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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast, I have another extra special guest,

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Speaker 2: So now, Decie. What can I say? She runs the

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Speaker 2: Fixed Income Group as chief investment Officer for Franklin Templeton.

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Speaker 2: She directly manages two hundred and fifteen billion dollars in assets.

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Speaker 2: Soanal has been named to just about every most influential

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Speaker 2: Woman in finance list Baron's five years in a row

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Speaker 2: Forbes Pension Investments. If you are at all interested in

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Speaker 2: fixed income, what the thought process is like, I'm trying

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Speaker 2: to figure out how to structure a portfolio fixed income?

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Speaker 2: What you think about, what affects the returns you're going

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Speaker 2: to see? This is gonna be a great podcast for you.

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Speaker 2: I thought this was interesting, really fascinating, and I think

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Speaker 2: you will also with no further ado Franklin Templeton's Sanal Decide,

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Speaker 2: Welcome to Blomberg.

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Speaker 3: Thank you Barry that it's so kind of you to

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Speaker 3: have me here.

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Speaker 2: Well, it's a pleasure. I'm excited to talk to you.

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Speaker 2: Let's start out with the background that you come from

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Speaker 2: bachelors and economics from del High University. PhD from Northwestern,

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Speaker 2: also in economics. What was the original career player?

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Speaker 3: This is a really interesting one because I grew up

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Speaker 3: in Indo. You know, there are two careers. At that time,

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Speaker 3: there were two careers any good parent wanted from for

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Speaker 3: his son or in my case daughter. You could be

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Speaker 3: an engineer, or you could be a doctor. And if

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Speaker 3: you really didn't want to do either of those, you

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Speaker 3: could work for the government. I didn't want to do

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Speaker 3: any of the three, and economics seemed at that time

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Speaker 3: to be the one which left the most options open

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Speaker 3: for me. So I did economics. At the end of

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Speaker 3: my undergraduate degree, though I didn't feel like I'd really

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Speaker 3: learned enough about economics, and so I decided, you know,

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Speaker 3: not having understood the concept of sunk cost, I decided

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Speaker 3: to do even more and I did a PhD.

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Speaker 2: And was that two years? Three years?

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Speaker 3: The PhD? Yeah, no, that was a full five four

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Speaker 3: five years.

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Speaker 2: So that's more than sun costs. That's double, more than

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Speaker 2: double exactly. So you come out of Northwestern with a

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Speaker 2: PhD in economics, What was your first job in finance

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Speaker 2: or what was your first job out of school?

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Speaker 3: I was assistant professor of economics at the University of Pittsburgh.

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Speaker 3: And here's the deal. When I got that job, I

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Speaker 3: had also interviewed with the IMF, and I had really

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Speaker 3: liked the IMF. But you have to understand, I don't

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Speaker 3: know if it's that way today, but at that time,

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Speaker 3: there was no way I was going to my thesis

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Speaker 3: advisor and telling him, yeah, I do have a tenure

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Speaker 3: track offer from a decent university, but you know, I'm

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Speaker 3: going to go to the dark side and work for

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Speaker 3: the IMF. So I couldn't bring myself to do it.

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Speaker 3: I went and I did the academia thing for a

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Speaker 3: couple of years. And I was young enough that the

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Speaker 3: IMF told me at that time that, look, if you

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Speaker 3: change your mind within the next two years, let us.

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Speaker 2: Know, huh. I mean, academia is in for everybody, and

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Speaker 2: it might take a year or two to figure that out.

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Speaker 2: I mean, if that lifestyle works for you, it certainly,

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Speaker 2: you know, could be rewarding intellectually very much.

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Speaker 3: So, Look, academia, I admire it. I think it is

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Speaker 3: the pinnacle of what this country does brilliantly having academia,

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Speaker 3: having those research universities, all of that is absolutely superb

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Speaker 3: for me. The problem was I'd spent five years of

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Speaker 3: my life essentially doing research, and now I wanted to

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Speaker 3: get out there and do something with it. To me,

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Speaker 3: getting into the IMF, it was mind bogglingly, ioway, it

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Speaker 3: was fantastic. Remember this is in the mid nineties, so

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Speaker 3: let's let me date myself. Yeah, so this is in

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Speaker 3: the mid nineties. Eastern Europe is just coming in from

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Speaker 3: the cold, right, and that was where I focused most

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Speaker 3: of my time.

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Speaker 2: So how long did you stay at Pittsburgh before you

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Speaker 2: joined the IMF?

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Speaker 3: Two years? It was two years.

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Speaker 2: So what was the experience like in Europe in the

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Speaker 2: nineties working for the International Monetary.

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Speaker 3: No, no, no. So I worked out of Washington, DC.

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Speaker 3: I worked on Eastern Europe. So I'm talking about countries

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Speaker 3: like Bulgaria, Macedonia, Romania, Croatia. Prior it liter the wall

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Speaker 3: had fallen in the late eighties, eighty nine, was it,

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Speaker 3: you know? And so these countries, some of these countries

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Speaker 3: didn't even have the concept of GDP as we know it.

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Speaker 3: They had gross social product, they didn't have CPI in disease.

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Speaker 3: So it was in some ways the initial piece was

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Speaker 3: like an extension of being a university because we were

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Speaker 3: bringing these concepts to them. It was. It was an

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Speaker 3: amazing experience.

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Speaker 2: So any lessons that you learn at IMF that ultimately

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Speaker 2: influenced your investment philosophy.

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Speaker 3: My enormous respect and belief in macroeconomics actually comes from

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Speaker 3: my time at the IMF. Were you know that IMF

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Speaker 3: got a lot of things for program countries, you know,

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Speaker 3: for programs which are put into place around the world.

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Speaker 3: Some were better than others. I get all of that,

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Speaker 3: but here's the thing. We would go to these countries

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Speaker 3: and the idea was really frankly orthodox fiscal and monetary policy.

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Speaker 3: And sometimes when you're starting from a certain point, be

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Speaker 3: it high perinflation, be it out of control physical balance,

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Speaker 3: be it lack of any kind of international reserves, you

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Speaker 3: need to go back to orthodoxy. It kind of works,

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Speaker 3: and that carrying that forward, I think it's influenced a

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Speaker 3: lot of how as thought about emerging markets through the

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Speaker 3: through the years.

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Speaker 2: How long did you stay at the IMF four.

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Speaker 3: It was it was six years. It was six years

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Speaker 3: in DC and then half a year. Basically my husband

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Speaker 3: and I at that time we chose to move to

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Speaker 3: the private sector right. He was moving to the private

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Speaker 3: sector in London and I was following him, and I

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Speaker 3: had accumulated six months of vacation. They let you do that.

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Speaker 3: They wouldn't cash me out for six months, but they

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Speaker 3: said take the holiday. You know what I did. I

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Speaker 3: had the IMF pay for me to do a professional

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Speaker 3: patisserie course in London because I had to take the holiday.

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Speaker 3: I couldn't go out and work, but I was being

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Speaker 3: paid and I couldn't not be paid. So I took

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Speaker 3: a one year course question to.

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Speaker 2: Six months full on pastry and.

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Speaker 3: Court UNPLO, Basic, intermediate and superior.

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Speaker 2: Do you still do a lot of cooking?

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Speaker 3: So I do a lot of cooking, but I don't

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Speaker 3: do much much baking anymore. My husband always complains. He says,

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Speaker 3: I baked more before the partisiri course because after that,

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Speaker 3: but I would come into our rental apartment and say,

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Speaker 3: I can't work in these conditions.

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Speaker 2: So you became a chef prima donna?

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Speaker 3: Is that what I have to looking back at myself,

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Speaker 3: I have to believe I became a prima donna.

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Speaker 2: So you relocate with your husband to London, I'm going

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Speaker 2: to assume that's how you end up at Thames River Capital,

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Speaker 2: Is that right?

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Speaker 3: First? Actually I was on the cell side, so I've

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Speaker 3: done it all. I've done academia. Then I did the

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Speaker 3: public sector at the IMF. Then I did the cell

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Speaker 3: side Dresna Klein watwas Stein Investment Banking and I was

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Speaker 3: in the research team there and that was in London.

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Speaker 3: And then after six years with them, I moved to

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Speaker 3: Thames River Capitol, which was a macro hedge fund in London.

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Speaker 2: What was that experience like that you were there right

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Speaker 2: through the Great Financial Crisis?

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Speaker 3: Yeah? Actually, so I started with them in two thousand

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Speaker 3: and six and in two thousand and nine I moved

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Speaker 3: back to the long only by side. I think it

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Speaker 3: was absolutely eye opening, all right, And I think one

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Speaker 3: of great things about working with them small team, boutique

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Speaker 3: firm hedge fund, but a macro hedge fund, so at

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Speaker 3: every stage it felt like and I'd been on the

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Speaker 3: cell side and now it's on the buy side. It

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Speaker 3: gets you a little bit closer to the end point.

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Speaker 3: I think it was a fascinating point of time because essentially,

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Speaker 3: over the course of the two thousands, the private sector

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Speaker 3: really came into its own, so in a sense, when

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Speaker 3: we were at the IMF, A lot of these emerging markets,

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Speaker 3: they came to the IMF because there wasn't a true alternative.

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Speaker 3: Private markets, especially for em had not deepened enough. And

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Speaker 3: now as as we got into eight nine, you started

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Speaker 3: seeing the strength and power of the private sector. And

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Speaker 3: then we had the global financial crisis. Holy cow, that

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Speaker 3: was you know. That was when I would walk around

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Speaker 3: and I used to walk home from my work and

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Speaker 3: I was just thinking. Everyone keeps talking about, oh, you know,

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Speaker 3: living an unprecedent times, living through history. I draw to

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Speaker 3: read about it. You know, living through it was amazing.

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Speaker 3: I remember waking up at three or four in the

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Speaker 3: morning to find out what had happened overnight, what were

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Speaker 3: markets doing. It was a whole different level. It was

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Speaker 3: just amazing. And now I look back and it's like, great,

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Speaker 3: we did that. We did that. But I will tell

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Speaker 3: you one of the best things about that time was

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Speaker 3: remembering to look out of the window we worked out

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Speaker 3: of Berkeley Square, lovely officers, looking out of the window

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Speaker 3: and watching people having normal lives and realizing, you know,

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Speaker 3: the world doesn't begin or end with finance.

