The Sherman Show™: Recent Episodes
The Sherman Show™
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine’s Asset Allocation Analyst, host a series of podcasts with distinguished guests, giving listeners insight into DoubleLine’s strategies, Portfolio Managers and industry innovators.
DoubleLine Deputy CIO Jeffrey Sherman and Portfolio Manager Jeffrey Mayberry welcome back David Zervos, Chief Market Strategist for Jefferies and Head of the Global Macro Division of Leucadia Asset Management. The last time Mr. Zervos was on in May 2019, he discussed Federal Reserve Chair Jerome H. Powell’s tenure in harsh terms, so this episode kicks off with what’s changed with Chair Powell, and Mr. Zervos believes he has come a long way. The group then gets into how the Fed acted in March 2020 (7:45), with Mr. Zervos noting that Fed officials think of their reaction as a success, setting up a framework for future intervention. He says areas that could draw Fed attention are private equity and commercial real estate (22:39), “two areas that have gorged on zero rates more than anybody.” Mr. Mayberry then turns the conversation back to Chair Powell and the specific way he has improved in his role (26:43). In discussing the performance improvement, Mr. Zervos notes, “I look at the evolution from what happened in ’18 and ’19, he really got caught up in the politics of the time and tried to stand his ground at a time when economically that wasn’t a very smart thing to do, and he looked kind of foolish.” The episode also includes discussion of the market’s eagerness for cuts (31:52) and whether there will be one before the election (34:36), what Mr. Zervos likes out there (38:19), the Fed framework shifting from average inflation targeting to nominal GDP targeting (45:53) and what Mr. Zervos thinks are the risks that are not being talked about (47:40). This episode was recorded May 7, 2024.
Jim Bianco, President of market and macroeconomic research firm Bianco Research, appears Jan. 11, 2024, with hosts Jeffrey Sherman and Samuel Lau to discuss among other issues his outlook for a “no landing” U.S. economy in 2024, sticky inflation of 3% to 4% and his theory on Fed Chair Jerome H. Powell’s dovish turn on Dec. 13. “The problem with the economy is there isn’t a problem,” Mr. Bianco says. “My biggest concern is too much growth and sticky inflation.”Between a hawkish Powell speech on Dec. 1 and Powell’s softened stance on Dec. 13, the data showed no change in economic fundamentals. So what changed his mind? Mr. Bianco notes that Federal Reserve officials prefer unanimous or near-unanimous votes on monetary policy and bank regulations. He suspects “a bunch of doves” among the FOMC’s voting members let Chair Powell know they were prepared to vote in dissent, “and I think he acquiesced.”Mr. Bianco thinks the biggest change in the economy coming out of 2020 was remote work. On economic fundamentals, he sees little case for “a macro problem with the labor market” or trouble with the consumer. He does note warning signs in credit and the potentially problematic rise of the U.S. government’s interest expense.Asked about exogenous risks, Mr. Bianco points to attacks on commercial shipping in the Red Sea and the consequent rerouting of 30% to 40% of the world’s cargo shipping from that critical Asia-Europe route to around Africa. Mr. Bianco warns delays will spell inventory trouble not only in Europe but in the U.S.Mr. Bianco has some criticism of the Federal Reserve. “The Fed first raised rates in March of 2022. What was the year-over-year inflation rate when they finally got to the first rate hike? It was 8.6%. Boy, they waited way, way, way too long before they got it.”Messrs. Sherman and Lau also discuss with Mr. Bianco why the bond market sometimes is “smarter at sniffing out disaster” than the stock market, the absence of recession despite protracted recessionary warnings from leading indicators and complacency in the credit market.
Andy Constan, founder, CEO and Chief Investment Officer of Damped Spring, joins DoubleLine’s Jeffrey Sherman and Samuel Lau to discuss his approach to macroeconomics-driven investing. They also discuss, among other timely topics, Mr. Constan’s outlook for persistent inflation above the Federal Reserve’s 2% target. Damped Spring is a full-service macroeconomic research firm. This episode of the Sherman Show was recorded Nov. 20, 2023. DoubleLine Deputy Chief Investment Officer Jeffrey Sherman opens the conversation (0:38), asking Mr. Constan to describe his 35 years in the financial markets, a career that began at Solomon Brothers in 1986 and spans roles at such notable names as Bridgewater Associates and Brevan Howard before the launch of Damped Spring. Then the discussion turns to Mr. Constan’s macroeconomic approach to investment decision making (4:45). Mr. Constan operates with a four-pillar framework. First, he focuses on how growth occurs in an economy and how inflation works on an economy. From those two starting points, he seeks to understand “the risk premium that assets contain and how policymakers and market participants can influence the risk premium, which is the return you get on assets.” Once those three factors come into focus, Mr. Constan overlays a fourth pillar his framework: positioning. “When those three other things are moving, it still matters how people are positioned, what's priced into markets and what's going to cause investors to change their positioning.” Mr. Constan warns against decision-making based on taking risk premiums as objective levels for trade exit or entry (7:18). “There's no level that is the correct level.” Attempting to buy or sell based on perceived whether a term premium is too high or too low can land investors “in a lot of trouble – just as most investors get themselves in a lot of trouble” buying and selling simply because assets are priced above estimates of fair value. “Markets overshoot all the time. It's very difficult to be an investor to base your investment thesis just on the level of valuation. And so the level of risk premium is not that important to me because nobody knows what it is. The only way you can interpret risk premium is through a model. All models have assumptions. All models require assumptions of forward-looking information which is unavailable.” Instead of focusing on estimated risk premium levels, Mr. Constan’s framework “just focuses on what could change term premiums because that's what you need to know to be an investor. If you think term premiums are going to fall, you want to own assets. If you think term premiums are going to expand, you want to sell assets. And so my framework just focuses on the factors that would cause term premium to change” (8:50). He then describes variables that can change risk premiums. These include changes in the supply of an asset vs. demand for it as well as changes in credit availability and monetary conditions. Jeffrey Sherman then asks Andy Constan for his thoughts on inflation (12:32), noting “perhaps people have not been thinking about the inflation component for, let's call it, over a decade. What are your thoughts about inflation today? What are your thoughts about how investors should incorporate some of this into estimates that raise premiums and hence thinking through the allocation process?” Mr. Constan starts with the fact of falling inflation, under the twin drivers of correcting supply chains and “less easy” monetary policy. A naïve extrapolation of those trends forward would point to inflation soon falling to the Fed’s 2% target or even undershooting it. Mr. Constan, however, expects inflation to a plateau well above 2%. Factors driving resilient above-target inflation, he says, are “a still-very-strong job market,” ample residual reserves “that will keep liquidity high and support demand” and “the three Ds” of de-globalization.
