back. Um, you mentioned China there,
Speaker 1: and I do want to get into that, but before
Speaker 1: we do, maybe maybe if I just ask the bonds question,
Speaker 1: that would be a good segue into it. We're talking
Speaker 1: about how stocks in the long run tend to go up.
Speaker 1: But I'm curious how you feel about bonds at the
Speaker 1: moment because I imagine, you know, if you're in the
Speaker 1: business of asset allocation, I just don't think selling you know,
Speaker 1: a big position in US treasuries is that um, I
Speaker 1: don't know, it can't get people that excited at the moment,
Speaker 1: right like it, It doesn't really it doesn't really work
Speaker 1: to um to offset losses in stocks anymore, or at
Speaker 1: least it hasn't this year. The yields are incredibly low.
Speaker 1: It's just very very hard to see the attraction in
Speaker 1: US debt at the moment. So how are you feeling
Speaker 1: about the role of you know, US treasuries in a portfolio. Well,
Speaker 1: I think bonds full stop, do still playing an important
Speaker 1: role in portfolios in US treasuries due to like think
Speaker 1: think about the nature of the quote unquote shock and
Speaker 1: I'm using air quotes on that because we're still pretty
Speaker 1: much even at all time highs after this this rate shock.
Speaker 1: And it's the thing about bonds is that they aren't
Speaker 1: intended to touch the shock. They're intended to hedge the
Speaker 1: downside shock to growth. And that's something that you know,
Speaker 1: we were we were able to to overcome and deal
Speaker 1: with last year in bonds. You performed pretty well throughout
Speaker 1: that I think you can say, especially after the liquidity
Speaker 1: crisis stages of the of the COVID chuck has passed.
Speaker 1: But right now, from from our point of view at
Speaker 1: GUBS were under we're underweight global duration, and that's just
Speaker 1: based on the view that we're getting we're getting a recovery,
Speaker 1: and bond yields haven't fully priced in the magnitude of
Speaker 1: the recovery or the about or the amount of growth
Speaker 1: we're about to get that's in the pipeline. But you know,
Speaker 1: being underweight bonds doesn't mean kind of abandoning them completely.
Speaker 1: So that's that's the kind of the rule we see
Speaker 1: that the give and take. It's certainly not a time
Speaker 1: in our view to be to be overweighting bonds. We
Speaker 1: prefer equities to bonds, we prefer credit to bonds. So
Speaker 1: that's that kind of gives you a sense of of
Speaker 1: where we are positionally. So just on the idea of
Speaker 1: bonds as a diversification play, and the fact that you
Speaker 1: mentioned the Chinese economic performance recently and the fact that
Speaker 1: monetary policy hasn't been as tight as maybe some people
Speaker 1: were worried that it could be. How do you see
Speaker 1: Chinese bonds at the moment, because I got to say, like,
Speaker 1: one of the things that we've been watching out here
Speaker 1: um in Asia is the enormous inflows that we've seen
Speaker 1: into Chinese government debt in and one like, it's just
Speaker 1: such a step change in China's position in investment portfolios
Speaker 1: and also in the global financial system because it's getting
Speaker 1: very close to moving from an exporter of capital to
Speaker 1: an importer of capital, and that's just really interesting to see.
Speaker 1: So I'm curious from an investment strategy perspective, what's going
Speaker 1: on with Chinese debt, Like what is the attraction right now?
Speaker 1: So I think the attraction starts with just the most
Speaker 1: simple component, and that's that's the yield premium relative to
Speaker 1: the rest of the world. So essentially, coming into this
Speaker 1: coming into this year, you had you know, the Chinese
Speaker 1: tenure at a near record premium two G three yields,
Speaker 1: So that that in itself is going to drive attention,
Speaker 1: especially with central banks signaling at the time that you know,
Speaker 1: we nobody was anticipating the kind of the results we
Speaker 1: got in Georgia or for yields to move the way
Speaker 1: they had. So that's something that just off the hop
Speaker 1: is going to naturally lead people to gravitate towards a
Speaker 1: you know, a higher yielding solution. But I think a
Speaker 1: deeper part of this, and this is something that it's
Speaker 1: part of a collection that me and my colleagues have
Speaker 1: written called Upgrade Draft Allocation. And the second paper in
Speaker 1: this series deals with enhancing diversification in the context of
Speaker 1: a low yield world. So how are you going to
Speaker 1: make sure portfolios are are well buffered in an environment
Speaker 1: where bonds might be at an effective lower bound? Which
Speaker 1: still an interesting part of the COVID chuck is that
Speaker 1: no central bank took rates more negative to deal from it.