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Speaker 2: For sure, it certainly has an impact, but yeah, it's

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Speaker 2: kind of funny. Some of the younger folks who are

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Speaker 2: late thirties, early forties, this is it's hard to imagine

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Speaker 2: this is before their time. It is like they were

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Speaker 2: in college. So I was in grad school during the

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Speaker 2: eighty seven crash, and it was you really didn't pay

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Speaker 2: attention to it. I imagine anybody who's an undergraduate or graduate

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Speaker 2: or even just starting to work into eight o nine,

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Speaker 2: you really don't understand how unusual and the force of

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Speaker 2: that debacle across the entire economy.

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Speaker 3: Barry, take it one step further and recognize that somebody,

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Speaker 3: some kid who got into JP Morgan as a trader

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Speaker 3: and was fortunate enough not to lose their job in

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Speaker 3: eight or nine. This is somebody who probably through COVID,

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Speaker 3: ended up being a senior trader and has never lived

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Speaker 3: through truly non zero interest rates. I mean yet the

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Speaker 3: FED started raising them, but through what I would consider normal,

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Speaker 3: normal business cycles. It is remarkable. That's when you really realize, Wow,

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Speaker 3: you've lived through interesting times.

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Speaker 2: To say the very least. So you mentioned you joined

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Speaker 2: Franklin in nine the long Only. Yes, pretty good timing

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Speaker 2: to join a long only shop mid o nine. Tell

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Speaker 2: us what that transition was like going from a long

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Speaker 2: short hedge fund to a long only asset manager.

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Speaker 3: So actually, you know, the reality is the team i

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Speaker 3: joined at that time was the global macro team within

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Speaker 3: Franklin Templeton, and in many respects that team works with

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Speaker 3: deep value investing in a sense, looking for emerging markets

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Speaker 3: which are totally out of favor, thinking in terms of

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Speaker 3: long business cycles and really investing approach. So it was

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Speaker 3: a bit of a natural transition. The part which was

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Speaker 3: more complicated to get my head around was being part

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Speaker 3: of an enormous organization after having basically been a part

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Speaker 3: of a very small team, a small boutique team where

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Speaker 3: if you want to do something you could be very

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Speaker 3: entrepreneurial and go out and do it. At Franklin you

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Speaker 3: have to to get your arms around a much bigger organization.

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Speaker 3: But it was very good.

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Speaker 2: Twenty eighteen you become chief investment officer for the fixed

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Speaker 2: income group at Franklin Templeton. Is that the timing right, Yeah?

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Speaker 3: Roughly, Yeah, that's the timing.

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Speaker 2: That's got to be a pretty big change in enroll

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Speaker 2: from had a research to yeah, running fixed income.

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Speaker 3: So it was a big change. And now we get

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Speaker 3: to the point where my predecessor was retiring, and Jenny

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Speaker 3: asked if I thought.

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Speaker 2: I could do this, and Jenny Johnson.

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Speaker 3: Jenny Johnson, and she asked me if I if I

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Speaker 3: thought I could take this role on. And I have

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Speaker 3: to say my first reaction was that there's too many

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Speaker 3: pieces that I can't do. And I tell you something.

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Speaker 3: This is a difference between men and women. My husband

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Speaker 3: when he looks at, you know, a job description, there

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Speaker 3: are something like twenty things on that job and so

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Speaker 3: I can apply for this. I said, but but, but

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Speaker 3: but you know, you haven't done you haven't digged up

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Speaker 3: one of these boxes. He says, I take that one.

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Speaker 3: He will apply for it and he will likely get

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Speaker 3: the job.

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Speaker 2: When I had Jenny here for an interview, we talked

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Speaker 2: about that exact thing, and did she mentioned, She goes,

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Speaker 2: women will look at this and say, oh, I can't

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Speaker 2: do that, like I don't have one seven and twelve,

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Speaker 2: and guys are like, yeah, we'll figure it out as

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Speaker 2: we go. It's a very genetic di It's.

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Speaker 3: A real genetic difference because my instinct is, well, I

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Speaker 3: haven't done that before, so I can't do it. And

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Speaker 3: between between my husband and Jenny They basically kicked me

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Speaker 3: in the pants and said, no, you can do it.

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Speaker 3: Learn learn on the job. I guess I did. It

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Speaker 3: was fantastic. It's been really fantastic.

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Speaker 2: Really interesting. So let's talk a little bit about Franklin.

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Speaker 2: So you've been chief investment officer for seven almost eight

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Speaker 2: years now. What's been the most surprising thing about this role?

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Speaker 3: Number One, When you challenge yourself, you really can step up.

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Speaker 3: Number Two, there are parts of fixed income that I

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Speaker 3: thought would be I'll just say it boring. They're not

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Speaker 3: as exciting as going out and finding that emerging market.

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Speaker 3: And what you find is actually everything is fascinating if

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Speaker 3: you spend enough time looking at it. So that's been great.

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Speaker 3: And I'd say the other part of it, which has

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Speaker 3: been somewhat surprising to me, I'd say, is it goes

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Speaker 3: actually into the broad into broader markets, not just my

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Speaker 3: role within this within this group, it is the extent

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Speaker 3: to which markets look at what is happening currently, and

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Speaker 3: it's a very short step for analysts to look at

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Speaker 3: what's happening extended into the future and give you a

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Speaker 3: reason for why it happened. How difficult it is to

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Speaker 3: break out of the mold and try to act genuinely

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Speaker 3: look forward. Does this make sense?

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Speaker 2: Yes, we you know, flick on the TV radio and

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Speaker 2: people are constantly explaining what just happened when they had

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Speaker 2: no idea what was going to happen. So a lot

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Speaker 2: of hindsight bias.

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Speaker 3: Yes, And there's also what just happened and therefore why

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Speaker 3: it should continue happening. And I think that's something which

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Speaker 3: I never realized how deeply ingrained it is and how

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Speaker 3: difficult it is to break people out of that way of.

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Speaker 2: Just extrapolating to infinity infinity. Yeah, that happens all the time.

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Speaker 2: You recently were on with my colleague Shanali and you

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Speaker 2: said to her, investors need to price risk more seriously.

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Speaker 2: Explain what you mean by that.

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Speaker 3: What I mean by that is, I said more than

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Speaker 3: I'm looking now since the global financial crisis, and Barry

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Speaker 3: we just talked about the fact that their entire entire

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Speaker 3: generations of people who have never lived in a world

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Speaker 3: where liquidity were anything other than hyperabundant. And by the way,

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Speaker 3: we're still in that world. You look at the Fed's

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Speaker 3: balance sheet, it's still enormous. I think it's very hard

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Speaker 3: for people to even realize that the FED sat on

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Speaker 3: a minuscule bald sheet prior to this, they were We

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Speaker 3: were not in a situation where essentially there was always

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Speaker 3: a get out of jail for free card out there.

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Speaker 2: The classic FED put fed.

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Speaker 3: The FED put. Eventually it was a FED put. Then

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Speaker 3: people thought there was a Trump put. And quite frankly,

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Speaker 3: over the over the last four or five years, we've

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Speaker 3: had a fiscal policy put. We have put all over

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Speaker 3: the place, and I think that what happens in that environment.

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Speaker 3: You know, when I said that we need to price risk,

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Speaker 3: start remembering again how to price risk appropriately. It is

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Speaker 3: the fact that when financial markets started moving out along

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Speaker 3: the yield curve, out along the risk spectrum. I've even

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Speaker 3: seen the IMF talk about, oh, well, markets need to

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Speaker 3: price risk correctly. Well, hello, they were forcing us into

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Speaker 3: those positions explicitly. When the first set of Q one

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Speaker 3: two threes happened, it was explicitly there to get financial

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Speaker 3: markets to take risk again. Q one definitely Q one

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Speaker 3: and two. Maybe you know markets had frozen up. We

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Speaker 3: needed to liquefy frozen markets. And to me, if I

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Speaker 3: look at that, that made sense. Problem is we hung

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Speaker 3: on to it for too long. If I look at

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Speaker 3: high yield credit, let's talk about fixed ink markets high

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Speaker 3: heeld credit. Typically in a recession, spreads of high yield

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Speaker 3: credit over treasuries equivalent treasuries should be at around six hundred,

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Speaker 3: six fifty even higher. We've never gotten there were tight

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Speaker 3: yet No, today we are close to record tights. Right

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Speaker 3: by only looking at a few hundred basis points, we're

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Speaker 3: sub three hundred. This to me means that while people

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Speaker 3: like to talk the talk of recipession, what they're really

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Speaker 3: saying is cut rates. We want more liquidity because we're

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Speaker 3: not getting rid of four of all of our assets

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Speaker 3: over here, the risky assets, which should sell off if

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Speaker 3: people truly expected a recession.

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Speaker 2: So I'm going to assume you're not in the recession

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Speaker 2: camp here.

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Speaker 3: I haven't been. I haven't been. I'd say that I

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Speaker 3: can proudly say that it's been. You know, I'm on redquord.

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Speaker 3: So I think it was in probably early twenty twenty one,

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Speaker 3: when inflation started picking up here that I was saying, yeah,

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Speaker 3: this isn't looking so good. This transitory stuff isn't looking

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Speaker 3: so good. And most importantly, it wasn't at all clear

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Speaker 3: to me why we were expanding fiscal while we also

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Speaker 3: had this massively easy monetary policy and how that could

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Speaker 3: possibly result in a recession. And we've been having recessions

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Speaker 3: which are two quarters out now, I think rolling two

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Speaker 3: quarters out for the better part of something like three

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Speaker 3: and a half years. And I will say, we've not

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Speaker 3: bought into that. I think it's a very strong economy.

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Speaker 2: So it certainly has been. We continue to see consumer

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Speaker 2: spending despite weak sentiment. Consumers continue to spend. The labor

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Speaker 2: market is tight. Yeah, there are some warts on the

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Speaker 2: housing markets, and you know, there's always some sector you

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Speaker 2: could poke at, but by and large, this seems to

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Speaker 2: be a fairly robust, fairly resilient economy. Fair statement.