DoubleLine ETF Specialist Scott Thomson discusses his role at the firm and describes the growing use and evolution of exchange-traded funds as vehicles for trading and investment with DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Macro Asset Allocation Analyst Mark Kimbrough. The discussion begins (1:08) with the career of Mr. Thomson, who joined DoubleLine in 2022 after working as an ETF Capital Markets and Fixed Income Strategist with PIMCO. Mr. Thomson next discusses the history of ETFs (5:29) since the first of this vehicle launched in 1993 and their evolution, a trajectory that began with passive equities funds but now includes fixed income as well as active strategies and commodities, among others. ETFs (9:11) continue to evolve and diversify, Mr. Thomson says, noting the development of semi-transparent structures and derivative-based strategies. He foresees growth potential in fund-of-funds strategies, which have long existed in the mutual fund universe, becoming available in ETFs as well as ETFs as a share class of mutual funds. Mr. Sherman asks Mr. Thomson to discuss his role heading up DoubleLine’s capital markets efforts in ETFs (11:34). Mr. Thomson breaks his role into four areas: primary markets, secondary markets, client execution services and relationship management between authorized participants and market makers. Asked by Mr. Kimbrough to explain the drivers behind the growth in fixed income ETFs (17:09), Mr. Thomson points to a combination of factors, including advisors seeking new and different investment tools, among other reasons, to the implementation of ETF model portfolios, which have grown in number and variety. Asked for advice for people who wish to trade ETFs (22:18), Mr. Thomson advises, “Always use limit orders. Don’t use market orders. That just helps you avoid paying more than you want.” For financial advisors looking to trade more than a couple of hundred shares in an ETF, he recommends they work with their firm’s or custodian’s block trading desk to support best order execution. Mr. Sherman, recalling Mr. Thomson’s comments on the efficiency of the arbitrage mechanism in ETFs, asks the ETF specialist to describe (25:13) the liquidity and efficiency of ETFs amid the dislocation of fixed income markets in March 2020.
Joseph Mallen, founder and CEO of Modelist, discusses with Jeffrey Sherman and Samuel Lau evidence-based investing, the integration of customized models with the securities and managers to implement them, the role of AI in his platform, and his take on the present state of financial markets and the macroeconomy. Modelist constructs model portfolios tailored to the needs of financial advisors. This conversation took place Sept. 7, 2023. After Mr. Sherman introduces (0:33) Mr. Mallen and they discuss the career that led him to launch Modelist, Mr. Mallen shares (4:00) his approach to modeling and the way Modelist works with independent financial advisors. Modelist develops and maintains models that implement a diverse array (9:01) of investment methods, including trend-following, relative strength, duration management, credit management and inflation expectations. Modelist’s models incorporate passive strategies as well as strategies that allocate among active managers. In the case of using tradeable securities (12:46), Modelist often relies on exchange-traded funds. At the end of the day, Mr. Mallen says, the objective, regardless of the choice of models tailored for the advisor, is “robotic-type investing based upon what the data says and taking emotion completely out of the equation” (17:09). Toward the end of the conversation (49:51), Mr. Mallen discusses Modelist’s use of artificial intelligence as an investment tool. Turning to market and macroeconomic outlooks (29:45), Mr. Mallen observes markets have “churned up,” leaving equity valuations “pretty extended” amid a “severely inverted” yield curve and signals of a “recession that’s looming” but “still has yet to come.” He notes (30:44) that the Federal Reserve has “done a good job of putting itself in a position where if data does start to get pretty gnarly, they can reverse course. And I think that’s what’s kind of priced in and embedded right now is the fact that people are expecting economic weakness, and, in turn, they are expecting the Fed to react and loosen monetary policy.” With respect to U.S. stocks (31:15), Mr. Mallen would “like a little bit of a mean reversion” with value “catching up, maybe providing that leadership between now and the end of the year relative to growth. I think growth could use a little bit of a reset. We’ve had seven companies in the S&P drive most of the return so far this year.” In fixed income, he still favors short duration. “Just from an academic perspective, I’m getting a greater yield with less expected volatility than on the longer end of the curve. I’m not as insulated if rates do fall, but I like that kind of conservative approach. Take that 4½% and 5% on the fixed income side of the book – go value.”
