00:00Equity markets very close to all-time highs, credit spreads near multi-decade tights on investment grade,
00:04high yield spreads near the tights of the year, and yet we've got a Fed official saying that we're excessively restrictive.
00:10You're across a range of funds, you look across markets all the time and the economy with the team.
00:15Do you see any signs that we're excessively restrictive?
00:18Well, I think rates are very high across the globe, right?
00:20And I think part of the reason why I get up so early and happy to go to work is because the opportunity has never been better.
00:27And, you know, we talk here about the U.S., but look at the U.K.
00:30The U.K., where you're from is, you know, tenure rates are four and three-quarter.
00:33Australia looks really, really attractive.
00:35So when we think about the opportunity in a way, yes, we do expect the Fed to cut.
00:39How much they're going to cut next year remains to be proven.
00:43No one knows what's going to happen to the labor market, but the reality is the opportunity in terms of global fixed income is very, very big.
00:50And the opportunity to add alpha is quite high.
00:54I'll tell you a funny story.
00:55We have a partner in Tokyo called Tomoya Masano.
00:58And, you know, for the longest time, there's not much happening in Tokyo.
01:01So you sort of call him and you have matcha with him and not much is happening.
01:04And then all of a sudden, the Japanese fixed income market becomes super exciting.
01:09And then there's a lot to do.
01:10And there's a whole generation of people who have disappeared because they don't do it anymore.
01:14And so you have a labor market which hasn't supplied fixed income investor because there was nothing to do for the longest time.
01:19And so what I think is interesting is the difference of view, the difference of opinion is also a source of incredible alpha.
01:28And, you know, if you want to think about why performance has been quite good, it's partially because the alpha that has been given by the market is quite good.
01:34I think it's interesting that John was talking about the Fed and you talk about the international sphere.
01:38And I think that that's really telling about what people are looking to for that alpha, for that incremental extra yield.
01:46Are those Japanese investors staying in Japan right now and not coming to the U.S. for treasuries, even if the Fed cuts?
01:52No, I think they're very big investors in U.S. assets.
01:55And remember, one of the opportunities everyone has is to buy foreign assets and swap them back into dollars or swap them back into yen and so on and so forth.
02:02And so you can actually buy synthetic credit.
02:06You can buy synthetic dollar exposure for U.S. investors buying, for example, JGB and sending forward the yen into dollar and having a different credit risk with JGB than you have with U.S. dollar.
02:20And so there's a lot to do.
02:21Now, we do that a lot in short term and longer term in terms of adding alpha, but all the time you can do this sort of transaction and sort of mitigate your exposure or increase your exposure or have different risk profile.
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