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Speaker 3: I think that is a fair statement because here's the thing.

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Speaker 3: You know, in the first few months of this year,

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Speaker 3: we saw sentiment tank and everyone said, well, hard data

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Speaker 3: will follow. I wasn't so sure because sentiment was moving

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Speaker 3: on something which was unusual. It wasn't moving on the

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Speaker 3: back of weakness and labor markets or people feeling uncertain

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Speaker 3: about their jobs. It was weakening on the back of pronouncements,

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Speaker 3: you know, on top of policy pronouncements. I'd see the

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Speaker 3: execution of that stuff was really bad and continues to

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Speaker 3: not be particularly good in terms of tariffs that impacted sentiment. However,

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Speaker 3: people continue to spend. They didn't stop spending, as you said.

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Speaker 3: And I'm not suggesting that this economy's recession proof. I'm

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Speaker 3: just saying, so far, we haven't got whatever we need

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Speaker 3: to push us right.

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Speaker 2: Interansas, any thoughts on the idea that perhaps sentiment measures

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Speaker 2: are broken, that when you see Michigan sentiment worse than

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Speaker 2: the pandemic, worse than the financial crisis, worse than the

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Speaker 2: eighty seven crash, and yet you know you look at

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Speaker 2: the data, you're just not seeing anything remotely.

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Speaker 3: I have to say that I'm looking a little bit

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Speaker 3: less at some of these indicators. I think they need

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Speaker 3: to be leeve and we need to now do more digging.

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Speaker 3: Our country has become very polarized, and that feeds into

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Speaker 3: people's sentiment. It doesn't feed into their shopping habits. That's

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Speaker 3: the reality, right.

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Speaker 2: So I'm wondering how much of this is driven not

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Speaker 2: just by media, but by social media and algorithms. It

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Speaker 2: seems to send people to more extreme.

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Speaker 3: Absolutely huge, and I think that the speed of the

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Speaker 3: news cycle, the need for clickbait style, tweets, headlines, whatever

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Speaker 3: it is. I think that exacerbates every sentiment. However, people

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Speaker 3: still seem to be relatively sensible in terms of how

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Speaker 3: they actually behave, because we're not hearing about people massively

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Speaker 3: canceling their European vacations, which, according to Delta, we're taking

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Speaker 3: in record numbers.

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Speaker 2: Right, It's so funny you say that because last quarter

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Speaker 2: they drop their guidance. Hey, everybody's frozen. JetBlue did something similar.

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Speaker 2: We don't know what's happening. They just came out in

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Speaker 2: the most recent few days talking about not only reinstating

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Speaker 2: guidance but being pretty aggressive as to what they see

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Speaker 2: going forward. That's fairly constructive kind of fights against the Oh,

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Speaker 2: this tariff war is going to cause a vib session

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Speaker 2: and crash everybody. Yeah.

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Speaker 3: No, I really never bought the vibe session idea on tariffs.

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Speaker 3: I mean, let's can we talk about tariffs? Sure? I

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Speaker 3: mean it's been talked to death, but why not let's

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Speaker 3: talk about tariffs briefly. Here's the thing. I look at

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Speaker 3: our country and I'm gonna use big round numbers here. Right,

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Speaker 3: We're about a thirty trillion economy. Okay, twenty nine call

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Speaker 3: it thirty trillion economy. Seventy percent of our economy is consumption. Okay,

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Speaker 3: so you get to around twenty one twenty twenty one trillion,

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Speaker 3: Seventy percent of consumption is services. Guess what services aren't

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Speaker 3: really impacted by tariffs? Now I go to Okay, I've

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Speaker 3: got around six six six and a quarter trillion of

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Speaker 3: consumption of goods. How much of this is actually imported?

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Speaker 3: Around three point four trillion of goods are imported. So

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Speaker 3: I'm looking at three point four trillion against all of

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Speaker 3: this huge economy size, and I say, okay, they're talking

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Speaker 3: about putting tariffs. You know, let's assume tariff revenue ends

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Speaker 3: up being three hundred billion. Yeah it's not. Yeah, that's

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Speaker 3: it could be much lower three hundred billion. If I

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Speaker 3: were to spread this out over all goods and services

403
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Speaker 3: like the Europeans do, using a vat that's a two

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Speaker 3: percent tax, right, would we all be jumping up and

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Speaker 3: down saying vibe session If magic happened and the federal

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Speaker 3: government did something very intelligent and put just a small

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Speaker 3: consumption tax on the economy to lower the budget deficit,

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Speaker 3: we wouldn't. So I guess what I'm trying to say

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Speaker 3: is I don't love tariffs, please. Tariff's are a highly

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Speaker 3: inefficient form of raising revenue that they there distortionary because

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Speaker 3: they randomly hit some products relative to other products. I

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Speaker 3: don't love tariffs. I just don't think that they are

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Speaker 3: as catastrophic for the US as they are for the

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Speaker 3: rest of the world. The rest of the world. Yeah,

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Speaker 3: it is a big problem. The US doesn't depend It's

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Speaker 3: a huge economy, which is essentially a large closed economy.

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Speaker 2: Closed economy, it is. That's very interesting.

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Speaker 3: How do I come back?

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Speaker 2: It seems like, look, our phones are made in China.

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Speaker 2: I'm wearing a watch. We're in Switzerland. Cars are from

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Speaker 2: Japan and Germany and Korea and elsewhere. It feels like

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Speaker 2: we see so many imported goods, clothing, just all this stuff.

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Speaker 2: But what you're really pointing out is the things we

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Speaker 2: import are relatively small percent way exactly.

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Speaker 3: I think you're totally right, you know, And here's the thing.

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Speaker 3: Should we be manufacturing more in the US? This is

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Speaker 3: actually a political decision, and people vote for this, don't

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Speaker 3: And you know, anybody who says that's a crazy idea, well,

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Speaker 3: Germany does it, Japan does it. You know, it's a choice.

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Speaker 3: It's a choice, it's a political choice, and I think

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Speaker 3: that it is up to the people of our country

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Speaker 3: to decide which direction do they wish to go, And

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Speaker 3: there's no right answer. It's a democracy. People need to choose. However,

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Speaker 3: it is an incredibly wealthy country. And therefore when we

435
00:24:55,520 --> 00:24:58,960
Speaker 3: talk about imports and exports, I look at exports, which

436
00:24:59,000 --> 00:25:03,000
Speaker 3: is how our gd HE gets impacted via tariffs or

437
00:25:03,040 --> 00:25:06,960
Speaker 3: trade or anything. Imports are ten twelve percent of our

438
00:25:07,119 --> 00:25:10,240
Speaker 3: overall GDP because we import around four and a half

439
00:25:10,240 --> 00:25:13,280
Speaker 3: trillion of goods and services three and a half of

440
00:25:13,520 --> 00:25:16,439
Speaker 3: just goods four and a half trillion out of you know,

441
00:25:16,480 --> 00:25:19,879
Speaker 3: a thirty trillion economy called it twelve thirteen percent. That

442
00:25:20,040 --> 00:25:23,080
Speaker 3: is where we are looking in terms of our imports.

443
00:25:23,080 --> 00:25:28,080
Speaker 3: And you compare this to a Germany. Germany, including its

444
00:25:28,119 --> 00:25:30,560
Speaker 3: exports to the rest of the euro Area, it's around

445
00:25:30,560 --> 00:25:31,800
Speaker 3: forty four percent of GDP.

446
00:25:32,240 --> 00:25:37,000
Speaker 2: Isn't that true throughout Europe? There they're much like I

447
00:25:37,080 --> 00:25:44,160
Speaker 2: look at Germany, France, Italy, Spain, sort of like New York, California, Texas, Florida,

448
00:25:44,560 --> 00:25:48,280
Speaker 2: because there are substantial economies and they're right there. There's

449
00:25:48,320 --> 00:25:49,919
Speaker 2: no ocean in between them.

450
00:25:49,840 --> 00:25:51,920
Speaker 3: And they know and they also export outside, right, so

451
00:25:51,960 --> 00:25:55,520
Speaker 3: they're very, very dependent on what the wins of the

452
00:25:55,560 --> 00:25:58,480
Speaker 3: rest of the world are because they need Here's the

453
00:25:58,520 --> 00:26:03,000
Speaker 3: reality of it. You know, Well, every time the administration

454
00:26:03,200 --> 00:26:07,240
Speaker 3: talks about VAT as a trade barrier, any economists will

455
00:26:07,240 --> 00:26:09,720
Speaker 3: tell you that's just plain wrong. It's not it because

456
00:26:09,720 --> 00:26:12,639
Speaker 3: it's a trade it's a trade adjustment. No, no, and

457
00:26:12,760 --> 00:26:16,280
Speaker 3: it basically it's not a barrier because it's a board

458
00:26:16,359 --> 00:26:18,919
Speaker 3: what we call a border adjusted tax. So you know,

459
00:26:19,280 --> 00:26:21,679
Speaker 3: we export a car to Germany, absolutely you have to

460
00:26:21,680 --> 00:26:23,480
Speaker 3: pay VAT there, but you'll have to pay the VAT

461
00:26:23,560 --> 00:26:24,680
Speaker 3: on the BMW may.

462
00:26:25,320 --> 00:26:27,920
Speaker 2: That's whatever you're going to say, that's just wrong.

463
00:26:28,359 --> 00:26:31,879
Speaker 3: However, if you want to take again that twenty thousand

464
00:26:31,920 --> 00:26:35,600
Speaker 3: foot up in the air view to this, there is

465
00:26:35,640 --> 00:26:39,719
Speaker 3: an economic model which I think the Europeans have chosen

466
00:26:39,760 --> 00:26:44,119
Speaker 3: to follow, which is to penalize consumption in Europe with

467
00:26:44,640 --> 00:26:48,600
Speaker 3: the VAT twenty two percent tax on average on consuming,

468
00:26:48,800 --> 00:26:53,280
Speaker 3: which means the Europeans aren't consuming not European stuff and

469
00:26:53,400 --> 00:26:56,159
Speaker 3: not American stuff. And we have some of the lowest

470
00:26:56,160 --> 00:26:59,719
Speaker 3: taxes in the world and everyone we consume everybody's production,

471
00:26:59,800 --> 00:27:05,160
Speaker 3: so you're supporting global GDP, buyo our desire for consumption.