Speaker 1: So it seems like, you know, the appreciation of that
Speaker 1: policy tool might might be might be fading in its
Speaker 1: in its role going forward. And so when we looked
Speaker 1: across the spectrum of different different fixed and co instruments,
Speaker 1: we just believe that Chinese bonds, because the yield premium
Speaker 1: and because of the the economic maturity, the People's Bank
Speaker 1: of China has now a reasonable history of being able
Speaker 1: to move move countercyclically, so you know, enable to you
Speaker 1: know ease when conditions are bad and tighten when conditions
Speaker 1: are getting better. That kind of supports the stock bond
Speaker 1: correlation you would like to see and helps you have
Speaker 1: faith that it will be there in the future. But
Speaker 1: I think what's more important is what Tracy just mentioned.
Speaker 1: The fact that Chinese bonds are getting all of these
Speaker 1: inflows and receiving all of this uh, you know, all
Speaker 1: this more institutional adoption and appreciation is something that itself
Speaker 1: will perpetuate and kind of reinforce this, this negative correlation
Speaker 1: between between stocks and Chinese bonds in particular because if
Speaker 1: you look at also the you know, if you go
Speaker 1: through the growth shocks or the you know, any reasonable
Speaker 1: pullbacks we've had in the past few years, it's you know,
Speaker 1: China and sixteen China divil. Obviously, Chinese component yields go
Speaker 1: down during this, and global stocks go down earlyen the
Speaker 1: you know, the Valmageddon experience not clearly not a China matter,
Speaker 1: but yields down materially to fen not really a China story.
Speaker 1: You can argue it might be about trade, maybe not,
Speaker 1: but yields down a lot during that, and COVID is
Speaker 1: certainly a story that China was first into from an
Speaker 1: economic and risk market perspective, and yes, yields down. So
Speaker 1: if you're trying to tell any story about the global
Speaker 1: economy and you know macroeconomic cycles and ebbs and flows,
Speaker 1: it's very likely that China is going to be a
Speaker 1: mover and shaker in that story. So it's you know,
Speaker 1: it's very likely that beyond the yield premium of the offer,
Speaker 1: that the negative correlation will still be there. That's super interesting.
Speaker 1: So you mentioned something early on in that answer I
Speaker 1: want to go back to, which is we didn't see
Speaker 1: any major central banks go deep into negative rates during
Speaker 1: this crisis um And what we have seen, at least
Speaker 1: in the US context is that, you know, in lieu
Speaker 1: of perhaps more monetary using, we've had this something of
Speaker 1: a handoff to fiscal that people have been talking about
Speaker 1: for a long time. A our negative rates as a
Speaker 1: policy tool likely done like sort of discredited or not
Speaker 1: likely to be pursued again. And be more broadly, does
Speaker 1: it change the business of asset allocation to think about
Speaker 1: a world in which there is this policy asymmetry and
Speaker 1: we're more likely to get um a fiscal impulse as
Speaker 1: opposed to just a monetary one. When there's a downturn.
Speaker 1: So on the on the negative rates question, I guess
Speaker 1: I mean, the the only thing that keeps me from,
Speaker 1: you know, in my view saying that it's definitely going
Speaker 1: the way of the wooly mammoth is the Bank of England.
Speaker 1: That would be kind of the only thing that gives
Speaker 1: me gives me pause, because they do seem to be
Speaker 1: at least laying the groundwork in the financial system to
Speaker 1: do that if needed. And it's a it's a real consideration,
Speaker 1: but that could also be part of the you know,
Speaker 1: the Ben Bernanke constructive ambiguity when it comes to negative rates,
Speaker 1: even talking about them is a is a form beforeward
Speaker 1: guidance set can kind of help keep the front of
Speaker 1: the curve well anchored and and well behaved when it
Speaker 1: when it comes to the policy asymmetry point, I think
Speaker 1: it's I think it plays out in two important ways.
Speaker 1: One is, again, you reasonably might not be able to
Speaker 1: expect to bonds to deliver the same degree of performance
Speaker 1: during risk off that they have in the past just
Speaker 1: because of the lower starting point. So that's that's a
Speaker 1: mathematical kind of construct there. When you move to the
Speaker 1: handoff to fiscal I think that that's where it moves
Speaker 1: more into the realm of equity rotation and equity risk premium.
