00:00There is a lot to unpack when it comes to these market moves.
00:03Joining us now is Rick Gardner, CIO at RGA Investments.
00:06Rick, good to see you.
00:08First off, let's talk about Japan.
00:10Did it surprise you in any way, the way in which it was so sudden and steep, the selling in JGBs?
00:19Well, I think it could be a surprise, but I also have to say the markets, I think,
00:24are having less of an appetite for tax reductions without a clear understanding of where funding is going to be coming from with those tax reductions.
00:37So the type of sell-off that we saw, although Japan has generally been viewed as somewhat of a safety trade,
00:44when you see something like this, I think it does give everybody pause.
00:47You couple that with the beginning of the morning with a weak bond auction, we see the yield spike,
00:56and then there was contagion there that kind of spread across the entire bond market.
01:01Yeah, you talk about this contagion.
01:04To what extent should we be worried about further spillover to global debt?
01:09At the time where we have Danish Pension Fund talking about how they're going to exit U.S. Treasuries,
01:15perhaps as a way in retaliation for what we're seeing, Trump's moves over Greenland.
01:22Yeah, global contagion is something that we want to keep an eye on,
01:26but I do think you have to look at every country based on its own merits,
01:30and you want to be careful about just assuming that this would spread too rapidly.
01:37But I do think it's fair to look at it as potentially a risk-off sentiment that maybe starts to enter our markets.
01:43January tends to be a really important month because it kind of gives us an idea of what the rest of the year may look like.
01:51So I guess as we're looking at it right now, maybe it's not a surprise.
01:55I'm expecting volatility this year, but I will say I do expect things to, as a general trend, be positive,
02:02particularly here in the United States markets.
02:05Yeah, tell us a little bit about the merits of the United States,
02:09because what we're seeing right now is that South America trade really regained momentum.
02:13And it's not just because of the concerns around Greenland.
02:16It's just this uncertainty and anxiety that the Trump administration causes,
02:21whether it's with the leader in Venezuela, more tariffs on Europe,
02:24and of course, the constant attacks on the Federal Reserve.
02:28Well, it does seem like we've hit the rewind button coming up with tariffs, again, as an obstacle for the markets.
02:35And I think if you think about what this administration has done in the past,
02:42particularly when it comes to the tariffs, now that that is the tool that the president is using here for Greenland,
02:50I think it's fair to say the administration's use of tariffs has more been about trying to get a deal than trying to dominate.
03:03And so I think if you're an investor and you can kind of take a step back
03:07and look at how the tariff negotiations of last year played out and the trade deals that came in response to it,
03:14I think that might give you a fresh perspective on what's happening with Greenland and these tariffs.
03:21I will say, though, escalating tariffs are definitely an issue that we have to be very cognizant of
03:28because escalating tariffs are what can really cause a lot of uncertainty and damage to the overall economy.
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