Liz Young, head of investment strategy at personal finance company and bank SoFi, discusses markets, the investor movement to DIY investing, and her investment process and market outlook with DoubleLine’s Jeffrey Sherman and Samuel Lau in this episode recorded Sept. 12, 2023. Their conversation begins with a discussion of Ms. Young’s career (1:06) in the investment industry and her path to SoFi, where she dispenses her economic, investment and market insights to a variety of audiences. Then she discusses the evolution of investors (6:04), away from “high-touch advisory” investment professionals to DIY investing, a movement with which SoFi works to bring education and tools to enable investors’ success. She notes the DIY movement has especially taken hold among younger people and new investors (9:15). For example, while the average age of clients at older brokerages is 55 to 65, 60% of SoFi’s investment clients are 20 to 40.Turning to the investment process at SoFi (16:35), Ms. Young begins with her assessment of the macroeconomic cycle and whether the market is reflecting that assessment or reflecting something else. If inconsistencies arise between macro and market signals, she says, “in my head it means one of the two is wrong. One of these two data sets is sending the wrong message or the timing is off and then you try to figure out what’s happening.” She warns (21:12) that investors have become conditioned to expect troubles in the capital system will be corrected by an “open-ended insurance program” underwritten by fiscal authorities and central banks. “OK, rates are now up, but (people’s thinking goes) we have this sort of never-ending punch bowl of stimulus if something ever goes wrong. In my eyes, that’s probably the next thing that can’t last forever.” While some observers have theorized the absence of a long-telegraphed recession points to a soft landing, Ms. Young points to historical data (24:23), noting the economy has only recently neared or crossed the average time lags between leading indicator warnings and the advent of recession. Mr. Sherman agrees, adding that even when such average time gaps are crossed, volatility around the average could allow for further delay before the next contraction begins.
DoubleLine Deputy CIO Jeffrey Sherman and Portfolio Manager Samuel Lau welcome Matt Forester, CIO of BNY Mellon Advisors, to The Sherman Show. Mr. Forester kicks off the episode by discussing the recent branding shift from Lockwood Advisors to BNY Mellon Advisors and the opportunities it will provide to the firm, which oversees about 550 strategies that it can provide to clients (0:53). Mr. Forester then shares his macro and markets outlook, including where we are in the cycle (8:08), how the Fed’s fight to lower inflation is going to get tougher the closer it gets to its 2% target rate (9:22) and what he calls the frenzy into AI stocks (11:10), which they then take a deep dive into. Mr. Forester notes that the companies that made money from the creation of a national electrical grid in the 1920s and the launch of the internet in the 1990s were not the beneficiaries of these productivity-enhancing technologies. “I suspect we’re there again, that the companies that are now leading the charge are not the same ones that are going to emerge,” he says. The three also discuss the hype around AI (13:44), and what these kinds of tools might mean for the investment world when everyone is using them (18:34).
They round out the episode with talk on recession probability (23:13), the pitfalls that Mr. Forester sees out there (29:07), his thoughts on asset allocation (33:41) and what the fiscal response mechanism could be in the next recession (37:19). On the latter Mr. Forester says, “I don’t think fiscal policy is going to be a big tailwind for markets for quite a long time. We’ve just got a really big hole to dig out of.” This episode was recorded July 17, 2023.
Jeff Mayberry, Portfolio Manager on DoubleLine’s Macro Asset Allocation team, on July 10, gets graded by Jeffrey Sherman and Samuel Lau on his forecasts for 1H2023 and shares his outlooks for the second half of the year. Jeff Mayberry gets a win on his prediction on federal funds rate hikes (2:44), shared on the Sherman Show at the beginning of the year. The podcast hosts ask him for his take on the June jobs report (5:18), which for the first time in 15 months came in below expectations. “Maybe you’re starting to see some cracks in the labor market,” he says. Mr. Sherman notes that, contrary to market expectations that tightening credit conditions would take a bite out of employment, manufacturers have continued to add jobs while “restocking of the services sector” has added payrolls in that part of the economy.
One loss on Jeff Mayberry’s midyear scorecard (8:05) was view that the 10-year Treasury yield would not exceed 4% in 1H2023, although he did correctly predict that yield would settle into a higher range. The yield on the two-year Treasury, he thinks, could reach 5% (9:50), although he continues to watch out for labor market deterioration, which would send that yield lower. Mr. Mayberry’s 10% allocation to Treasury bills (11:56) proved a winner. He is keeping on his fixed income allocation for 1H2023 through 2H2023. That deployment forms a barbell between higher-yielding credit and longer-duration Treasuries, the government allocation aimed at offsetting a future widening of credit spreads if the economy enters recession.
Messrs. Sherman and Lau give Mr. Mayberry a “solid win” for his bullish call on technology stocks (15:50), the best-performing sector of the S&P 500 year-to-date. One losing theme turned out to be his favoring commodities (18:16), which among other headwinds had to contend with China’s failure to re-open its economy. The hosts and guest discuss the macroeconomic outlook for the United States. Amid weakness in manufacturing but resilience in services, and low unemployment (21:18), Jeff Mayberry expects the Fed to keep rates elevated the remainder of 2023. “The Fed doesn't want to say they want a recession,” he says. They don't want to say they need unemployment to rise, they need wages to fall, but they do in order to get inflation back down. That's what they're going to be focused on: wages and the labor market overall.” If the economy remains resilient, he expects the Fed to raise rates in 2H2023.
Mr. Sherman and Mr. Mayberry agree that the resumption of student loan payments (28:11), coming after three years of forbearance, could become a new headwind for the economy. “That's going to hurt consumers, it's going to hurt consumption” in some households, Mr. Mayberry says. However, he describes the odds of recession this year as “very low.” Notwithstanding that outlook, he advises preparing for trouble now by including longer-duration Treasuries in one’s portfolio (35:07). “If we're not getting a recession this year, you still want to have that barbell side, that flight-to-safety side, your long-duration Treasury side to kind of take some of the edge off of the spread-widening that would occur before a recession comes.”
The discussion turns to Mr. Mayberry’s outlook for emerging market and developed market ex-U.S. equities (39:25), cryptocurrency (41:08) and overall asset allocations, including cash and credit (42:23). As for fixed income, he would “avoid the investment grade credit market at 130 basis points over. I'd rather just go more high yield, more bank loans, more emerging markets, and then Treasuries to give you that duration. So one third in Treasuries, two thirds in credit.” As for U.S. equities (43:21), he does not expect the S&P 500 to match its performance in the first half of the year, and he advises some diversifying away from the market-cap-weighted large-cap index into other areas of the stock market, including mid- and small-cap stocks and value stocks.
