Avsnitt
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This week, the Fed cut benchmark rates by 50 basis points. Lower financing costs should be a relief for companies that need to borrow in the form of bonds or loans. But, the weird thing about the previous few years of high rates and high inflation is how much corporate credit has defied expectations. While defaults increased slightly, there wasn’t a huge wave of bankruptcies. And most companies haven’t really had trouble finding financing, with a smorgasbord of options available to them — including from the booming private credit market. So what happens now that the Fed is lowering rates? In this episode, we speak with Danielle Poli, co-portfolio manager of Oaktree’s Diversified Income Fund and a founding member of the firm’s investment committee, about how she sees the next leg of the credit cycle unfolding, and how she decides between a multitude of potential investments in the space.
Related Links:
The Black Hole of Private Credit That’s Swallowing the Economy
The Hottest Way for Banks to Get Risk Off Their Balance SheetsOnly http://Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots
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It’s Fed Day, and while everyone expects the central bank to cut benchmark interest rates, the key question is by how much? Will it be 25 basis points or 50? Investors are evenly split between the two possibilities, setting up one of the most uncertain meetings ever. So what does a big bond manager do on a day like this? In this episode, we speak with Dan Ivascyn, Group CIO at Pimco, where he manages the $158 billion Pimco Income Fund. He tells us what he’s expecting from the FOMC, and what he’s seeing in terms of financial conditions and the real restrictiveness of the monetary environment right now. He also walks us through what Fed day is actually like at Pimco, where he thinks the economy is going, and answers the question of whether — with rates finally going down — bonds might be back in favor.
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Saknas det avsnitt?
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15 years ago was a pivotal moment for financial media. On the one hand, we were in the midst of a huge financial crisis, which shook everything up and exposed how little we knew about our own world. In addition to that, we were in the early moments of a revolution, which saw the rise of blogs, podcasts, "Finance Twitter" and other new platforms for disseminating information about markets and business. One of the winners from that era was Josh Brown, a former stockbroker who rose to fame in part on the back of his must-read blog The Reformed Broker. Now he's the CEO of a large investment advisory firm, Ritholtz Wealth Management. He's got a popular podcast. He's got a new book. He's a fixture on CNBC. And he even has a conference business. We talk about his career path, what he's learned, some funny stories from the good old days, and how he became a media giant.
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Financial institutions have been a leading target for cyber crime since the dawn of the internet. But phishing schemes have become far more intricate, and cyber heists go beyond stealing money from a bank. JF Legault, Deputy CISO at J.P. Morgan Chase, explains how he leads cyber defense on the front lines of work — and lays out a strategy to transform teams into early detection networks. Then David Adrian from Chrome unpacks how web browsing protections, robust monitoring, and a real-time view of threats can fit into this kind of strategy to maximize resilience to a cyber attack.
This episode is sponsored by Chrome Enterprise.
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This week, former European Central Bank President and Italian Prime Minister Mario Draghi published a long-awaited report examining ways to make the European economy more competitive. The report comes at a time when there are major concerns about how Europe is stacking up against the US and China in things like electrical vehicles and AI. It also dovetails with long-running debates about German fiscal austerity, economic tensions between various European Union members, energy crises, and inflation. In this episode, we speak with University of Massachusetts-Amherst economics professor Isabella Weber about her takeaways from the report and potential policy approaches to solving Europe's big competitiveness problem.
Referenced in this episode:
Draghi Says EU Itself at Risk Without More Funds, Joint Debt
Draghi’s Call for Joint EU Bonds Hits Wall of German OppositionOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots
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One of the big buzzwords over the last year or so has been "overcapacity." There's a constant line of argument that China is unfairly flooding the world with unprofitable goods and creating huge, unsustainable imbalances. Western countries, particularly the US (but also Europe), have responded by raising tariffs and engaging in domestic industrial policy in order to compete. But is the strategy sound? Are the basic premises of the problem correct? On this episode of the podcast, we speak with Columbia Professor Adam Tooze, the author of several books, as well as the popular Chartbook newsletter. He argues that the overcapacity framing is misguided, and that the US may be making a mistake putting its chips down on an industrial revival. He talks us through some of the actual weaknesses of the Chinese model, as well as its global political reverberations.
Read more:
Two Veteran Chip Builders Have a Plan to Take On Nvidia
The US and China Are in an All Out Race for AI Domination
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One of the rare areas of bipartisan consensus in the US right now, is on the need to change our trading relationship with China. Former President Donald Trump started a process of putting tariffs on Chinese goods and limiting the export of certain key technologies. This has only expanded under the Biden administration, with expanded restrictions on things like electric vehicles, solar panels, and semiconductors. So what's the thinking behind this drive? What are the goals and what are the risks? On this episode we speak with the United States Trade Representative Katherine Tai. Ambassador Tai describes what she sees as a rethink, or a new version of, globalization. She explains the new worker-centric priorities, how trade fits into domestic investments, and what a healthy version of international economic relations actually looks like.