472
00:27:05,400 --> 00:27:10,200
Speaker 2: We also have privatized things that the VAT tax subsidizers

473
00:27:10,240 --> 00:27:10,760
Speaker 2: in Europe.

474
00:27:10,880 --> 00:27:12,120
Speaker 3: Yeah, yeah, so we.

475
00:27:12,119 --> 00:27:15,399
Speaker 2: Pay our own healthcare and retirement in college. For many

476
00:27:15,400 --> 00:27:19,560
Speaker 2: European countries, they're paying much higher taxes. But that's part

477
00:27:19,600 --> 00:27:22,879
Speaker 2: of the sort of the social safety net, not part

478
00:27:22,920 --> 00:27:24,360
Speaker 2: of the private sector.

479
00:27:25,000 --> 00:27:28,080
Speaker 3: Totally agree, And again I'd come back to the idea

480
00:27:28,200 --> 00:27:32,520
Speaker 3: that these are choices made by democracies, and there are

481
00:27:32,640 --> 00:27:35,160
Speaker 3: no right and wrong answers. So it's wrong for us

482
00:27:35,200 --> 00:27:36,840
Speaker 3: to say get rid of your VAT. They made the

483
00:27:36,920 --> 00:27:37,760
Speaker 3: choice to have that.

484
00:27:37,800 --> 00:27:38,080
Speaker 1: Eight.

485
00:27:38,560 --> 00:27:41,160
Speaker 2: I will tell you that I have a vivid recollection

486
00:27:41,280 --> 00:27:45,080
Speaker 2: of being in London and Brussels during the dot com crash,

487
00:27:45,280 --> 00:27:48,920
Speaker 2: like two thousands for business. And you leave New York

488
00:27:48,960 --> 00:27:51,560
Speaker 2: where everybody's kind of freaked out and stressed, and you

489
00:27:51,640 --> 00:27:54,200
Speaker 2: go to London and people are a little more relaxed.

490
00:27:54,240 --> 00:27:57,240
Speaker 2: Then you go to Brussels and they're even more relaxed.

491
00:27:57,760 --> 00:28:01,119
Speaker 2: And I guess there's no fear of losing your healthcare

492
00:28:01,280 --> 00:28:05,760
Speaker 2: or owing college loans or saving for retirement. Kind of

493
00:28:05,800 --> 00:28:09,760
Speaker 2: makes people a little more sanguine when it comes to

494
00:28:09,800 --> 00:28:10,880
Speaker 2: the economic.

495
00:28:10,480 --> 00:28:14,080
Speaker 3: Cycle, it is you know, there are trade offs on everything, right,

496
00:28:14,440 --> 00:28:21,080
Speaker 3: So we could have an entire philosophical discussion in terms

497
00:28:21,280 --> 00:28:25,359
Speaker 3: of the choices people make, and everyone doesn't make the

498
00:28:25,400 --> 00:28:28,960
Speaker 3: same choices. The other side, I would argue, of the

499
00:28:28,960 --> 00:28:32,840
Speaker 3: coin that you're pointing out correctly, which is the lack

500
00:28:32,880 --> 00:28:37,080
Speaker 3: of stress associated with all these fundamental needs of life.

501
00:28:37,520 --> 00:28:42,040
Speaker 3: The other side can and is a lack of innovation,

502
00:28:42,400 --> 00:28:48,280
Speaker 3: which you see across the boards. There is a desire

503
00:28:48,320 --> 00:28:51,720
Speaker 3: of a risk taking right, and that's what permeates the

504
00:28:51,920 --> 00:28:55,280
Speaker 3: entire American dream, so to speak. You know, you work

505
00:28:55,320 --> 00:28:58,880
Speaker 3: really hard, you can be entrepreneurial, You go out there,

506
00:28:58,960 --> 00:29:03,240
Speaker 3: you do things, and you can make it. And I'm

507
00:29:03,280 --> 00:29:06,480
Speaker 3: an immigrant, I'm a naturalized American, and I have to

508
00:29:06,520 --> 00:29:09,840
Speaker 3: tell you that's what I bought into and I really

509
00:29:09,840 --> 00:29:11,959
Speaker 3: believe in it. I love that about this country.

510
00:29:12,080 --> 00:29:17,560
Speaker 2: Huh. Really really interesting. You mentioned earlier all the liquidity

511
00:29:17,640 --> 00:29:21,040
Speaker 2: that the FED has flooded the system with. What's the

512
00:29:21,120 --> 00:29:23,719
Speaker 2: implication of that for fixed income today?

513
00:29:24,280 --> 00:29:28,880
Speaker 3: So I'd say the implication is when you're looking for

514
00:29:29,240 --> 00:29:32,200
Speaker 3: let's call them risky assets within the fixed income space

515
00:29:32,240 --> 00:29:35,760
Speaker 3: to invest in it's quite difficult. Like I said, typically

516
00:29:35,880 --> 00:29:39,000
Speaker 3: risk assets, you look at the premium you get for

517
00:29:39,080 --> 00:29:42,000
Speaker 3: taking the risk over the risk Free Act, which is

518
00:29:42,400 --> 00:29:46,560
Speaker 3: of course the Treasury. And the reality is there's clearly

519
00:29:47,240 --> 00:29:51,320
Speaker 3: enough to the point of complacency. I would say comfort

520
00:29:51,600 --> 00:29:55,280
Speaker 3: around what is going on within the economy and what

521
00:29:55,480 --> 00:29:59,400
Speaker 3: the expectations are from the FED that those spreads. If

522
00:29:59,440 --> 00:30:02,680
Speaker 3: I again I point to something like high yield, they're

523
00:30:02,680 --> 00:30:06,920
Speaker 3: nowhere close to what I think would be reasonable. Nonetheless,

524
00:30:07,280 --> 00:30:10,000
Speaker 3: you are getting close to seven percent seven and a

525
00:30:10,000 --> 00:30:12,080
Speaker 3: half percent depending on the day you're looking at it,

526
00:30:12,720 --> 00:30:16,800
Speaker 3: without not in spread terms, but all in terms for

527
00:30:17,200 --> 00:30:19,920
Speaker 3: a high yield or a risky bond in the for

528
00:30:20,240 --> 00:30:25,480
Speaker 3: a high yeld corporate. Now, this I think remains reasonable

529
00:30:25,600 --> 00:30:29,040
Speaker 3: if you are active. I wouldn't buy passively into this

530
00:30:29,080 --> 00:30:32,240
Speaker 3: because when you have way too much liquidity, clearly some

531
00:30:33,000 --> 00:30:36,360
Speaker 3: excesses are bound to creep up, and I think that

532
00:30:37,080 --> 00:30:40,840
Speaker 3: probably they have. We are active managers, so we're literally

533
00:30:40,920 --> 00:30:46,480
Speaker 3: doing bottom up picking a company by company, and I

534
00:30:46,520 --> 00:30:48,400
Speaker 3: think you need to do that. So what do you do.

535
00:30:49,320 --> 00:30:51,040
Speaker 3: I look at ten your treasuries, and I look at

536
00:30:51,080 --> 00:30:55,920
Speaker 3: FED funds, and I try to decide at four forty

537
00:30:55,960 --> 00:30:59,560
Speaker 3: four p. Fifty. We're range trading right now. Is this

538
00:30:59,640 --> 00:31:02,840
Speaker 3: a sing by? Should you be jumping in because you

539
00:31:02,920 --> 00:31:05,360
Speaker 3: think that treasuries are going to rally massively? And the

540
00:31:05,400 --> 00:31:08,680
Speaker 3: answer is, actually, though I would call myself aggressively neutral,

541
00:31:08,840 --> 00:31:12,680
Speaker 3: I'm stealing that term from a colleague of mine. Aggressively neutral.

542
00:31:12,840 --> 00:31:16,360
Speaker 3: At this range, I think fair value for US treasuries

543
00:31:16,400 --> 00:31:20,560
Speaker 3: actually is probably today at between four seventy five and five. So,

544
00:31:20,600 --> 00:31:22,880
Speaker 3: in fact, I think there's more for US treasuries to

545
00:31:22,960 --> 00:31:27,000
Speaker 3: sell off, and thus this is this is the backdrop.

546
00:31:27,040 --> 00:31:29,520
Speaker 3: Now why do I think this? I think all these

547
00:31:29,560 --> 00:31:31,960
Speaker 3: complaints about where the FED is, you know, the FED

548
00:31:31,960 --> 00:31:34,920
Speaker 3: should cut rates, cut rates, cut rates, Well, I think

549
00:31:34,960 --> 00:31:37,600
Speaker 3: the neutral Fed funds rate is actually between four and

550
00:31:37,640 --> 00:31:39,560
Speaker 3: four twenty five or so. So I don't think the

551
00:31:39,560 --> 00:31:43,200
Speaker 3: Fed is that much room to cut rates. Why do

552
00:31:43,280 --> 00:31:46,400
Speaker 3: I think it's four percent? Is there a magic number? Well,

553
00:31:46,560 --> 00:31:52,040
Speaker 3: if I again abstract from these POSTGFC fifteen seventeen years

554
00:31:52,080 --> 00:31:55,440
Speaker 3: that we're looking at where we've had this very abnormal,

555
00:31:56,000 --> 00:31:59,160
Speaker 3: unorthodox monetree policy for a large part of this period,

556
00:31:59,200 --> 00:32:02,840
Speaker 3: and I look at the decades prior to that, neutral

557
00:32:02,920 --> 00:32:06,400
Speaker 3: FED funds was around four p fifty five percent. That

558
00:32:06,600 --> 00:32:10,160
Speaker 3: was what this economy took. What does that neutral FED

559
00:32:10,200 --> 00:32:14,200
Speaker 3: funds rate consist of inflation and what you think productivity

560
00:32:14,240 --> 00:32:16,480
Speaker 3: growth is going to be. I think inflation is around

561
00:32:16,480 --> 00:32:19,200
Speaker 3: two two and a quarter and productivity growth we're kind

562
00:32:19,200 --> 00:32:22,360
Speaker 3: of cruising back towards that two percent is level that

563
00:32:22,400 --> 00:32:24,719
Speaker 3: we were gives you your FED funds.