Robert Cohen, head of DoubleLine’s Global Developed Credit team, discusses navigating the waters of investment grade and high yield corporate bonds and leveraged loans as these markets enter the late stage of the economic and credit cycles. He speaks June 9, 2023, with DoubleLine’s Jeffrey Sherman and Samuel Lau.
“We’re in a period, probably the greatest period in the last decade, where credit selection matters,” Mr. Cohen tells Messrs. Sherman and Lau (25:00). “It really hasn’t mattered for a long time. We’ve been in an environment where beta trades worked. So you liked an asset class, you liked high yield or you liked emerging markets, or you’re putting on these beta trades where you’re just allocating to a sector. Now we’re seeing great dispersion amongst the constituents of these asset classes, and we’re seeing that the dispersion of managers is widening because it’s all about credit selection.”
For corporate credit, Mr. Cohen defines a late cycle (3:01) as an environment in which “companies try to defend their balance sheet, so instead of raising money and borrowing more, they try to pay down their debt. That tends to be when credit conditions get tight, lenders are more strict or more discerning about the companies that they lend to. You often see credit metrics deteriorating in that environment.” These phenomena are underway, he says, amid a raft of warning signs portending recession such as the inverted Treasury yield curve and a negative year-over-year change in the Leading Economic Index. Credit markets are not pricing for a recession, but Mr. Cohen thinks the next one is coming in early 2024 if not by the end of 2023.
The next default cycle (5:47) has yet to begin in below-investment-grade corporate credit, although Mr. Cohen expects it to come with or without recession. With respect to investment grade corporates, rather than looking for the rare default, Cohen is on watch for changes in new issuance, leverage and risk-taking “as opposed to companies that are defending their balance sheets, borrowing less, paying down debt.”
The term “leveraged credit” (7:29) encompasses both high yield bonds (fixed rate) and bank debt (floating rate), both of which are below investment grade. “They work kind of in tandem with each other. There are often cases where borrowers will tap both markets for a senior secured term loan and an unsecured high yield bond,” he says. “Lately, really since the pandemic in 2020, you’re seeing borrowers tap the high yield market and loan market for both a secured loan and a secured bond.”
While leveraged credit defaults peaked at around 10% in the wake of the Great Financial Crisis (8:40), Mr. Cohen expects a lower peak in defaults if the next recession is less severe, but recovery rates on defaulted bank loans will be worse The reason? “In a prior cycle, maybe bank loans would recover 70% or 80% of their initial par value” post-default, he says. Due to a decadelong deterioration in protections for secured senior lenders, he expects “recoveries closer to 50% or even lower.” In contrast, high yield bonds (10:21), Mr. Cohen notes, appear in stronger shape than at anytime before. He cites growth in the BB share of the sector and the highest percentage of secured bonds in the sector’s history. “While the loan market has been getting worse in credit quality, the high yield market has actually been getting better in credit quality.”
Russ Ivinjack, Global Chief Investment Officer of Aon Investments, discusses, among other topics, his management of Aon’s investment manager research teams, the discipline of selecting active managers and investment strategies, and the strategic and tactical dimensions of building portfolios to perform under a range of macroeconomic outcomes. The latter include a “dark-sky” scenario more severe than the Global Financial Crisis. DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau spoke with Mr. Ivinjack on May 23, 2023.
In his role as an outsource CIO to pension plans and other institutions (4:23), Mr. Ivinjack assesses how much volatility, illiquidity and other forms of risk the client is willing to bear in the portfolio as a starting point for building a strategic policy. The next level is how to implement the strategy in the asset classes suited to the client. Mr. Ivinjack notably oversees manager research teams in equities, fixed income, liquid alternatives, private equity, infrastructure and private credit.
In terms of the current opportunity set (9:21), Mr. Ivinjack notes that in the wake of the spike in interest rates in 2022, the markets offer “a better base to build portfolios from,” with “cash earning 5% and core fixed earning about the same.” He expresses concern that, amid higher inflation than experienced in decades, economic data used to guide investing “is far less reliable than it was just three, four years ago. I joke that we used to worry about the 0.1% difference in GDP or inflation, and now we’re worrying about one, two, or three percentage point differences in the reads that come out, and that causes much more volatility in portfolios.”
This necessitates (10:26) “numerous strategic studies with our clients, walking through those scenarios we call blue-sky scenarios, recessionary scenarios, stagflation or even dark-sky scenarios so they can gauge what’s the right portfolio to implement.” He defines a dark-sky scenario as “more or less a depression” involving “significant negative growth,” causing “significant impairment on financial assets in clients’ portfolios over a fairly short period of time.”
Mr. Ivinjack describes his teams (21:44) as “very disciplined about rebalancing, so we set targets,” rebalancing back within allocation ranges when they are exceeded. This is key in the direction of cash flows. “And we’re market aware about where valuations are. We will take that into account in terms of where to deploy new cash coming or where to take money out. That disciplined, I would say somewhat boring, approach has worked incredibly well over the last 10 years.”
Another issue Mr. Ivinjack calls to investors’ attention (23:57) is the concentration of risk in today’s financial markets. “If you pull back the S&P 500, it’s far more concentrated than what is five or 10 years ago. Pull back the investment-grade indices, you’ll see they’re more concentrated than they were years ago. Investors need to recognize where their unintended risks lie. People like to wring their hands about a 25 basis point position in certain securities when, frankly, their exposure to Apple is five times that, 10 times that in some cases.” On the subject of manager research and hiring managers (25:26), he looks for stable firms, philosophy and approach, “but the key thing is they’re matching up with their philosophy and process and what their advantage is – so making sure those two stick together. Obviously, we spend a lot of time understanding the people who manage the money. It’s a lot of time on Zoom calls, in-person meetings. It’s monitoring portfolios even before we invest with them to know what they’re saying matches their actual actions.”
