THANKS FOR HAVING US HERE WITH YOU. >> THANKS FOR JOINING US >> JOHN MADE A GREAT POINT ABOUT SOFT LANDINGS AND THEY ARE NOT SMOOTH ALL THE TIME, EVEN THOUGH THEY MAY BE SOFT TALK ABOUT THAT A BIT. >> I THINK THE MARKET SHOULD LISTEN TO JOHN THERE'S BEEN SO MUCH BACK AND FORTH, IS IT A HARD LANDING, A SOFT LANDING I THINK WHAT WE VERY MUCH FEEL WILL BE A SOFT LANDING, BUT I THINK WHAT'S BEEN MISSED BY THE MARKET IS THAT A SOFT LANDING, IF YOU THINK ABOUT IT AT THE AIRPORT, YOU'RE LANDING ON THE TARMAC, THERE ARE TIMES WHEN YOU HAVE TO BRACE WITH THE TRAY TABLE IN FRONT OF YOU. THAT COULD BE WITH WHAT WE'RE GOING INTO IN THE ECONOMY. THE THREE HOT INFLATION PRINTS IN CPI WERE A BRACING OF THE TABLE IN FRONT OF YOU. BUT IT'S HOW BROADLY TRENDS AND WHAT THE BIGGER THEME IS THIS IS A SOFT LANDING WE HAVE GOOD GROWTH, A NORMALIZING LABOR MARKET, WE HAVE INFLATION CHANNELLING IN THE RIGHT DIRECTION. YES, SOME BUMPS, BUT WE'RE GOING IN THE RIGHT SPOT. THIS IS A SOFT LANDING AND I THINK WE HEARD FROM POWELL HE IS SEEING A SOFT LANDING FOR SURE >> RIGHT THE HOUSE VIEW AT GOLDMAN HAS BEEN CONSTRUCTIVE FOR A WHILE NOW. I THINK JAN HAS 15% RECESSION ODDS LOOKING FOR A JULY CUT, LOOKING FOR RELIEF IN THINGS LIKE INSURANCE AND SHELTER SO, WHERE DOES THAT LEAD YOU TO ON THE DURATION CONVERSATION RIGHT NOW? >> WELL, WE THINK IT'S REALLY A GOOD TIME TO EXTEND DURATION THERE'S A LOT OF MONEY SITTING IN CASH RIGHT NOW. THERE'S ABOUT $6 TRILLION IN MONEY MARKETS AND VERY, VERY FRONT END OF THE CURVE WE THINK THAT CUTS ARE HAPPENING. THEY'RE GOING TO START EITHER THIS SUMMER OR THEY'RE GOING TO START JULY OR THEY'RE GOING TO POTENTIALLY COME IN SEPTEMBER. BUT THEY ARE COMING. AND AS A RESULT, IT IS THE TIME TO EXTEND YOUR DURATION AND LOCK IN THOSE YIELDS. THE REALLY EXCITING FIVE HANDLE ON MONEY MARKETS, THAT'S GOING AWAY SOON. THE AVERAGE DURATION OF A MONEY MARKET FUND IS TWO WEEKS IF YOU THINK ABOUT AS THAT STARTS TO WORK THROUGH THE SYSTEM, YOU'RE NOT GOING TO GET THOSE GREAT YIELDS IN THE FRONT END OF THE KUMPB MOVE OUT THE CURVE INTO GREAT SPOTS IN FIXED INCOME WHERE YOU CAN TAKE ADVANTAGE OF THE HIGH YIELDS YOU'RE USED TO AND WANT. >> THE CHOPPINESS YOU'RE TALKING ABOUT DOES STILL LEAD YOU TO HIGH QUALITY, RIGHT? >> THAT'S RIGHT. THIS ISN'T A MARKET IN WHICH EVERYTHING IS GOING TO DO WELL WHAT IS DIFFERENT HERE AND THE PLAYBOOK CHANGED IS WE HAVE A HIGHER COST OF CAPITAL THERE ARE ABSOLUTELY COUNTRIES, COMPANIES, STRUCTURES, CONSUMERS, THAT CAN'T HANDLE THIS HIGHER COST AND SO YOU HAVE TO BE REALLY DISCERNING IN WHERE YOU NVEST. BIG PICTURE, BROAD STROKES, UP IN QUALITY, LEANING INTO HIGH QUALITY ASSETS, INVESTMENT GRADE OR UP IN QUALITY IN HIGH YIELD, DOUBLE Bs, SINGLE Bs THAT IS A GREAT PLACE TO BE. AND THE OTHER THING WE THINK IS IMPORTANT IS THAT THIS ISA MARKET, AGAIN, WITH HIGHER COST OF CAPITAL, THAT YOU WANT AN ACTIVE MANAGER