564
00:32:24,840 --> 00:32:29,440
Speaker 2: So inflation is softening, productivity is gaining. That sounds like

565
00:32:29,520 --> 00:32:34,320
Speaker 2: a very productive environment for both the economy and the

566
00:32:34,360 --> 00:32:35,360
Speaker 2: fixed income market.

567
00:32:35,400 --> 00:32:37,480
Speaker 3: Well, I think it's a good time for fixed income.

568
00:32:37,560 --> 00:32:41,160
Speaker 3: From the following perspective, You're getting yield from fixed income,

569
00:32:41,240 --> 00:32:42,920
Speaker 3: and I think you'd probably sell off a bit more.

570
00:32:42,960 --> 00:32:45,400
Speaker 3: You're getting income from fixed income. Let's put it that way,

571
00:32:45,600 --> 00:32:48,680
Speaker 3: and again talking about generations of people who were used

572
00:32:48,720 --> 00:32:50,720
Speaker 3: to getting one or two two and a half percent

573
00:32:50,760 --> 00:32:53,760
Speaker 3: from their you know, there was a point where, given

574
00:32:53,800 --> 00:32:57,000
Speaker 3: where inflation was and given where tenure treasuries were, we

575
00:32:57,000 --> 00:33:00,520
Speaker 3: were paying the government in real terms for the privilege

576
00:33:00,520 --> 00:33:02,560
Speaker 3: of lending the government money, which is what you're doing

577
00:33:02,600 --> 00:33:04,600
Speaker 3: every time you buy a treasury. Right, But at least

578
00:33:04,640 --> 00:33:07,760
Speaker 3: we're not there anymore. We're getting positive real returns. I

579
00:33:07,800 --> 00:33:10,400
Speaker 3: think it is a constructive environment for fixed income, but

580
00:33:10,480 --> 00:33:15,400
Speaker 3: you can't expect equity like returns from fixed income. And again,

581
00:33:15,520 --> 00:33:18,959
Speaker 3: because of liquidity flows and so on, people have become

582
00:33:19,120 --> 00:33:22,400
Speaker 3: a little bit married to the idea of fixed income

583
00:33:22,480 --> 00:33:26,640
Speaker 3: delivering massive outperformance. And what it should really be doing

584
00:33:26,840 --> 00:33:29,680
Speaker 3: is giving you boring returns. You know, boring returns. It

585
00:33:29,720 --> 00:33:32,960
Speaker 3: should be the ballast in your portfolio when your equity

586
00:33:33,000 --> 00:33:37,400
Speaker 3: market delivers equity like returns. And that is the future

587
00:33:37,520 --> 00:33:40,040
Speaker 3: state that I anticipate for fixed income.

588
00:33:40,120 --> 00:33:43,480
Speaker 2: So let's stay with the issue of liquidity, which keeps

589
00:33:43,480 --> 00:33:46,400
Speaker 2: coming up. How does that affect how you look at

590
00:33:46,520 --> 00:33:49,400
Speaker 2: fixed income, whether you want to go out for further

591
00:33:49,520 --> 00:33:53,120
Speaker 2: duration or maybe even higher credit risk. What is all

592
00:33:53,160 --> 00:33:56,640
Speaker 2: of this, both from the FED and elsewhere. What does

593
00:33:56,680 --> 00:34:00,000
Speaker 2: all this liquidly do to how you construct a portfolio

594
00:34:00,360 --> 00:34:01,000
Speaker 2: fixed thing comet?

595
00:34:01,080 --> 00:34:05,840
Speaker 3: I think it actually makes it a little bit more difficult.

596
00:34:05,920 --> 00:34:09,879
Speaker 3: We talked earlier about the issue of pricing risk. When

597
00:34:09,920 --> 00:34:13,719
Speaker 3: you have this much of liquidity, those spreads, people will

598
00:34:13,760 --> 00:34:17,439
Speaker 3: get forced into risky your products. You can't stay out

599
00:34:17,440 --> 00:34:20,200
Speaker 3: of the market because you need to clip that coupon.

600
00:34:20,520 --> 00:34:24,400
Speaker 3: So you are present. But like I said, you're not

601
00:34:24,480 --> 00:34:28,120
Speaker 3: getting massively over your skis in terms of adding on

602
00:34:28,400 --> 00:34:32,120
Speaker 3: extra risk, because things are priced to perfection in a

603
00:34:32,200 --> 00:34:34,439
Speaker 3: market like this one. So what I mean by this

604
00:34:34,520 --> 00:34:36,880
Speaker 3: is my baseline is that we don't get a recession.

605
00:34:36,920 --> 00:34:40,879
Speaker 3: As we spoke about it, nobody has perfect foresight into

606
00:34:41,000 --> 00:34:43,799
Speaker 3: what this looks like. You could get anything coming out

607
00:34:43,800 --> 00:34:46,440
Speaker 3: of left field. COVID came from somewhere. None of us

608
00:34:46,480 --> 00:34:51,680
Speaker 3: anticipated very short recession, but it had very meaningful consequences. Clearly,

609
00:34:51,719 --> 00:34:54,880
Speaker 3: there are many areas of uncertainty, and these are the

610
00:34:54,920 --> 00:34:59,919
Speaker 3: reasons why. From my perspective, my baseline on the fundamental

611
00:35:00,520 --> 00:35:05,799
Speaker 3: economic fundamentals is no recession. But given how assets are

612
00:35:05,840 --> 00:35:09,600
Speaker 3: priced right now, I would not go overboard loading up

613
00:35:09,600 --> 00:35:13,640
Speaker 3: on risk at current levels. There are many reasons to anticipate,

614
00:35:13,680 --> 00:35:17,320
Speaker 3: for example, additional corrections, including on the equity markets. Frankly,

615
00:35:17,600 --> 00:35:20,400
Speaker 3: just from a macro perspective, which we don't have right now.

616
00:35:20,920 --> 00:35:23,600
Speaker 2: We're gonna We're gonna keep it modest on the credit side.

617
00:35:23,600 --> 00:35:26,760
Speaker 2: What about duration, we had we had an inverted yield

618
00:35:26,800 --> 00:35:30,080
Speaker 2: curve for a couple of years. The yield curve more

619
00:35:30,160 --> 00:35:34,040
Speaker 2: or less uninverted, so you're getting paid a little bit

620
00:35:34,360 --> 00:35:37,760
Speaker 2: for longer duration, But you're not getting paid a whole lot.

621
00:35:38,080 --> 00:35:41,440
Speaker 2: How do you look at at the long term choices

622
00:35:41,520 --> 00:35:43,880
Speaker 2: for where's the sweet spot?

623
00:35:43,960 --> 00:35:47,440
Speaker 3: Is it forty No, I'd say it's it's shorter right now.

624
00:35:47,880 --> 00:35:50,080
Speaker 3: It's shorter than fourty seven, So I'd say I'd stay

625
00:35:50,120 --> 00:35:52,720
Speaker 3: a little bit shorter right now because I, like I said,

626
00:35:53,000 --> 00:35:55,319
Speaker 3: we're at four forty. I don't think it would take

627
00:35:55,400 --> 00:35:58,400
Speaker 3: us very much to grind higher over here. And then

628
00:35:58,440 --> 00:36:00,399
Speaker 3: if you've taken on a lot of duration, it will

629
00:36:00,440 --> 00:36:03,800
Speaker 3: hurt you. Now if you're taking some of that credit risks,

630
00:36:03,840 --> 00:36:05,920
Speaker 3: should you be hedging it out? That is something which

631
00:36:05,960 --> 00:36:10,160
Speaker 3: you can consider, But outright simply going long I wouldn't

632
00:36:10,160 --> 00:36:13,800
Speaker 3: do too much in terms of we actually still think

633
00:36:14,280 --> 00:36:16,840
Speaker 3: that there is an enormous amount of cash still sitting

634
00:36:16,920 --> 00:36:20,120
Speaker 3: on the sidelines and everything from money markets onwards. And

635
00:36:20,160 --> 00:36:22,000
Speaker 3: perhaps one of the best things to do is to

636
00:36:22,080 --> 00:36:24,640
Speaker 3: at least dip your feet in and get at least

637
00:36:24,680 --> 00:36:27,319
Speaker 3: to ultra short, get yourself comfortable with ultra short, so

638
00:36:27,360 --> 00:36:31,000
Speaker 3: you could start moving out the yield curve as opportunities

639
00:36:31,000 --> 00:36:31,640
Speaker 3: present themselves.

640
00:36:31,680 --> 00:36:34,759
Speaker 2: So one of the questions anytime we discuss hedging, either

641
00:36:34,840 --> 00:36:38,000
Speaker 2: credit or duration risk, what are the prices of that

642
00:36:38,040 --> 00:36:42,279
Speaker 2: look like these days curse. I recall pre financial crisis

643
00:36:42,840 --> 00:36:45,239
Speaker 2: it was wildly miss priced then turned out to be

644
00:36:45,320 --> 00:36:49,440
Speaker 2: really cheap to hedge credit risk. What about today in

645
00:36:49,560 --> 00:36:52,160
Speaker 2: duration risk? Is it cheap or expensive to hedge that.

646
00:36:52,080 --> 00:36:55,680
Speaker 3: It's still expensive still? I would say, it's still expensive,

647
00:36:55,680 --> 00:36:57,319
Speaker 3: but you can't do it. You can do it in

648
00:36:57,440 --> 00:36:58,800
Speaker 3: option space, for example.

649
00:36:58,840 --> 00:37:04,520
Speaker 2: But that's that's really interesting. We hinted at but really

650
00:37:04,520 --> 00:37:08,680
Speaker 2: didn't spend a lot of time talking about geopolitical risk.

651
00:37:09,480 --> 00:37:12,680
Speaker 2: How do you factor that into your investment decisions? How

652
00:37:12,760 --> 00:37:16,200
Speaker 2: does this drive fixed income choices?