DoubleLine Deputy CIO Jeffrey Sherman and Portfolio Manager Samuel Lau welcome StoneX Director of Macro Global Strategy Vincent Deluard to The Sherman Show. Mr. Deluard begins the episode by sharing how his passion for collecting actual paper money and coins before getting into his career in finance, working at StoneX and teaching at Saint Mary’s College. Messrs. Sherman, Lau and Deluard then get into, among other topics, Mr. Deluard’s nonconsensus calls including his recession doubts (8:29), why he feels a certain level of inflation is accretive to the economy (12:04), why he thinks the government doesn’t need to balance its books (15:17) and where the 2% target for inflation comes from (20:00). On the topic of the federal government balancing the books, Mr. Deluard says, “I’m not arguing that we should just spend the way like Venezuela or Argentina does, but the notion that we need to balance the books is wrong. At the end of the day, it’s a tradeoff.”The three also discuss how the Fed’s QE policy led to its current tough talk on inflation (24:50), why Mr. Deluard believes we can sidestep recession in 2023 (28:52), why we should let capitalism work out the banking dilemma (32:33) and Mr. Deluard’s thoughts on allocation (34:46), including commodity positioning (39:07) and lightening up on duration (42:14). This episode was recorded May 22, 2023.
DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau welcome J.P. Morgan Chief U.S. Economist Michael Feroli to The Sherman Show. Mr. Feroli kicks the episode off by recounting his educational transition from philosophy to finance and his employment transition from working at the Federal Reserve Board, when Alan Greenspan was chair and Ben Bernanke was a board governor, to the private sector for J.P. Morgan (2:53). Mr. Feroli then addresses topics including the potential disconnect between financial markets and the real economy (5:42), the lag this cycle between the Fed’s interest rate hikes and their impact on the labor market (10:03), the interplay of financial stability and monetary policy in the Fed’s response to the banking crisis (17:03) and the possibility for immaculate (painless) disinflation (20:09). “Can we get back to 2% without a recession?” Mr. Feroli asks in regard to hitting the Fed’s annual inflation target. “The models would say probably not.”Messrs. Sherman, Lau and Feroli also discuss, among other topics, what a slowdown in credit could mean for smaller businesses (28:06), fractional reserve and narrow banking systems (32:02), the hunt for a magic regressor signaling recession (41:27) and Mr. Feroli’s concerns over how the debt-ceiling standoff in Washington could go down differently this time – in a bad way (44:32). This episode was recorded May 4, 2023.
Morris Chen, head of DoubleLine’s Commercial Mortgage-Backed Securities (CMBS) and Commercial Real Estate Debt (CRE) team, on April 18, 2023, discusses the merits of his asset class with hosts Jeffrey Sherman and Samuel Lau. He describes CMBS-CRE both as a timely investment in the wake of repricing in 2022 and as a strategic portfolio allocation. With a primary focus on bonds rated A to AAA, Mr. Chen takes listeners behind the news headlines of defaults by commercial mortgage borrowers (2:39). In many cases, he says, these defaults, which began in 1Q2023, represent serious problems, especially in office mortgages, but have obscured healthy fundamentals in other property types. Many of these represent borrowers following necessary protocols to open the process of negotiations with lenders ahead of actual maturities. Often the better outcome for lenders will be maturity extensions and changes to loan covenants rather than foreclosure and property liquidation.In the wake of the Great Financial Crisis, the capital structures of high-grade CMBS have undergone significant improvement (15:13). For example, Mr. Chen notes in 2007, “AAA bond had essentially had 11% subordination, which means the bond can withstand 11% of losses before that bond is impacted, at least in terms of principal. Today, an 11% subordination level equates to a single A rated security.”Mr. Chen discusses (19:35) his team’s investment process, which includes research into the borrowers and loans securitized into CMBS; the properties securing those loans, including the tenants, utilization rates, leases and loan-to-value ratios; and bond structure. The discussion then turns to property types (26:53). Mr. Chen is most negative about office buildings. While some shopping malls are dying, other retail properties are doing well, notably grocery-anchored shopping centers. Mr. Chen and his team also are finding investment opportunities in mortgages secured by multifamily (apartments) and industrial properties.The conversation concludes (38:58) with a discussion of the place of high-grade CMBS as a strategic allocation to a diversified fixed income portfolio. Among other factors, Mr. Chen says that investment grade CMBS at present offer attractive yields compared to corporate bonds carrying the equivalent letter-grade credit ratings while providing diversification to investors’ corporate exposures. In addition to the yield pickup, high-grade CMBS is backed by real property as collateral and beneath the subordinated debt is 30-35% equity.