BECAUSE SOMEONE NEEDS TO BE LOOKING AT THE PORTFOLIO AND SAYING, I WANT TO STAY AWAY FROM THOSE CCCs OR I'M WORRIED ABOUT THAT COMMERCIAL PROPERTY LET'S PICK THE RIGHT THINGS THAT WILL DO WELL IN THIS ENVIRONMENT. >> YOU TALK ABOUT GEOGRAPHIC DIVERSITY. I WONDER WHY WHAT ABOUT THE CURRENT ENVIRONMENT LEADS YOU TO MAKING SURE YOU'RE NOT CONCENTRATED IN ONE AREA OF THE WORLD? >> SURE. IT'S REALLY INTERESTING RIGHT NOW BECAUSE THERE'S GLOBAL DIVERGENCE YOU HAVE THE BANK OF JAPAN THAT'S LIKELY TO HIKE. YOU HAVE THE FED, JULY, SEPTEMBER, LET'S SEE, GOING TO CUT. SWEDEN CUT ACTUALLY. SO YOU'VE GOT ALL THESE THINGS MOVING IN DIFFERENT DIRECTIONS THAT LEADS TO VERY DIFFERENT OUTCOMES THIS IS A BEAUTIFUL PLACE TO BE IN FIXED INCOME AND PICK AND CHOOSE YOU CAN DO INTERESTING PAIRS YOU CAN BE LONG DURATION IN THE U.S., SHORT DURATION IN JAPAN. WE CAN PUT ALL OF THIS TOGETHER TO HAVE A MUCH BETTER OUTCOME AND ALPHA OPPORTUNITY FOR OUR CLIENTS. >> WHEN YOU -- I DON'T MEAN TO BELABOR EVERY DATA POINT BUT WHEN AN ATLANTA FED COMES IN THIS WEEK AND SAYS, Q2 TRACKING AT 4.2, HOW DO YOU LOOK AWAY AND NOT GET SEDUCED BY NUMBERS THAT MIGHT LEAD TO YOU CHANGE YOUR WHOLE THESIS >> I THINK YOU HAVE TO PULL THE CAMERA BACK AND YOU NEED TO THINK LONG TERM. WE HAVE LONG-TERM INVESTORS. WE'RE ALSO INVESTORS, I THINK, WITH HUMILITY. I THINK THAT'S REALLY IMPORTANT AND I THINK THAT'S A MESSAGE WE'LL HAVE AT THE INVESTOR FORUM TODAY. INVESTORS NEED TO BE HUMBLE. WE HAVE SEEN IN THE FIRST QUARTER, ATLANTA FED WOULD HAVE TOLD YOU A DIFFERENT KIND OF PRINT. WE HAVE A RECENT DATA POINT THAT SUGGESTS YOU NEED TO PULL THE CAMERA BACK AND THINK BROADER. THE BIGGER PICTURE AS WE FORECAST OUT WHERE GDP IS GOING TO GO, IT'S STRONG. >> YOU MENTIONED THE FORUM WHEN YOU TALK ABOUT, SAY, DURATION EXTENSION, DO CLIENTS PUSH BACK OR ARE THEY -- OR ARE THEY WILLING TO BE LED ON THAT FRONT RIGHT NOW? >> CLIENTS ARE ASKING THE QUESTION, THEY'RE LOOKING FOR ADVICE WHAT ARE WE SUPPOSED TO DO THE PUSHBACK WE'VE RECEIVED IS, HEY, BEING IN CASH HAS REALLY WORKED WE'RE SAYING, CONGRATULATIONS, YOU'RE RIGHT CASH WAS A GREAT PLACE TO BE WE ARE NOT DENYING THAT. WE ARE NOT SAYING THE INVESTORS WE SPEAK TO AREN'T SMART AND HAVEN'T MADE PRUDENT DECISIONS BUT WE WORK TO WORK TOGETHER LET US HELP YOU THINK ABOUT SOLUTIONS FOR YOUR CLIENTS THAT IS EXTENDING DURATION FIXED INCOME HAS YIELD IN A WAY IT DIDN'T HAVE BEFORE. THIS IS A GREAT OPPORTUNITY. AGAIN, IF YOU REALLY DID LIKE THOSE YIELDS THAT YOU WERE GETTING IN MONEY MARKETS WITH A 5% HANDLE, THEY'RE NOT GOING TO BE THERE FOREVER BECAUSE ALL IT TAKES IS TWO CUTS AND SUDDENLY T-BILLS DON'T HAVE A 5 HANDLE ANYMORE. THEY'RE IN THE 4 RANGE MOVE OUT THAT CURVE, LOCK THAT IN IF YOU'RE WILLING TO GO RISK SPECTRUM, HIGH YIELD, EMERGING MARKETS, YOU CAN DO FAR IN EXCESS OF 5%, 6%, 7%, 8% THERE ARE REAL OPPORTUNITIES OUT THERE. WITH THE