Speaker 1: So if we're if we're moving into into an environment
Speaker 1: where policymakers have say, hey, we've discovered the real solution
Speaker 1: to counter cyclical policy. It's it's giving people money, it's
Speaker 1: giving businesses money. It's making sure that liquidity crisis don't
Speaker 1: moll morph into solvency crisis. And actually we do that
Speaker 1: role better than central banks do it. We're going to
Speaker 1: continue this playbook going forward. What does that do to
Speaker 1: the cyclicality of earnings for cyclical companies? And in my view,
Speaker 1: this is something that would make them less cyclical if
Speaker 1: we're going to constantly underrate the business cycle using fiscal policy.
Speaker 1: So the valuation gap that we talked about earlier between
Speaker 1: value and growth, if you also, you know, kind of
Speaker 1: just reframe that as cyclical versus defensive. If you're less
Speaker 1: worried about the cyclicality of earnings for cyclical companies because
Speaker 1: of fiscal policy taking a more muscular role, that's something
Speaker 1: that can act as a conduit to over time that
Speaker 1: valuation discrepancy narrowing. Sorry, So just on that point. I mean,
Speaker 1: you mentioned the nineteen seventies oil crisis, So I'm just curious,
Speaker 1: as the shift from monetary policy to fiscal stimulus gets underway,
Speaker 1: how are you thinking about This is such an obvious question,
Speaker 1: but how are you thinking about inflation? There's inflation is
Speaker 1: a show me story still, right, Like the FED has
Speaker 1: essentially told us that inflation is not is not something
Speaker 1: they're going to react to. It's uh, you know the FED,
Speaker 1: Jerome Powell is Fed Ben Berniki looking through inflation, not
Speaker 1: the Fed of kind of you know, preemptive setting off
Speaker 1: a taper tantrum. So that's so the reactivity of financial
Speaker 1: markets too near term inflation outcomes. I think we've been
Speaker 1: we've been well prepared for that, and you see that
Speaker 1: already in the the backup in yields we've had looking
Speaker 1: forward over a long period of time. And I know
Speaker 1: Joe loves to post charts of essentially a bunch of
Speaker 1: core inflation measures that are just hanging out close to
Speaker 1: but not above two. So that's the history we're fighting.
Speaker 1: But that was a history that we had in the
Speaker 1: context of monetary policy doing all the lifting. So it's
Speaker 1: you know, Sysiphus posting the boulder up the hill. Monetary
Speaker 1: policy can't do it on its own, boulder back down.
Speaker 1: We try it again. This time it's different because you
Speaker 1: know Hercules is pushing the boulder too. You have fiscal
Speaker 1: policy much more on board. So it's it's a wait
Speaker 1: and see and monitor because you know, at this point
Speaker 1: we can't judge the degree of fiscal stimulus and how
Speaker 1: long it will be there. What we can do is
Speaker 1: look at, okay, what kinds of realized inflation outcomes would
Speaker 1: really cause us to re examine the stock bond correlation
Speaker 1: and the you know, the potential negative effect on portfolios.
Speaker 1: And so a couple of my colleagues, Mkelly Gambera and
Speaker 1: Lewis Finney have done some great work on this, and
Speaker 1: what they found is that the point where the correlation
Speaker 1: flips where you should be very, very worried or at
Speaker 1: least concerned or taking steps to monitor you know that
Speaker 1: the bond part of your portfolio isn't providing the protection
Speaker 1: you might think it is. Is when core CPI is
Speaker 1: has averaged two point five for a thirty six month period.
Speaker 1: So when you think about that in the context of
Speaker 1: average inflation targeting, that's that's almost what we're looking for.
Speaker 1: So we're almost targeting basically getting back to us to
Speaker 1: the point where bonds might not be providing good protection,
Speaker 1: but you still might also be. So we're going to
Speaker 1: be flirting with that line under a policy success regime.
Speaker 1: This super interesting and super important. I also want to
Speaker 1: note again we are recording this Monday, March fifteen. Um,
Speaker 1: by the time you'll have listened to this, we will
Speaker 1: have had a FED meeting, the context of which is
Speaker 1: partly this backup and rates growing economic optimism, but this
Speaker 1: general sense that this doesn't change much yet for the FED.