Ken Shinoda, who chairs DoubleLine’s Structured Products Committee and leads the firm’s non-Agency mortgage securities team, discusses his asset class and housing market outlook with Jeffrey Sherman and Samuel Lau on April 10. Mr. Shinoda discusses his path in asset management, joking that early in his career “my MBA was the Global Financial Crisis,” and his roles at DoubleLine (2:05). He delves (3:47) into the evolution of residential mortgage-backed securities (RMBS), from an asset class in the 1970s and 1980s dominated by Agency RMBS, backed by the principal guarantee of the federal government, and then the growth in the non-Agency or private-label RMBS sector in the 2000s. He then (6:52) describes the roughly $650 billion private-label sector in greater detail and the reasons for investing in it, as opposed to investing in the $7 trillion Agency sector. In exchange for taking that credit risk, he notes, “you can get paid a significant spread over Agencies today. Sometimes it’s more, sometimes it’s less. We’ve found that mixing Agencies and non-Agencies together and weighting more toward credit when spreads are really wide, less toward credit when spreads are really tight. If you actively manage that mix between Agencies and non-Agencies, you’re actually able to generate a better risk-adjusted return through time relative to if you just hold the index.” The discussion next turns to Mr. Shinoda’s outlook for the U.S. housing market (9:23). Of “the three biggest drivers of single-family home prices,” he notes (1) affordability has worsened due to higher mortgage rates and home prices. But the lack of (2) supply relative to (3) demand is “supportive of housing in the long run.” Home prices, he acknowledges “are down about 5% from the peak” in 2022. “Could we go down a little bit more? Of course. I think there’s probably still some downside pressure nationwide, but you’ve already started seeing some metros flatline, stop going down. On the East Coast especially, there’s places that are still going up in price, if you can believe it. Florida, Buffalo. There’s just a wave of people moving to that southeast area in Florida especially, that is propping up home prices, even though mortgage rates are high.” In a context of growing signs of economic weakness and recent turbulence in regional banking, Mr. Lau asks Mr. Shinoda to explain his view that the housing market, while undergoing a correction, will avoid a crash of the magnitude that occurred in the Great Financial Crisis (GFC). Noting the GFC was centered around excesses in mortgage underwriting, Mr. Shinoda says (12:51), “the market is now so much safer” because in the wake of that crisis, “there’s a lot more strict rules and regulations around mortgage underwriting” and the fact that borrowers today have significant equity in their homes.Mr. Shinoda also discusses the post-GFC regulatory landscape for non-Agency RMBS (14:05). He notes for example that risk-retention rules under Dodd Frank require issuers of certain mortgage bonds to retain 5% of the bonds for up to five years. In contrast, before the GFC, investment banks could buy loans from originators, securitize them into RMBS and sell all the exposure into the primary market. Today “through regulation you’ve got skin in the game from the issuers,” he says. “Most people who are doing these deals are keeping the equity, and they don’t want to take losses. I think that’s a second component that makes these bonds safer. Lastly, the rating agencies, the ones that got it so wrong during the GFC that had all these bonds get downgraded, they’ve gotten much stricter on what they require to call a bond investment grade, especially to call a bond AAA.”
Jen Wing, Head of Asset Management at GeoWealth, a proprietary technology and turnkey asset management platform (TAMP) to registered investment advisors (RIAs), appears March 28, 2023, with DoubleLine’s Jeffrey Sherman and Samuel Lau. Mr. Sherman asks Ms. Wing (0:59) to begin by discussing her career story in finance and how she came to specialize in due diligence on asset managers and asset manager selection. Ms. Wing then turns to explaining the role of TAMPs in general (7:56), most of which exist to serve broker-dealers, and then discusses the growing sector of registered investment advisors (RIAs) (9:43) and the story of GeoWealth, a TAMP devoted to serving RIAs. The discussion next turns (15:38) to GeoWealth’s suites of portfolio models and relationships with 40 active managers, including DoubleLine, to manage its models. While investment advisors by necessity must be cost conscious and fee sensitive, Ms. Wing notes (26:42) that by attempting to in-source all their roles, including investment management, can consume time needed to face clients and build their business. “You’ve seen a lot of this data start to come out that out-sourcers during COVID won more business and saved 10 hours on average a week by out-sourcing to investment management and usually had better investing returns.” She also explains that GeoWealth works with individual models with RIA firms to customize models to fit their business practices and then run those models for them, allowing their business to scale up.
DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau welcome Fairlead Strategies Founder and Managing Partner Katie Stockton, the first technical analysis specialist to visit The Sherman Show. Ms. Stockton kicks off the show by recounting what drew her to technical analysis, a discipline she says is best used for risk management; her accreditation as an official Chartered Market Technician; and why she launched Fairlead (2:00). The three then get into what technical analysis is (6:01), the main reason it is useful (10:43) and which asset types its most helpful in application (14:29). “It’s useful for anything that really has a price and liquidity,” Ms. Stockton notes. “It’ll be as useful for GE as it is for one of the altcoins.”They also discuss, among other topics, how Ms. Stockton works with clients who have more of a fundamental tilt (24:24), her stance on the Elliott Wave (28:02) and what she would say to young technicians getting into the business (29:35). Ms. Stockton encourages people interested in technical analysis to give part of their screen over to tracking a chart. “You’re just going to start seeing things,” she says, “whether it’s price patterns or moving averages or acting as support.” This episode was recorded March 9, 2023.
DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau welcome Ted Seides, founder of Capital Allocators, a podcast ecosystem that includes gatherings, and advisory to managers and allocators. The episode kicks off with Mr. Seides recounting how he got his start in the financial industry working for David Swensen and the Yale Endowment (2:05), what led him to podcasting (11:14) and how that decision grew into a broader enterprise that draws on his diverse experience (12:49). “I didn’t know if they’d be interested in talking,” he says of his initial interest in speaking to CIOs. “Turns out there’s a lot of reasons why they would.”The three also discuss, among other topics, how Capital Allocators advises both managers and allocators (19:01), what drives the investment decisions of allocators (24:55), new things under the sun in the industry (30:14) and the risks associated with new complex strategies being available today to the average investor (38:14). In discussing what has changed during his 20-plus years in the industry, Mr. Seides notes, “The thing that doesn’t change is an increase and drive for innovation and sophistication. If you looked at the average practitioner today, they are far more sophisticated than the average practitioner when I got started in the business.”
DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau welcome back Nancy Davis, Founder, Managing Partner and Chief Investment Officer of Quadratic Capital Management, to The Sherman Show. Messrs. Sherman and Lau, and Ms. Davis kick things off with a discussion of Quadratic’s IVOL ETF, the strategy behind it and the fund’s TIPS allocation (1:39) before moving to a broad macro discussion. Topics covered include the interest-rate swaps curve (7:30), the benchmark Agg’s composition (12:49), having to use your hands to illustrate the inverted yield curve’s directionality (19:14) and the risk of deflation (20:34). On the division in market investors’ mentality, Ms. Davis notes, “Credit and equities are behaving like maybe things are OK. The yield curve is trading like there are UFOs in the sky, and it’s like the end of the world.”In addition to talking about the pronounced division in market messaging (26:58), the three get a little nerdy over selling vol (33:11) and wonder how so little is said about the Fed’s balance sheet (35:37), and Ms. Davis shares her experience as a business owner (41:05). This episode was recorded Feb. 14, 2023.