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Pretty much since the moment that cryptocurrencies came into existence, there's been a chorus of skeptics who argue that they solve no real world use cases, except for gambling and speculation. For a while, there was a lot of hype about things like Web3 or DeFi, but for the most part, these still remain in the realm of pure speculation and gambling. And so, the ultimate use case for crypto remains elusive. Our guest on this episode argues otherwise. He thinks that stablecoins, such as Circle or Paxos, which are backed by actual dollar instruments in regulated institutions running on public blockchains (like Ethereum or Solana) are solving a genuine problem in transmitting money, beyond just speculating on other cryptocurrencies. Austin Campbell is an adjunct professor at Columbia Business School and the founder of Zero Knowledge Consulting. He also comes with a long resume at both crypto and legacy financial institutions. He explains why stablecoins are having a moment and explains the problems they currently solve (particularly internationally) and why legacy payments infrastructure is unlikely to serve the same needs.
Read more:
The Case for Stablecoins Being the New Shadow BanksHow Stablecoins Became a Powerful Force in Crypto
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One of the problems in investing or trading is that — to use a common disclaimer — past results are no guarantee of future success. Someone can have a great track record in their stock picks, but maybe they just got lucky. Or maybe they were particularly well-dialed into one market regime that inevitably shifts. Or maybe they're actually just better than other traders. For multi-strategy hedge funds or "pod shops," there's an ongoing battle to hire or train the next great portfolio manager. But how can managers tell who is actually good and who isn't? On this episode of the podcast, we speak with Joe Peta, who was previously the head of performance analytics at Point72 Asset Management and has had a long career in the trading world. He's also an avid fan of sports gambling, and the author of the recent book, Moneyball for the Money Set, which attempts to take some of the talent analytical principles that originated in Major League Baseball and apply them to evaluating portfolio managers. He talks us through the traditional approach funds use to find or create superstars, and how these approaches can be improved upon using more rigorous, quantitative methods.
Mentioned in this episode:
Hedge Fund Talent Schools Are Looking for the Perfect Trader
How to Succeed at Multi-Strategy Hedge FundsOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots
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There's been a lot of talk about private credit in recent years. The market has exploded in size, and there are worries that it could be a bubble that eventually bursts and sparks disaster. But there are other negative effects from private credit that might already be happening. In a new paper called "The Credit Markets Go Dark," co-authors Harvard Law School professor Jared Ellias and Duke University School of Law professor Elisabeth de Fontenay argue that the $1.5 trillion market for private credit is already having a big impact on the economy — and not in a good way. They say that the rise of private credit marks a seismic change for corporate governance and dynamism.
Read More:
Odd Lots Newsletter: The Black Hole of Private Credit
Private Credit Pushes Deeper Into Risk That Wall Street Is Fleeing
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Last week at Jackson Hole, Federal Reserve Chair Jerome Powell delivered a short and powerful speech indicating that it's time for a policy pivot. The goal now, from his perspective, is to prevent further deterioration of the US labor market. His speech didn't delve much into theory or nuance. In this episode, we speak with Peterson Institute President, Adam Posen, who found the speech unsatisfying. He argues that the state of the labor market, while cooling, didn't merit a "rifle shot" approach, such as the one Powell delivered. He explains his concerns and how he sees the risks materializing from here.
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Remember August 5th? That was the day that markets around the world plunged in historic fashion and everyone became an overnight expert on the yen carry trade. But what really is the yen carry trade? How big is it? Who is making the trade? And what is its connection to markets all around the world? On this episode, recorded at the Kansas City Federal Reserve Bank of Kansas City's Economic Symposium in Jackson Hole, Wyoming, we speak with Hyun Song Shin, economic advisor and head of research at the Bank for International Settlements. He walks us through the mechanics of the trade, what went on in early August, and the lessons we've already learned from it.
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When the Treasury market broke in March 2020, the Federal Reserve intervened in extraordinary fashion. It purchased more than $1 trillion worth of Treasury securities in that month alone. Superficially, this looked a lot like the Quantitative Easing that we came to know during the GFC. But it's purpose was different. This wasn't about depressing the yield curve or providing a form of strong forward guidance. Instead, it was the Fed taking on a role of the "market maker of last resort," so to speak. And yet, despite the different goals, the two different operations look the same and are carried out by the same officials (the members of the FOMC). This creates confusion, cost, and can create a situation where it looks like the Fed is working against itself. On this episode of the podcast, which was recorded in Jackson Hole at the Kansas City Fed's annual Economic Symposium, we speak with University of Chicago Booth professor, Anil Kashyap. He presented a paper at the conference proposing a separate tool within the Fed that can handle balance sheet operations for financial stability. We discussed his proposal along with broader questions about the transmission of monetary policy.