653
00:37:16,840 --> 00:37:22,879
Speaker 3: I think the interesting thing about geopolitics is increasingly it's

654
00:37:22,920 --> 00:37:27,600
Speaker 3: become a backdrop, and I think that markets are not

655
00:37:27,840 --> 00:37:33,759
Speaker 3: capable of remaining in a heightened state of panic and

656
00:37:33,840 --> 00:37:38,960
Speaker 3: anticipation indefinitely. What I mean is, when Russia went into Ukraine,

657
00:37:39,840 --> 00:37:42,280
Speaker 3: we all thought this was going to be a short period,

658
00:37:42,400 --> 00:37:46,560
Speaker 3: and you know, geopolitics became very central to everyone's thinking.

659
00:37:46,920 --> 00:37:49,799
Speaker 3: It's gone on for three years and it's not unclear when,

660
00:37:50,000 --> 00:37:52,920
Speaker 3: if ever, it's going to go away. And I think

661
00:37:53,160 --> 00:37:57,720
Speaker 3: what's happening is that geopolitical uncertainty has become so much

662
00:37:58,480 --> 00:38:02,799
Speaker 3: a part of the backdrop that you can't actually manage

663
00:38:02,880 --> 00:38:08,320
Speaker 3: your portfolio to that geopolitical risk. You can when risks

664
00:38:08,440 --> 00:38:12,719
Speaker 3: get sharply higher, you can try doing something, but you

665
00:38:12,760 --> 00:38:16,799
Speaker 3: cannot position your portfolio for these geopolitical risks. So what

666
00:38:16,880 --> 00:38:20,440
Speaker 3: are the geopolitical stress points? The Middle East is frankly,

667
00:38:21,000 --> 00:38:24,920
Speaker 3: it was a forever geopolitical stress point, which has to

668
00:38:24,960 --> 00:38:29,600
Speaker 3: give this administration it's due come markedly lower. Based on

669
00:38:30,480 --> 00:38:33,000
Speaker 3: what we have seen so far, I think actually things

670
00:38:33,040 --> 00:38:35,520
Speaker 3: are looking a lot better in the Middle East than

671
00:38:35,560 --> 00:38:38,080
Speaker 3: they have over a very long period of time, So

672
00:38:38,120 --> 00:38:42,840
Speaker 3: that's a positive. I think the issue of China, you

673
00:38:42,920 --> 00:38:46,600
Speaker 3: have different geopolitical stress points. You have the trade tensions,

674
00:38:46,600 --> 00:38:49,560
Speaker 3: but then separately there's the eternal question of what happens

675
00:38:49,560 --> 00:38:52,320
Speaker 3: with Taiwan, and that is always going to be a

676
00:38:52,360 --> 00:38:54,239
Speaker 3: part of the backdrop. And I think a lot of

677
00:38:54,280 --> 00:38:56,880
Speaker 3: people take a great deal of comfort from the fact

678
00:38:56,960 --> 00:39:04,719
Speaker 3: that the Chinese authorities are extremely, extremely careful, and so

679
00:39:05,000 --> 00:39:09,080
Speaker 3: we don't anticipate shooting from the hips, so to speak,

680
00:39:09,320 --> 00:39:11,360
Speaker 3: you know. So this is something which we will continue

681
00:39:11,360 --> 00:39:14,319
Speaker 3: to see stress points go up and down, and so

682
00:39:15,400 --> 00:39:18,600
Speaker 3: I do think that in the early days of this administration,

683
00:39:18,920 --> 00:39:22,080
Speaker 3: you know, certainly early days post Liberation Day, there was

684
00:39:22,080 --> 00:39:26,280
Speaker 3: a thought that somehow you have a complete realigning of

685
00:39:26,320 --> 00:39:31,480
Speaker 3: the geopolitical environment with the US not being credible or dependable.

686
00:39:31,560 --> 00:39:34,319
Speaker 3: I don't I think that was overstated. The US is

687
00:39:35,239 --> 00:39:40,280
Speaker 3: more important than any one administration or any one single

688
00:39:40,320 --> 00:39:41,160
Speaker 3: set of policies.

689
00:39:41,520 --> 00:39:44,200
Speaker 2: We talked a little bit about Europe and the euro Area,

690
00:39:44,600 --> 00:39:48,560
Speaker 2: at least in the equity side. Europe is finally outperforming

691
00:39:48,600 --> 00:39:52,640
Speaker 2: the US after a long period of underperformance. What are

692
00:39:52,680 --> 00:39:56,480
Speaker 2: your thoughts on the Euro Area and emerging markets in

693
00:39:56,960 --> 00:39:57,960
Speaker 2: today's environment?

694
00:39:58,600 --> 00:40:01,040
Speaker 3: So you know the euro so if I look at

695
00:40:01,040 --> 00:40:03,759
Speaker 3: the equity markets, I think you can't really talk about

696
00:40:03,760 --> 00:40:07,200
Speaker 3: the equity markets without talking a little bit about the dollar,

697
00:40:07,760 --> 00:40:11,680
Speaker 3: and that actually impacts em as well. And I see

698
00:40:11,680 --> 00:40:14,480
Speaker 3: a lot of discussion again, and it's somewhat related to

699
00:40:14,520 --> 00:40:17,840
Speaker 3: our previous comments on geopolitics, that somehow the dollar is

700
00:40:17,880 --> 00:40:21,360
Speaker 3: no longer fit to be the world's reserve currency. It

701
00:40:21,440 --> 00:40:24,160
Speaker 3: is the end of US exceptionalism, et cetera, et cetera.

702
00:40:24,400 --> 00:40:26,200
Speaker 3: I think it's mixing up a whole bunch of things.

703
00:40:26,440 --> 00:40:29,600
Speaker 3: Number One, when we entered this year trade in trade

704
00:40:29,640 --> 00:40:32,560
Speaker 3: weighted terms, the dollar was at its strongest level since

705
00:40:32,560 --> 00:40:35,080
Speaker 3: the Plaza code, right, do you know that since the

706
00:40:35,120 --> 00:40:37,920
Speaker 3: Plaza Corde I didn't realize we're talking about the absolute

707
00:40:38,000 --> 00:40:42,920
Speaker 3: strongest levels in trade weighted terms since in something like

708
00:40:42,960 --> 00:40:48,400
Speaker 3: close to forty five fifty years, really strong. Then what happened.

709
00:40:48,440 --> 00:40:52,120
Speaker 3: We came into this year and the first thing that happened,

710
00:40:52,360 --> 00:40:56,200
Speaker 3: frankly was deep Seek you know, Deep Seek burst, and somehow,

711
00:40:56,400 --> 00:40:59,400
Speaker 3: oh my god, the US is not exceptional and people

712
00:40:59,480 --> 00:41:03,360
Speaker 3: were put us exceptionalism hand in glove with the mag seven.

713
00:41:03,400 --> 00:41:07,960
Speaker 3: I think, however, if you were a European investor right

714
00:41:08,120 --> 00:41:11,920
Speaker 3: last two years, you got fifty four percent just on

715
00:41:12,640 --> 00:41:15,200
Speaker 3: the S and P, and then you got what was it,

716
00:41:15,239 --> 00:41:18,640
Speaker 3: ten to fifteen percent in dollar appreciation? You made not

717
00:41:18,800 --> 00:41:21,640
Speaker 3: like a bandit. If you were smart, you took some profits.

718
00:41:21,719 --> 00:41:24,000
Speaker 3: Right as soon as you got deep Sea happening. In

719
00:41:24,080 --> 00:41:27,040
Speaker 3: short order afterwards, you got the Germans suddenly talking about

720
00:41:27,120 --> 00:41:29,640
Speaker 3: one trillion euros over the ten year period in terms

721
00:41:29,680 --> 00:41:32,560
Speaker 3: of spending. So the last fiscal man standing, like I

722
00:41:32,680 --> 00:41:36,280
Speaker 3: like to say, goes toppling down and we will go yeah, yay,

723
00:41:36,360 --> 00:41:40,360
Speaker 3: that happened. But more seriously, it meant that potentially European

724
00:41:40,400 --> 00:41:43,560
Speaker 3: growth would not look as lackluster, frankly as it has

725
00:41:43,640 --> 00:41:46,200
Speaker 3: been for a while. So that happened, and then you

726
00:41:46,200 --> 00:41:49,160
Speaker 3: had Liberation Day. You had three sets of reasons. And

727
00:41:49,200 --> 00:41:53,160
Speaker 3: the European equity market had been lagging so much more

728
00:41:53,200 --> 00:41:57,560
Speaker 3: than even the Nike in Japan. It was obviously a

729
00:41:57,600 --> 00:42:01,399
Speaker 3: good time for people to go put money back there.

730
00:42:01,520 --> 00:42:03,120
Speaker 3: And I think there's a little bit of catch up

731
00:42:03,160 --> 00:42:06,360
Speaker 3: going on. So I don't think it's anything deep and amazing,

732
00:42:06,680 --> 00:42:11,239
Speaker 3: and quite frankly, if I look at European growth, European

733
00:42:11,320 --> 00:42:15,560
Speaker 3: growth is not yet showing German growth is not yet

734
00:42:15,600 --> 00:42:20,520
Speaker 3: showing any impact from the one trillion ten year dollars spend.

735
00:42:20,640 --> 00:42:24,520
Speaker 3: It's not yet showing up. I personally think that perhaps

736
00:42:24,600 --> 00:42:26,520
Speaker 3: it's gone a bit too far, because if I look

737
00:42:26,680 --> 00:42:31,040
Speaker 3: at funds which had been approved during COVID time five

738
00:42:31,120 --> 00:42:33,799
Speaker 3: years ago, five years ago, they still have not been

739
00:42:33,840 --> 00:42:37,560
Speaker 3: able to deploy them. The Europeans tied up in red

740
00:42:37,600 --> 00:42:41,920
Speaker 3: tape at a level which makes me have a certain

741
00:42:42,040 --> 00:42:44,880
Speaker 3: degree of I'm not going to go as far as

742
00:42:44,920 --> 00:42:48,440
Speaker 3: saying skepticism, but caution in terms of how quickly this

743
00:42:48,520 --> 00:42:49,879
Speaker 3: money will actually show up.