Speaker 1: How confident are you generally that this really is, as
Speaker 1: you put it, the eleven FED right now or certainly
Speaker 1: not FED, and it's willing this to tolerate a level
Speaker 1: of inflation and tolerate a drop in the unemployment rate
Speaker 1: that doesn't make them nervous in a way that we
Speaker 1: didn't see um with the FED pre crisis. I can
Speaker 1: I can tell you things that will make me more
Speaker 1: confident in that going forward. I think just on a
Speaker 1: on a basic level, for the inflation point, it's it's
Speaker 1: almost as if all this the policy review was for
Speaker 1: not unless it produces some kind of concrete change and
Speaker 1: the fed's reaction functions so that that in itself, there's
Speaker 1: there's some sunk costs into this new framework that does
Speaker 1: suggest that he yes, it will continue to be an
Speaker 1: operable one that produces different results than the than the
Speaker 1: previous economic cycle. So I think, uh, you know, from
Speaker 1: a from a starting point, that's a that's a good
Speaker 1: place to anchor to what going forward? I think what
Speaker 1: would increase my confidence that this is really a different FED?
Speaker 1: And you hear you hear FED members talk about this
Speaker 1: fairly often. They're talking about more economic metrics outside of
Speaker 1: the unemployment rate that's in the that's in the Summary
Speaker 1: of Economic Projections. They're talking about the employment to population ratio.
Speaker 1: They're talking about how labor market outcomes are are unequal
Speaker 1: based on race, and that you know, that is something
Speaker 1: that over the fullness of time, a hot labor market
Speaker 1: can start to correct. If the FED gave us in
Speaker 1: their in their dashboard and their Summary of Economic Projections
Speaker 1: the outlook for how some of those variables are expected
Speaker 1: to unfold and suggested that those are what's moving into
Speaker 1: being targeted as measures a full employment, I think that
Speaker 1: would very much increase my confidence that there won't be
Speaker 1: kind of the there won't be as much of a
Speaker 1: preemptive tightening, and we won't be you know, we won't
Speaker 1: be tightening even as soon as we see the whites
Speaker 1: of inflations eyes. But we can we can see a
Speaker 1: little more than that. We can see the iris and
Speaker 1: the pupil. So you've talked um or you've mentioned a
Speaker 1: couple of times now this idea of waiting and see
Speaker 1: sing how durable the fiscal policy response actually is. And
Speaker 1: this is something that I've thought about at various times
Speaker 1: throughout the years. But how difficult is it as an
Speaker 1: investment strategist or you know, as an analyst or something
Speaker 1: like that to be gauging policy and to be looking
Speaker 1: at economic policies through a political lens. And I remember
Speaker 1: the first time this came up was in the context
Speaker 1: of the European Union and the Eurozone debt crisis. There,
Speaker 1: you know, everything hinged on what the EU would actually
Speaker 1: do and what sort of political will there was for
Speaker 1: burden sharing or fiscal austerity and that sort of thing,
Speaker 1: and it just seemed really, really difficult if you were
Speaker 1: a strategist who is basing their decisions on you know,
Speaker 1: actual fundamentals to suddenly switch to trying to figure out
Speaker 1: what a certain politician was thinking and how they were
Speaker 1: playing to their base and what political calcul relations that
Speaker 1: were making. So I'm curious, like how difficult were easy
Speaker 1: is it to incorporate political motivations and mechanations into your
Speaker 1: investment thesis. I think it's incredibly different difficult because as
Speaker 1: you kind alluded to, your biases will will tend to
Speaker 1: creep in and infect the process. And I think that's
Speaker 1: where you know, being a being a global bank and
Speaker 1: I'm on a global team, this is where that that
Speaker 1: really comes in handy because you do have more kind
Speaker 1: of boots on the ground closer to home, domestic knowledge
Speaker 1: and pretty much every market. So I think as a
Speaker 1: starting point, that's very helpful. And beyond that, it's recognizing
Speaker 1: your your limitations, recognizing that I'm not I'm not a
Speaker 1: congressional analyst. I'm not a political analyst, but I talked
Speaker 1: to people who are. It's it's still doing that research,
Speaker 1: doing that work, and that's where there's so much symbiosis.
Speaker 1: I think between between news and UH and asset management.
Speaker 1: We we rely on the we rely on good reporting.