Related link: Monetary Policy Implications of Market Marker of Last Resort Operations
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At Jackson Hole, Fed Chairman Jerome Powell gave a clear signal that the rate cut cycle is likely to start in September. But of course that just opens more questions. Will it be a 25bps cut? Will it be 50? Could it be two 50s in a row? When does it stop? On today's episode, we speak with Peter Williams, a macro strategist at 22V Research. He walks us through his interpretation of Powell's speech and what to look for as the rate cut cycle begins.
Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots
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This year’s Economic Symposium in Jackson Hole, Wyoming marked a big change for US monetary policy, with Federal Reserve Chairman Jerome Powell telegraphing the first rate cuts in potentially two years. But what’s it actually like to be a policymaker at one of the most famous economics conferences in the world? And what do central bankers do when they all get together to talk policy? In this episode, we catch up with Richmond Fed President Tom Barkin, who describes what it’s like to be at Jackson Hole, what’s discussed and how the annual agenda put together by the Kansas City Fed comes together. We also talk about Powell’s speech and how Barkin is viewing the labor market right now.
Powell’s Pivot Leaves Traders Debating Size, Path of Rate CutsOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots
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Every year, the Federal Reserve Bank of Kansas City hosts an economic symposium in Jackson Hole, Wyoming. It’s a chance for central bankers and other policymakers to talk about issues facing the global economy, debate academic literature, and provide further guidance on the future path of monetary policy. This week’s symposium marked a step change for the Fed, with Chair Jerome Powell announcing that the “time has come” for rate cuts after years of hikes. So what makes him confident that inflation’s been tamed? And what are the key pressure points to watch out for in the US economy now? On this episode, recorded in Jackson Hole shortly after Powell delivered his speech, we speak with Bloomberg TV’s Tom Keene and Mike McKee — both veteran Jackson Hole attendees — about what we just learned.
Read more:
Powell Says ‘Time Has Come’ for Fed to Cut Interest Rates
Full Text of Jerome Powell's Jackson Hole Speech
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Synthetic risk transfers, in which banks purchase insurance-like protection on some of their loans, is a growing market on Wall Street, with billions worth of deals made in the US last year. But of course, anything with the words "synthetic" and "risk transfer" is probably going to remind people of the 2008 financial crisis, when securitizations of loans blew up and infected the banking system. So what exactly are these new trades? Why do banks want to do them and what are investors getting in return for taking on this risk? In this episode, we speak with Michael Shemi, North America structured credit leader at Guy Carpenter, about what these deals are, how they're structured, and what they say about bank capital and the wider financial system.
Mentioned in this episode:
One of the Hottest Trades on Wall Street, An Etymological Study
JPMorgan’s Risk Swap Ends Up at a Familiar Place: Rival Banks
‘Blind’ Bets on Bank Risk Transfers Have Never Been So Popular
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Political prediction markets — where traders can make bets on election outcomes — have been around for years. But in this cycle in particular, we've seen an explosion of interest, with people constantly checking the odds on sites like Polymarket and PredictIt to assess the state of the US presidential race. But how accurate are these markets? How do people make money on them? What do they tell us beyond what traditional polling or modeling already indicates? On this episode, we speak with Nate Silver and Maria Konnikova, the co-hosts of the new podcast Risky Business. Silver is, of course, a famed election modeler, and both are serious poker players with good instincts for gambling and odds. We discuss how these markets work and what the markets and models are saying right now about the current US campaign.
Read More at Bloomberg.com:
https://bloom.bg/46Q66tS
https://bloom.bg/3X54rNP
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The Federal Reserve appears to be ready to pivot into rate cutting mode. Inflation has come down significantly, and the unemployment rate has been trending upward for most of the year. In fact, in the most recent Non-Farm Payrolls report, the headline unemployment rate of 4.3% triggered the so-called "Sahm Rule," which has been a historically reliable signal that the US is already in a recession. So are we in a recession? Could the rule be wrong this time due the unique features of this economic cycle? How should the Fed weigh the risks that we see in front of us? On this episode of Lots More, we speak with the rule's creator, Clauda Sahm, Bloomberg Opinion contributor and the chief economist at New Century Advisors. She explains why the signal this time could be misleading, but also why — regardless of whether we're in a recession or not — the Fed must be on guard for a weakening labor market.
Read More:
My Recession Rule Was Meant to Be Broken
What’s the Sahm Rule? Is It Warning of a Recession?
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The past few years have thrown up a number of potential weaknesses in the American economy. There've been disruptions to supply chains stemming from the global pandemic. There are concerns about the availability of strategically important items like semiconductors and vaccines. Meanwhile, Russia's invasion of Ukraine roiled global commodity markets and the ongoing conflict in the Middle East has created even more complications for shipping. So how is the US thinking about economic security and what have we learned? In this episode, we speak with Daleep Singh, Deputy National Security Advisor for International Economics and Deputy Director of the National Economic Council in the Biden Administration. We talk about how the government identifies areas of potential shortages and chokepoints, and what it does to try to get ahead of them.
Mentioned in this Episode:
Introducing the Chokepoint Economy, When Shortages Start to MatterOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots
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- Visa fler