744
00:42:50,440 --> 00:42:53,440
Speaker 2: What about the defense spending that we're hearing about. That's

745
00:42:53,800 --> 00:42:58,080
Speaker 2: probably weaponized Knesenism. That's probably going to be a little

746
00:42:58,200 --> 00:43:00,680
Speaker 2: quicker to find its way into the economy.

747
00:43:00,800 --> 00:43:02,920
Speaker 3: I think it could be. But the only thing is

748
00:43:03,040 --> 00:43:06,040
Speaker 3: the multiplier for defense spending is one of the lowest

749
00:43:06,120 --> 00:43:09,000
Speaker 3: multipliers you have. Your highest multiplier is going to be

750
00:43:09,360 --> 00:43:12,440
Speaker 3: what we did, which was to helicopter drop checks during

751
00:43:12,560 --> 00:43:15,719
Speaker 3: co COVID to everyone. That has a very high multiplier eventually,

752
00:43:16,040 --> 00:43:19,560
Speaker 3: But if you look at defenses, the multiplier zero point four,

753
00:43:19,960 --> 00:43:23,680
Speaker 3: it's a low, low, low multiplier. Separately, you have other

754
00:43:23,920 --> 00:43:26,680
Speaker 3: issues which I think are not discussed enough, and that

755
00:43:26,920 --> 00:43:29,120
Speaker 3: is I think there are that somebody who's telling me

756
00:43:29,160 --> 00:43:32,320
Speaker 3: it's close to seventeen different arms manufacturers and europe haamny

757
00:43:32,400 --> 00:43:37,520
Speaker 3: arms manufacturers. You need if you have multitudes of people

758
00:43:37,560 --> 00:43:40,680
Speaker 3: making tanks. The problem is the demand for tanks is

759
00:43:40,680 --> 00:43:43,520
Speaker 3: not infinite, right right, And so you have a lot

760
00:43:43,800 --> 00:43:48,399
Speaker 3: of relatively inefficient defense expenditure which is likely to take

761
00:43:48,440 --> 00:43:51,399
Speaker 3: place as well. I think it will make its way.

762
00:43:51,680 --> 00:43:54,600
Speaker 3: I don't want to come across as being overly negative.

763
00:43:54,640 --> 00:43:57,560
Speaker 3: I think it's very positive that the Europeans are taking

764
00:43:57,600 --> 00:44:02,000
Speaker 3: their own defense in hand, and I think we and

765
00:44:02,160 --> 00:44:05,000
Speaker 3: markets need to be cautious in terms of the speed

766
00:44:05,040 --> 00:44:07,319
Speaker 3: at which we think this will show up.

767
00:44:07,520 --> 00:44:11,680
Speaker 2: Sure, so the European Central Bank has cut rates. We've

768
00:44:11,719 --> 00:44:15,279
Speaker 2: seen other central banks around the world cut rates. We

769
00:44:15,360 --> 00:44:17,719
Speaker 2: talked a little bit about the FED. What do you

770
00:44:17,760 --> 00:44:22,920
Speaker 2: think they're paying attention to? Are they legitimately tight, especially

771
00:44:23,000 --> 00:44:27,279
Speaker 2: now with q E ending and QT beginning. How do

772
00:44:27,320 --> 00:44:28,760
Speaker 2: you look at the role of the FED.

773
00:44:28,560 --> 00:44:32,080
Speaker 3: Here, Barry, Look, we talked a little bit about what

774
00:44:32,200 --> 00:44:35,880
Speaker 3: I thought a reasonable FED funds rate was. When I

775
00:44:35,960 --> 00:44:38,280
Speaker 3: call it neutral, I mean the economy is neither falling

776
00:44:38,320 --> 00:44:43,200
Speaker 3: into recession or overheating ie inflation accelerating. I think that

777
00:44:43,320 --> 00:44:46,520
Speaker 3: number is four to four twenty five given where rates

778
00:44:46,520 --> 00:44:50,560
Speaker 3: are right now. Last year, before all of these ups

779
00:44:50,640 --> 00:44:53,040
Speaker 3: downs and ins and outs, I thought the FED had

780
00:44:53,040 --> 00:44:55,840
Speaker 3: within its gift around one hundred and twenty five to

781
00:44:55,840 --> 00:44:58,560
Speaker 3: one hundred and fifty basis points of rate cuts in all,

782
00:44:58,719 --> 00:45:01,239
Speaker 3: and they did a hundred basis points already. So I

783
00:45:01,239 --> 00:45:05,120
Speaker 3: think there isn't an unlimited amount that the FED really

784
00:45:05,960 --> 00:45:08,799
Speaker 3: can or should do. Will they do more? Probably, you know,

785
00:45:08,840 --> 00:45:10,680
Speaker 3: I don't know whether it's this Fed or next year.

786
00:45:10,800 --> 00:45:13,920
Speaker 3: At some stage they can it won't be catastrophic. I

787
00:45:13,960 --> 00:45:19,040
Speaker 3: don't think it's particularly wise to cut rates dramatically. Are

788
00:45:19,040 --> 00:45:22,879
Speaker 3: they messing up right now? No? Actually, I don't think

789
00:45:22,880 --> 00:45:25,520
Speaker 3: they're messing up. This is a very dubbish FED by

790
00:45:25,560 --> 00:45:27,960
Speaker 3: the way, everyone says that, oh, markets will panic if

791
00:45:28,000 --> 00:45:31,399
Speaker 3: we get a dubbish FED chair. Hello, the last non

792
00:45:31,520 --> 00:45:35,480
Speaker 3: dubbish FED chair we had was Paul Volca. We haven't

793
00:45:35,560 --> 00:45:39,680
Speaker 3: had a hawkish FED chair in an enormous amount of time,

794
00:45:39,719 --> 00:45:41,800
Speaker 3: and I don't see it happening now. It's not in

795
00:45:41,840 --> 00:45:42,640
Speaker 3: the Fed's DNA.

796
00:45:42,960 --> 00:45:46,960
Speaker 2: Huh, really really interesting. Let me throw a curveball question

797
00:45:47,040 --> 00:45:50,800
Speaker 2: at you. What do you think investors are not talking

798
00:45:50,880 --> 00:45:53,120
Speaker 2: about but perhaps should be.

799
00:45:53,840 --> 00:45:57,840
Speaker 3: So that's a really excellent question. In this day and age,

800
00:45:58,400 --> 00:46:02,360
Speaker 3: I think you can't talk about what's being overlooked without

801
00:46:02,440 --> 00:46:07,560
Speaker 3: talking about time horizon. I think that we are all

802
00:46:07,640 --> 00:46:11,400
Speaker 3: talking about fiscal but in very vague terms, and the

803
00:46:11,520 --> 00:46:15,080
Speaker 3: mistake we are making is acting as if we suddenly

804
00:46:15,120 --> 00:46:19,680
Speaker 3: got a fiscal deficit. We have been running ridiculous deficits

805
00:46:19,719 --> 00:46:22,919
Speaker 3: for the last close to five years now, and it's

806
00:46:23,120 --> 00:46:26,400
Speaker 3: very much like the excesses we saw with QE in

807
00:46:26,440 --> 00:46:30,440
Speaker 3: the sense of monetary policy which lasted long after it

808
00:46:30,480 --> 00:46:33,320
Speaker 3: should have been withdrawn, and we're seeing that now. And

809
00:46:33,760 --> 00:46:37,080
Speaker 3: I don't see any desire on either party's side to

810
00:46:37,120 --> 00:46:40,520
Speaker 3: do something serious about that deficit, which implies we won't

811
00:46:40,560 --> 00:46:42,520
Speaker 3: fall into a recession. But I do think at some

812
00:46:42,719 --> 00:46:47,719
Speaker 3: stage there needs to be some change in policy which

813
00:46:47,800 --> 00:46:51,080
Speaker 3: reduces that deficit meaningfully. And I'm not sure you can

814
00:46:51,160 --> 00:46:54,400
Speaker 3: do that without actually reducing growth. This is an additional

815
00:46:54,440 --> 00:46:56,200
Speaker 3: reason why I don't think the FED should go too

816
00:46:56,200 --> 00:47:00,600
Speaker 3: far today. So I I think there is a long

817
00:47:00,640 --> 00:47:03,120
Speaker 3: way of saying there's almost nothing that we don't talk about.

818
00:47:03,200 --> 00:47:06,520
Speaker 3: It is a question of the timing. I think today

819
00:47:06,560 --> 00:47:10,319
Speaker 3: we're probably looking at most of the important things that

820
00:47:10,440 --> 00:47:11,640
Speaker 3: need to be looked at.

821
00:47:11,719 --> 00:47:14,759
Speaker 2: Huh, really interesting. So I only have you for a

822
00:47:14,760 --> 00:47:16,600
Speaker 2: certain amount of time, But let me jump to my

823
00:47:16,719 --> 00:47:20,600
Speaker 2: favorite questions. Tell us about your early mentors who helped

824
00:47:20,760 --> 00:47:21,800
Speaker 2: shape your career.

825
00:47:22,600 --> 00:47:25,200
Speaker 3: So you know, my earliest mentor, I'd have to say,

826
00:47:25,719 --> 00:47:29,840
Speaker 3: is my father. I grew up in India. In India,

827
00:47:30,040 --> 00:47:33,799
Speaker 3: the path that I followed is not very traditional, and

828
00:47:34,719 --> 00:47:37,600
Speaker 3: I have two brothers, and my father always treated me

829
00:47:37,840 --> 00:47:41,040
Speaker 3: exactly the same as my brothers, and so in a sense,

830
00:47:41,080 --> 00:47:43,760
Speaker 3: when people ask me, even today, how do you get

831
00:47:44,320 --> 00:47:47,200
Speaker 3: more women into the workplace? And I get asked this

832
00:47:47,600 --> 00:47:50,320
Speaker 3: question around the world when I go to our different offices,

833
00:47:50,719 --> 00:47:55,240
Speaker 3: I tell everyone, you know, encourage your daughters, your sisters,

834
00:47:55,360 --> 00:47:58,920
Speaker 3: your wives to be in finance, and they will be

835
00:47:58,960 --> 00:48:01,640
Speaker 3: in finance. My father didn't encouraged me to be in finance.