Speaker 1: We're around the desk, we're sharing Tracy Alloway or or
Speaker 1: Stephen Spratt or occasionally Joe Wisenthal articles and discussing the
Speaker 1: information in this and whether it's whether it's changing our priors,
Speaker 1: whether it's changing our views, whether it's changing our thesis.
Speaker 1: So I think it's it's a lot of humility. It's
Speaker 1: knowing what you don't know. It's knowing that there's someone
Speaker 1: around you who has a better idea than you do,
Speaker 1: deferring to them, and then continuing to sneak out proberating
Speaker 1: evidence from actual experts on the subject. So this might
Speaker 1: be a good time to pivot a little bit to journalism.
Speaker 1: We mentioned in the beginning we sometimes cite your work
Speaker 1: here at Bloomberg, and I think, uh, just over a
Speaker 1: year ago. I think it was last February, right before
Speaker 1: the crisis hit. You kind of had this legend Dairy
Speaker 1: Business Week cover when the bull market gets weird about
Speaker 1: what was then the sort of nascent thing which has
Speaker 1: grown way bigger, about the role of sort of Robin
Speaker 1: Hood and Wall Street bets and this thing that's really
Speaker 1: taken on a life of its own. Talk to us
Speaker 1: about um when you think about impact on portfolio thinking
Speaker 1: about portfolios, an impact on the market. How the introduction
Speaker 1: of this new phenomenon of this really intent retail participation,
Speaker 1: call buying meme stocks, all kinds of stuff like that
Speaker 1: that has become very mainstream in the last year. How
Speaker 1: would uh, how it intersects with your broader thinking about
Speaker 1: portfolios and how markets behave. Yeah, I've got to say
Speaker 1: it was this. This was the moment in a time
Speaker 1: where I think, my you know, my brain had been
Speaker 1: successfully rewired. When you when you see some of this
Speaker 1: activity and then you you immediately don't go okay, I
Speaker 1: need to check this or that forum. It's okay, Like,
Speaker 1: how is this going to affect the broader market? Ecose,
Speaker 1: it's them so kind of from the highest, highest possible
Speaker 1: level of view, if we're going to have a new
Speaker 1: material source of funds generally entering the market, that's this.
Speaker 1: This is going to put downward pressure on the equity
Speaker 1: risk premium. This is going to be kind of positive
Speaker 1: for asset valuations. So from that high level perspective, that's
Speaker 1: the that's the first order from which I would view
Speaker 1: it is that this increased these increased flows from this
Speaker 1: cohort is positive for equities full stop. The the increased
Speaker 1: kind of footprint of this of this cohort, the higher turnover,
Speaker 1: and I think what we saw at the end of January,
Speaker 1: it's it's a reminder to me about how a lot
Speaker 1: of the the pullbacks we've gotten in recent years are
Speaker 1: they really do have a liquidity accelerant kicker here. And
Speaker 1: so from an asset management perspective, if we're able to
Speaker 1: identify a situation where sharply swinging flows are what's essentially
Speaker 1: driving the move in headline markets and the fundamentals haven't
Speaker 1: changed a bit, well, then there's there's a pretty good
Speaker 1: opportunity for us. That's the that's the evaluation and the
Speaker 1: catalyst that's opened up thanks to these flows. We can
Speaker 1: expect that to remedy, and you know therefore that that's
Speaker 1: an opportunity. I think another element that's really unique to
Speaker 1: retail participation is the timing. The fact that this came
Speaker 1: about during a period in which buy backs obviously fell
Speaker 1: tremendously because of profitability and because of you know, regulatory rules,
Speaker 1: and it was a time when the macro economy was
Speaker 1: not doing well. So I think this leads to a
Speaker 1: bit of a you know, an over focused on retail,
Speaker 1: which certainly you can you can see the visible footprint,
Speaker 1: but it's important like not to be doing partial equilibrium
Speaker 1: analysis here. We also do have to consider how, you know,
Speaker 1: how flows are going to improve from buy backs, how
Speaker 1: flows might improve for more autopilot flows as uh, you know,
Speaker 1: as employment does grow, and so you know, that's that's
Speaker 1: something in a wholesome manner, that's kind of how we
Speaker 1: we think about it. Sorry, I gotta ask this as
Speaker 1: a slightly flippant question, but one thing that I've said
Speaker 1: about the game stop phenomenon and Wall Street bets is
Speaker 1: this idea of flows before pros, So that idea that
Speaker 1: money can sort of, um, I guess, trump the economic
Speaker 1: fundamentals and at some point, you know, asset prices that
Speaker 1: used to be self limiting because at some point valuations
Speaker 1: would just be excessive now can kind of keep going forever.