DoubleLine Portfolio Manager Jeff Mayberry returns as a guest to share his market and macro outlooks for 2023 with DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau. Noting Mr. Mayberry gave his outlooks a year ago for 2022, Mr. Sherman reviews Mayberry’s score card (1:15) for the year gone by. Among those 2022 calls, one of Mr. Mayberry’s most contrarian forecasts (4:28), which proved to be true, was the Federal Reserve would tighten a lot without weakening the labor market. This episode was recorded Jan. 19, 2023.Turning to the future, the discussion goes into Mr. Mayberry’s expectations for the Fed’s rate-hiking campaign (4:45). Mr. Sherman (6:51) asks about the divergence between market pricing and the Fed’s forward guidance on the fed funds rate, which leads to Mr. Mayberry sorting out the market mechanism as a “probability machine.” The discussion eventually takes up the idea (13:36) that the Fed follows the bond market, especially the two-year Treasury yield, and to what extent, if any, the Fed can push back against market-priced expectations.With the December prints of the Personal Consumption Expenditures Deflator due Jan. 27, Samuel Lau notes that Fed Chair Jerome H. Powell’s preferred inflation metric, the Core PCE Deflator, has been falling (15:11). He asks what will the Fed do if that gauge falls below the current fed funds rate? Mr. Sherman asks his guest (20:06) for areas of the fixed income universe where investors are getting paid to take credit risk and areas to avoid. While people are focused on the Fed’s management of the fed funds rate, the discussion notes (30:50) that the Fed has quietly been pursuing another path to tighter financial conditions: balance-sheet reduction, aka quantitative tightening (QT).
Charles Payne, financial author, Fox Business Network anchor and principal of independent research firm Wall Street Strategies, discusses with hosts Jeffrey Sherman and Samuel Lau his career, the power of financial literacy to change people’s lives, his approach to investing, and his outlook for the economy and markets. This podcast was recorded Jan. 4, 2023.Mr. Payne, host of Making Money With Charles Payne on FBN, starts (0:21) with his “two childhoods,” the first an idyllic experience in a military family, the second in a penniless household after the breakup of his parents. “I was sort of thrust at 12 years old into a position of having to help” the household finances. Growing up in Harlem with his mother and two younger brothers, he self-educated himself about investing to the point where he bought his first mutual fund at 17 and his first stock, a successful investment in telecom MCI, at 18.After college and a tour in the United States Air Force, including a posting on a nuclear missile base (5:52), Mr. Payne found work in the stock brokerage industry (9:21). But in time, his passion for research and his disillusion (12:13) with the sales-driven focus of the industry led him to found Wall Street Strategies in 1991. Mr. Payne describes the buildup of his firm (13:42), preparing research at night and working as his own salesman by day until the business took off, allowing him to hire staff and open an office on Wall Street.Mr. Payne describes his guest appearance on CNBC (14:26), a journey that included a moving encounter with former professional boxer Mike Tyson, his growing presence as a market commentator on the networks and the development of his on-air style. He eventually was approached by the then-fledgling FBN. After an initial struggle, he made his regular weekday program into a ratings success.With Jeffrey Sherman and Samuel Lau, among further topics, Mr. Payne stresses (21:25) the importance of people learning to actively invest over their lifetime and not passively turning their money over to fee-collecting financial professionals. He also discusses the art of interviewing on television and how he chooses guests (25:09).Turning to markets, among other topics, Mr. Payne discusses his contrarian approach to investing (36:25), grounded on fundamental analysis but also including technical and behavioral work. He criticizes the Federal Reserve’s focus on the dubious metric of “excess reserves” (40:20), the investment opportunities he sees in China (42:12) and his expectation that the Fed will be compelled to cut rates sooner than the central bank expects (47:08).
The Sherman Show host Jeffrey Sherman, deputy CIO of DoubleLine, closes out his end-of-the-year guest tour on The Investors First Podcast, produced by CFA Society Orlando. Investors First hosts Colby Donovan and Steve Curley get Mr. Sherman’s take on the investment landscape heading into the new year, including, the price of money (4:06), inflation (6:15), whether or not he expects a Fed pivot (9:06) and where he sees opportunity in the credit markets (18:36). On 2023 being a challenging year, Mr. Sherman notes, “It’s not challenged from investing. It’s just challenged from the uncertainty and the direction that investors are going to want to tilt their portfolio.” The three also discuss, among other topics, the strength of the U.S. dollar (25:11) and expected returns for equities and fixed income (30:42). “I think it’s very easy to put a relatively high-quality credit book together that has a 6-handle yield,” Mr. Sherman says, “and it’s probably a high-6 handle.” This episode was recorded Dec. 19, 2022.
The Sherman Show host Jeffrey Sherman, deputy CIO of DoubleLine, again plays the role of guest with a visit to FEG Insight Bridge and host Greg Dowling, head of research and CIO at FEG, an institutional investment consultant and OCIO firm serving non-profits across the U.S. This episode begins with a discussion of Mr. Sherman’s podcast, including the decision to launch the show, how it boosts the profile of DoubleLine and Sam Lau’s role as the brains of The Sherman Show. Mr. Dowling then interviews Mr. Sherman on his background in math and as an educator, the importance of teaching STEM and Mr. Sherman’s transition into the finance world (5:31). “I was reading that these people on Wall Street made money,” says Mr. Sherman, who was thinking of going into academia. “They made a lot more than a professor did, and it took a lot shorter time.” The two also discuss the fixed income sector and yield’s return after a long absence (16:09), the Fed focus on fighting inflation (20:14), Mr. Sherman’s outlook on the possibility of recession (26:35) and why the Fed should step back on rate hikes (31:23).Messrs. Dowling and Sherman also talk the status of consumer strength (36:00); the U.S., its dollar and the rest of the world (39:27); and why today’s inflationary environment has sparked retro ’80s (not ’70s!) comparisons (47:05).