836
00:48:01,880 --> 00:48:05,520
Speaker 3: He did encourage me to think exactly the way frankly

837
00:48:05,680 --> 00:48:08,359
Speaker 3: my brothers were thinking in terms of what the future held.

838
00:48:08,400 --> 00:48:11,040
Speaker 3: So he was my earliest mentor second mentor, I would

839
00:48:11,080 --> 00:48:14,800
Speaker 3: have to say, is one of my first mission chiefs

840
00:48:14,840 --> 00:48:19,560
Speaker 3: at the IMF, Paul Thompson, who subsequently actually led missions

841
00:48:19,600 --> 00:48:22,400
Speaker 3: to Greece and became the director of the European Department.

842
00:48:22,520 --> 00:48:27,480
Speaker 3: He was my first mission chief and he is an

843
00:48:27,480 --> 00:48:34,040
Speaker 3: amazing negotiator. And I still find myself using hand gestures

844
00:48:34,640 --> 00:48:37,360
Speaker 3: that I see I've learnt from him, and I still

845
00:48:37,400 --> 00:48:40,080
Speaker 3: find myself doing this. How amazing is that, because now

846
00:48:40,120 --> 00:48:43,680
Speaker 3: you're talking about a very long time ago, and he

847
00:48:43,800 --> 00:48:48,400
Speaker 3: definitely shaped how I work in the workplace.

848
00:48:49,960 --> 00:48:53,080
Speaker 2: Really interesting. Let's talk about books. What if some are

849
00:48:53,160 --> 00:48:54,880
Speaker 2: your favorites? What are you reading right now?

850
00:48:55,000 --> 00:48:58,919
Speaker 3: Okay, so some of my favorites. I've got an enormously

851
00:48:59,600 --> 00:49:02,319
Speaker 3: very The only thing I don't read is horror of

852
00:49:02,360 --> 00:49:06,160
Speaker 3: any kind. It scares me too much. My imagination is

853
00:49:06,200 --> 00:49:09,440
Speaker 3: too real. But if I think about things I always

854
00:49:09,480 --> 00:49:13,560
Speaker 3: go back to I will throw out. There's the Master

855
00:49:13,600 --> 00:49:17,040
Speaker 3: in Margarita, which is Mikhail Bulkrakov, which was the first

856
00:49:17,280 --> 00:49:21,240
Speaker 3: first book which actually seen It was transcendental. I think

857
00:49:21,600 --> 00:49:25,520
Speaker 3: love pride and prejudice. I love The Lord of the Rings.

858
00:49:25,760 --> 00:49:31,840
Speaker 3: And currently I'm reading urban fantasy. It's called The author's

859
00:49:31,960 --> 00:49:37,480
Speaker 3: names are Ilona Andrews, Kate Daniels. It's very escapist. It's

860
00:49:37,520 --> 00:49:40,960
Speaker 3: about as as escapist as anything I think you would

861
00:49:40,960 --> 00:49:43,480
Speaker 3: watch on Netflix. It is absolutely fantastic.

862
00:49:43,760 --> 00:49:44,480
Speaker 2: What's the title.

863
00:49:44,760 --> 00:49:48,440
Speaker 3: So it's a series of books. The protagonist is called

864
00:49:48,560 --> 00:49:52,760
Speaker 3: Kate Daniels, and I think the first one was Magic

865
00:49:52,920 --> 00:49:56,440
Speaker 3: Bites or something like that, set in a dystopian Atlanta

866
00:49:56,920 --> 00:50:01,120
Speaker 3: where you have a mixture of various types of supernatural

867
00:50:01,160 --> 00:50:02,160
Speaker 3: elements and things like that.

868
00:50:02,160 --> 00:50:05,840
Speaker 2: It's really cool, huh, really interesting. Our final two questions,

869
00:50:06,480 --> 00:50:08,560
Speaker 2: what sort of advice would you give to a recent

870
00:50:08,600 --> 00:50:12,960
Speaker 2: college grad interested in the career in either fixed income

871
00:50:13,160 --> 00:50:13,920
Speaker 2: or investing.

872
00:50:14,680 --> 00:50:20,960
Speaker 3: Number one, be extremely curious, right, extremely curious. I would

873
00:50:21,000 --> 00:50:26,160
Speaker 3: note that learn to do research. I'm not talking about research.

874
00:50:26,640 --> 00:50:31,200
Speaker 3: What I'm saying is, especially today with gen Ai, I

875
00:50:31,200 --> 00:50:34,840
Speaker 3: think one of the worst things is immediately having answers,

876
00:50:35,239 --> 00:50:38,640
Speaker 3: because if you don't learn to spend the time to

877
00:50:38,800 --> 00:50:44,879
Speaker 3: dig really, really deep into different areas, I don't think

878
00:50:44,960 --> 00:50:48,319
Speaker 3: you're going to find answers. You're not going to be

879
00:50:48,400 --> 00:50:51,200
Speaker 3: able to find the answers all written in the first

880
00:50:51,200 --> 00:50:54,960
Speaker 3: three lines of Google search. Actually, I do think that

881
00:50:55,840 --> 00:50:58,680
Speaker 3: people coming fresh into the markets that we have, they

882
00:50:58,719 --> 00:51:01,839
Speaker 3: need to read a little bit more about what has

883
00:51:01,880 --> 00:51:04,640
Speaker 3: gone before them. I think there are some brilliant books

884
00:51:04,719 --> 00:51:08,480
Speaker 3: out there. I would call out Ken Rogoff and Carmen

885
00:51:08,520 --> 00:51:11,239
Speaker 3: Reinhart have a couple of them. It's just a good

886
00:51:11,560 --> 00:51:14,360
Speaker 3: this time is different, Yeah, this time, this time it's different.

887
00:51:14,400 --> 00:51:18,200
Speaker 3: It's fantastic. And and your book, I'm gonna give you

888
00:51:18,200 --> 00:51:20,320
Speaker 3: that shout out because I think it's good to actually

889
00:51:20,400 --> 00:51:26,200
Speaker 3: read practitioners books because we live in bizarre times and

890
00:51:26,280 --> 00:51:31,080
Speaker 3: many people will not have seen the various cycles history.

891
00:51:31,200 --> 00:51:33,560
Speaker 2: You know, those of us who don't learn from history

892
00:51:33,600 --> 00:51:36,200
Speaker 2: are condemned to repeat it.

893
00:51:36,280 --> 00:51:41,040
Speaker 3: There's that part of it, and I think. The other

894
00:51:41,120 --> 00:51:44,080
Speaker 3: piece I would say is it's very hard, I know,

895
00:51:44,320 --> 00:51:47,600
Speaker 3: but try not to be too impatient. If you can't

896
00:51:47,640 --> 00:51:53,000
Speaker 3: go through a few market cycles, it's very difficult to

897
00:51:53,080 --> 00:51:57,560
Speaker 3: really understand my markets, right. So I don't believe in

898
00:51:57,640 --> 00:52:01,120
Speaker 3: time and grade. I'm all for people umping ahead, but

899
00:52:01,239 --> 00:52:07,360
Speaker 3: sometimes nothing substitutes for actually living through different market cycles

900
00:52:07,400 --> 00:52:08,280
Speaker 3: in our business.

901
00:52:08,480 --> 00:52:11,120
Speaker 2: Huh, really really interesting. What do you know about the

902
00:52:11,160 --> 00:52:14,439
Speaker 2: world of investing today? You wish you knew thirty years

903
00:52:14,520 --> 00:52:16,440
Speaker 2: or so ago when you were first getting started.

904
00:52:17,880 --> 00:52:23,200
Speaker 3: You know, the biggest thing I'd say is that nothing.

905
00:52:24,160 --> 00:52:28,400
Speaker 3: While in the moment it feels like the catastrophe is

906
00:52:28,440 --> 00:52:31,920
Speaker 3: going to end the world number one, it won't number

907
00:52:31,960 --> 00:52:35,560
Speaker 3: two cycles end. I would have had a lot fewer

908
00:52:35,600 --> 00:52:38,640
Speaker 3: sleepless nights if I could have just calmed myself down

909
00:52:38,800 --> 00:52:42,799
Speaker 3: and said, Okay, this too will pass. So I think

910
00:52:43,160 --> 00:52:48,640
Speaker 3: I think there is an element of just knowing that

911
00:52:48,680 --> 00:52:50,799
Speaker 3: you know, this is a part of what we do.

912
00:52:51,320 --> 00:52:54,520
Speaker 2: Really so interesting. Thank you Sanal for being so generous

913
00:52:54,560 --> 00:52:58,040
Speaker 2: with your time. We have been speaking with Sonal Dasai.

914
00:52:58,640 --> 00:53:02,600
Speaker 2: She's chief investment serve for Franklin Templeton's fixed income group.

915
00:53:03,120 --> 00:53:06,239
Speaker 2: If you enjoy this conversation. Well, check out any of

916
00:53:06,239 --> 00:53:09,400
Speaker 2: the five hundred we've done over the past eleven years.

917
00:53:09,840 --> 00:53:14,640
Speaker 2: You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever

918
00:53:14,719 --> 00:53:18,120
Speaker 2: you find your favorite podcast, And be sure and check

919
00:53:18,160 --> 00:53:23,200
Speaker 2: out my new book How Not to Invest The ideas, numbers,

920
00:53:23,239 --> 00:53:26,680
Speaker 2: and behavior that destroys wealth and how to avoid them

921
00:53:27,040 --> 00:53:30,560
Speaker 2: How Not to Invest at your favorite bookseller. I would

922
00:53:30,600 --> 00:53:32,520
Speaker 2: be remiss if I did not thank the Crack team

923
00:53:32,560 --> 00:53:36,240
Speaker 2: that helps us put these conversations together each week. Meredith

924
00:53:36,239 --> 00:53:39,560
Speaker 2: Frank is my audio engineer. Anna Luke is my producer.

925
00:53:39,680 --> 00:53:43,399
Speaker 2: Sean Russo is my researcher. Sage Bauman is the head

926
00:53:43,400 --> 00:53:47,480
Speaker 2: of podcasts at Bloomberg. I'm Barry Riholts. You're listening to

927
00:53:47,600 --> 00:54:00,200
Speaker 2: Masters in Business on Bloomberg Radio. Y