Speaker 1: Because it's the momentum that really matters to investors. People
Speaker 1: are just trying to catch the next wave. I'm very curious,
Speaker 1: or sorry, let me rephrase that. I'm wondering now that
Speaker 1: you're a pro at U B s um, how do
Speaker 1: you feel about the flows, Like, what's it like internally
Speaker 1: at ubs when you see something like you know, game
Speaker 1: Stop rising to four hundred dollars. This is where kind
Speaker 1: of the we're we're very top down oriented and don't
Speaker 1: do anything related to single stocks. And that's where this
Speaker 1: this is where it helps here is that you can
Speaker 1: see that clearly in late January you're having dislocations and
Speaker 1: you're having headline indexes decline because of flows related to
Speaker 1: retail trading and associated de leveraging. Nothing about the fundamentals
Speaker 1: change for the for the better or worse, and very
Speaker 1: soon thereafter all time highs. Again, So thinking about it
Speaker 1: from the index level perspective, it doesn't seem that these
Speaker 1: you know, that these flows are kind of overpowering the
Speaker 1: fundamentals at any point in time. Might that be true
Speaker 1: at the at the single stock level. That's mercifully something
Speaker 1: I don't I don't have to have an opinion on
Speaker 1: it anymore. Okay, So we're talking a lot about flows
Speaker 1: and how you actually pitch investment strategies. Uh, once you
Speaker 1: become a professional strategist. So another thing that's been really
Speaker 1: hot this year is or in recent years really is
Speaker 1: E S G and you know, environmentally and socially friendly investments.
Speaker 1: And I have to admit that I've become very cynical
Speaker 1: about it, probably because I receive at least eight emails
Speaker 1: a day and you know, ten other press releases about
Speaker 1: someone starting an e s G fund or how a
Speaker 1: particular bank is doing something new in e s G. Whatever.
Speaker 1: It seems like the thing, the bandwagon that everyone really
Speaker 1: wants to hop on. How how is that playing out
Speaker 1: at ubs? Or you know, how how are you approaching it?
Speaker 1: Like is it something that you're pitching because clients are
Speaker 1: demanding it? Or is it something that you're pitching because
Speaker 1: it feels like the right thing to do, or that
Speaker 1: I don't know how to phrase this. I guess I'm
Speaker 1: just curious how how you all are thinking about e
Speaker 1: s G at the moment and how much of it
Speaker 1: is a trend for better or worse When I when
Speaker 1: I think about E s G. And this is what
Speaker 1: I'm primarily going to kind of focus on, is that
Speaker 1: there's a paper again. I'll give MICHAELA. Gambera another showed
Speaker 1: out because he's he's it's in the process of review.
Speaker 1: But another paper that I'll try not to cannibalize or
Speaker 1: pre empt too much. It's about how do we how
Speaker 1: do we think about incorporate E s G into the
Speaker 1: asset allocation process because I think the a big underlying
Speaker 1: question to this is is there a trade off if
Speaker 1: you think this is a if you think this is
Speaker 1: a bad, if you think this you know, doesn't produce
Speaker 1: optimal return results, what are the what are the associated costs?
Speaker 1: Are there any And there's there's precious few academic studies
Speaker 1: or work on this, and michaelis is among the first
Speaker 1: in this field. And so how we're viewing it is
Speaker 1: that the traditional kind of investment process you're balancing risk
Speaker 1: and return. With E s G, you're adding a time
Speaker 1: dimension and you're also adding preferences that are going to
Speaker 1: the preferences are going to guide the investment universe, and
Speaker 1: that could be by kind of regulatory fiat, or that
Speaker 1: could be because of you know, the values of you
Speaker 1: know of certain boards, firms, endowments, etcetera. And the time
Speaker 1: dimension is I think something is something interesting. It's the
Speaker 1: idea that more and more E s G is much
Speaker 1: less a you know, here's here's something we would like
Speaker 1: to encourage by kind of by rules by flows, etcetera.
Speaker 1: And it's going to become much more something that drives
Speaker 1: bottom line activity if it's not. It's not just kind
Speaker 1: of regulations saying you know, you must you must do this,
Speaker 1: you must do that. It's governments making steps beyond that,
Speaker 1: using fiscal policy to support E s G goals and
Speaker 1: particularly related to E. So that's that's what provides a
Speaker 1: lot of opportunity on the on the time dimension side
Speaker 1: of things. Is that you know, I'll give you the
Speaker 1: coals note punchline of of the forthcoming paper, and it's
Speaker 1: essentially that we believe through our search is that there's
Speaker 1: there will not be a trade off between risk and return,
Speaker 1: any negative trade off by adopting E s G, and
Speaker 1: that you can make essentially a lot of portfolios that
Speaker 1: are have the same factor components as the parent index,
Speaker 1: the non U s G index, you know, pretty easily,
Speaker 1: even using some more some brute exclusion techniques. So it's
Speaker 1: something that you know, regulators seem to be demanding. It's
Speaker 1: something that clearly if you look across the industry, there's
Speaker 1: there's interest in and it's something that's going to be
Speaker 1: affecting bottom line results for corporates more and more. I
Speaker 1: have a sorry, I have one more question. But this
Speaker 1: is also something I've always wondered. So in journalism, as
Speaker 1: you know, we get a lot of feedback on our work,
Speaker 1: Like I think it's one of the few jobs where
Speaker 1: you published to a relatively large audience and you can
Speaker 1: get feedback almost instantaneously, either through comments on your stories
Speaker 1: or through social media or people emailing you or whatever.
Speaker 1: What sort of feedback you get as an investment strategist
Speaker 1: and what sort of um, what oh consequences? Yes? Okay,
Speaker 1: so what sort of consequences happen? Like if you get
Speaker 1: something wrong or right? Like do clients come come back
Speaker 1: to you and say, like, this call is incorrect? Why
Speaker 1: why did you think that? Or you know, does anything
Speaker 1: happen if you actually get something wrong? I know Joe
Speaker 1: and I were joking earlier about how when you're a
Speaker 1: journalist you don't always have to be right, but presumably
Speaker 1: when you're doing this professionally, uh, you want to be
Speaker 1: reasonably um, well you said it earlier, you want to
Speaker 1: be reasonably accurate, And you're thinking, what what gives you feedback?
Speaker 1: Is the market kind of instantaneously and always is giving
Speaker 1: you feedback on whether you're you're right or wrong, and
Speaker 1: that'll you know, that'll play out over time. But for us,
Speaker 1: it's very important. You know, this is this is a
Speaker 1: result oriented business, but it's very important to keep process
Speaker 1: in mind that at all times. And that's that's why
Speaker 1: it's important to to build a lot of consensus for
Speaker 1: new positions and new trades and have them you know,
Speaker 1: thoroughly vetted battered around. So that's the the consequence is
Speaker 1: everyone having buy in, everyone having understanding of the of
Speaker 1: the factors, of the milestones that could affect a trade
Speaker 1: when you go into it, and and being able to
Speaker 1: monitor it so you know when the conditions are shifting,
Speaker 1: you know, when there's been a thesis violation, or you
Speaker 1: know when things have gone according to plan but the
Speaker 1: price just hasn't. So the the way to avoid or
Speaker 1: to kind of mitigate quote unquote consequences is uh, the
Speaker 1: dissemination of information in a in a manner that allows
Speaker 1: a lot of these these priors or these questions to
Speaker 1: be challenged before you actually do it, and then it's
Speaker 1: just you know, then it's just a matter of monitoring
Speaker 1: and figuring out our things going according to plan are
Speaker 1: they not and and why and if you've done the
Speaker 1: work beforehand, you you know you have a pretty good
Speaker 1: based to go off with their. Well, Luke, thank you
Speaker 1: so much for joining us. Is great to be um
Speaker 1: for to be reunited and hopefully we'll see you again
Speaker 1: one day in person. But congratulations and we miss you.
Speaker 1: And this was a fantastic and fascinating discussion. Real pleasure, guys.
Speaker 1: Thanks for having me on, Luke. We're all so proud
Speaker 1: of you. Yeah, seriously, Oh, thank you guys very much.
Speaker 1: It's you know, it's so great to be speaking to
Speaker 1: you guys again. And hopefully you know, a a karaoke
Speaker 1: at sometime when Tracy's back in the year. Yeah, we'll
Speaker 1: definitely do it. Take care of Look, Tracy. I thought
Speaker 1: that was great catching up with Luke, but way too long, obviously.
Speaker 1: I really liked everything that last answer to your question.
Speaker 1: I thought it was like super interesting, like how they
Speaker 1: think about like feedback and uh anticipating just everything related
Speaker 1: to like process. It was super interesting to me. Yeah,
Speaker 1: I've always wondered, I guess how your evaluated it UM
Speaker 1: in a position as an investment strategist, Like is it
Speaker 1: how good your research and you're thinking was around a
Speaker 1: certain investment decision or is it based on absolute returns?
Speaker 1: Like even if you had the smartest thesis in the world,
Speaker 1: could you get a really bad year because the market
Speaker 1: just goes against you and you're considered unlucky, like you know,
Speaker 1: all those perma bears. I'm not saying Luke is a
Speaker 1: permit bear at all, but you know the permit bears
Speaker 1: who for the past ten years have been you know,
Speaker 1: talking about how stocks are going to crash and things
Speaker 1: like that, and they're very, very popular. They have a
Speaker 1: huge following among buy side and journalists. But if you
Speaker 1: looked at you know, if you actually did what they
Speaker 1: were telling you for the past ten years, you probably
Speaker 1: would have missed out on a lot. Well, you would
Speaker 1: have made money for about five minutes last March, So
Speaker 1: you know, yes, that's the thing. I guess. No, I
Speaker 1: totally agree. I also thought like Luke did a really
Speaker 1: good job like clarifying a couple of really interesting thoughts
Speaker 1: in my mind. One is that discussion um Chinese bonds,
Speaker 1: which I think we should probably do an episode on soon,
Speaker 1: just like the Chinese government bond market and how it's
Speaker 1: become this big International asset class, his explanation of why
Speaker 1: the money's rushing in how it sort of is serving
Speaker 1: as this sort of countercyclical um anchor, super interesting topic
Speaker 1: and very well explained. And also this idea of like
Speaker 1: the value verse growth valuation gap, and this idea that
Speaker 1: like in a world of more physical activism, um maybe
Speaker 1: you could put it in a world where policy makers
Speaker 1: react more aggressively to cap downside that that then sort
Speaker 1: of like cuts off the left tail of value companies earnings,
Speaker 1: and you potentially get this sort of valuation rerating. Super
Speaker 1: interesting topic, and I think that will be something to
Speaker 1: like keep watching going forward to see if like what
Speaker 1: we call value stocks meaningfully reprice on changes in expected
Speaker 1: UH policy in and exchanges changes in the expected fiscal
Speaker 1: policy stands. Yeah, but just on that point Luke's, you know,
Speaker 1: the way Luke framed it, this idea of not trying
Speaker 1: to call the tipping point or the big change in markets,
Speaker 1: but actually waiting and seeing how durable the shift towards
Speaker 1: fiscal actually is. I thought that was a really important point.
Speaker 1: And I know markets are always racing ahead to identify
Speaker 1: significant turning points, but maybe this is in fact a
Speaker 1: moment where you sort of step back and say, Okay,
Speaker 1: we've had the big, big stimulus bill. Now we actually
Speaker 1: see whether it translates into growth and whether or not
Speaker 1: it might translate into inflation. Do you think a journalist
Speaker 1: could get away with that? It's like, what do you
Speaker 1: have coming today? And it's like, just relax. I'm just
Speaker 1: waiting to see how this all plays out. I'm not
Speaker 1: I'm not rushing the next narrative. Just just let me
Speaker 1: let's just see how this plays out. I don't think
Speaker 1: that would work. I don't think that would uh fly.
Speaker 1: I think we're in danger of getting into a conversation
Speaker 1: about the pros of short term horizons versus long term horizons.
Speaker 1: So we better step away quickly. Maybe we should leave
Speaker 1: it there. Let's leave it there. Okay. This has been
Speaker 1: another episode of the All Thoughts Podcast. I'm Tracy Alloway.
Speaker 1: You can follow me on Twitter at Tracy Alloway and
Speaker 1: I'm Joe wi Isn't All. You can follow me on
Speaker 1: Twitter at The Stalwart. Follow Luke Kawa on Twitter He's
Speaker 1: at l J Kwa. Follow our producer Laura Carlson, She's
Speaker 1: at Laura M. Carlson. Followed the Bloomberg head of podcast
Speaker 1: Francisco Levi at Francisco Today, and check out all of
Speaker 1: our podcasts at Bloomberg under the handle at podcasts. Thanks
Speaker 1: for listening, Ey,