The Sherman Show flips the script as DoubleLine Deputy CIO Jeffrey Sherman visits The Acid Capitalist podcast, where Hugh Hendry promotes iconoclastic thinking and interviews figures from the world of investment. The episode begins with Mr. Sherman discussing his career and role at DoubleLine (1:53) before Messrs. Sherman and Hendry get into how an investment firm operates, including team composition and harnessing the talents of quirky people (6:06) so that you stand out in your industry – but not too far. “You’ve got to be sexy enough, right, to get people to have interest,” Mr. Sherman notes. “You can’t be so sexy that no one wants to come to the party with you.” They also get into the importance of nurturing junior members of a firm (12:48), the value of not just copying what your industry peers are doing (16:54) and how “ruthless” a manager has to be (22:36). “If we had some roadmap that was guaranteed to success, then we would all be on it, and probably it wouldn’t be as successful,” Mr. Sherman says about the challenges of forming an effective team.
Mr. Hendry also questions Mr. Sherman about what it is like to operate in a down environment, with the two getting into portfolio positioning when clients are understandably anxious (27:44), the outlook for 2023 (35:52) and naïve extrapolators, who try to read too much into recent history (52:48). The Fed looms large in their discussion, with both of them noting the agency’s data dependency and history of lagging responses. “The last thing is always the Fed to get it. It’s the guy at the end of the queue,” Mr. Hendry notes. “You can't wait for the Fed.”
Ashok Varadhan, Global Co-Head of the Global Markets Division, Goldman Sachs appears Oct. 17, 2022, on The Sherman Show with hosts Jeffrey Sherman and Samuel Lau. After discussing his career in markets (2:48), which began with the last protracted Federal Reserve tightening campaign (1994-1995), Mr. Varadhan assesses the current Fed’s monetary management (9:20) and shares his leading indicators for the economy (14:36). Among further topics, Messrs. Varadhan, Sherman and Lau discuss the state of credit markets (17:44), the rising cost of leverage due to quantitative tightening (22:02), the dominance of the U.S. dollar (29:54) and the possibility that equities can remain expensive and become more expensive (35:56).
Philip Huber, Chief Investment Officer of the registered investment advisory firm Savant Wealth Management, discusses asset allocation and alternative investments on Sept. 13, 2022, with hosts Jeffrey Sherman and Samuel Lau. Mr. Huber is the author of “The Allocator’s Edge: A modern guide to alternative investments and the future of diversification.” The discussion begins (1:58) with Mr. Huber’s career in asset management. Then Messrs. Huber, Sherman and Lau discuss Mr. Huber’s views on the appropriateness, risks and uses of interval funds (13:11); his use of liquid and semi-liquid alternative investments, including managed futures, diversified arbitrage strategies, floating-rate catastrophe reinsurance assets, real assets and direct lending (21:23); the importance of a core allocation to bonds, even in a time of tightening monetary policy and rising rates (24:47); Savant’s long-term tilt to value in its equity allocation (26:44); and innovations in alternative investments (31:55), including the development of true private markets for wealth managers and, in the retail space, the advent of fractionalized ownership and trading of collectibles, paintings and other illiquid assets via consumer apps.
Barry Ritholtz, Chairman and Chief Investment Officer of Ritholtz Wealth Management, appears on The Sherman Show with hosts Jeffrey Sherman and Samuel Lau, live Sept. 13, 2022, at the Future Proof Wealth Festival in Huntington Beach. Among other issues, Mr. Ritholtz discusses how investment advisers (6:46) should prepare clients for the cycles and vicissitudes of markets, attractive yields in municipal bonds (9:52) and the importance of an allocation to equities even to people who are well into their retirement.
The conversation turns to the Federal Reserve (12:09), including the flaws in models driving monetary policy. Messrs. Sherman and Lau ask their guest on his approach to building portfolios (21:30), including investment products and markets that he favors and avoids. In addition to munis, Mr. Ritholtz says (35:38), “Now to me, the best inflation hedge in the out years is going to be equities. Seems companies have the ability to pass along cost increases, or just say, ‘We don’t have any cost increases, but who is going to notice? Raise prices.’” The conversationalists discuss the long-lasting changes (39:45) remote work might bring to wages, the labor force and core urban market office real estate. Mr. Ritholtz shares how his firm (43:27) offers a spectrum of robo advisory, robo plus human advisory and full-time advisory providing the full suite of services, depending on client profile.
Jeffrey Sherman and Sam Lau welcome Brenda Vingiello, chief investment officer at Silicon Valley-based wealth management firm Sand Hill Global Advisors, to the latest episode of The Sherman Show, recorded Sept. 13, 2022, during the Future Proof Wealth Festival in Huntington Beach. Ms. Vingiello kicks off the podcast by sharing her career history and how she moved from the buy side to the advisory side at Sand Hill, where she and her team rely on the discipline from their institutional experience to guide their clients (1:30). The group then discuss what Ms. Vingiello and Sand Hill think of traditional asset classes versus the more private markets (3:53), how clients are responding to the firm’s outlook on inflation (6:58) and what the current environment means for Sand Hill clients who have retired or are getting closer to retiring (9:19). In their talk, Ms. Vingiello notes how commodities served as a “lifesaver” within Sand Hill’s diversified allocation coming into this year and how most of Sand Hill’s client base just likes traditional stocks and bonds.
Other topics covered include opportunities in the stock market (10:14), Sand Hill’s stance on the possibility of recession (11:44), the effectiveness of FOMC messaging (14:00) and putting big vacation plans on hold for the next year (16:34). In describing her relationship with clients, Ms. Vingiello says, “Such an important piece of what we do is helping people to not make a bad emotional decision at the wrong time with the market.”
Jeffrey Sherman and Sam Lau welcome Allen Sukholitsky, chief investment officer at art investment platform Masterworks, to DoubleLine’s The Sherman Show to discuss art as an asset class. Mr. Sukholitsky kicks off the discussion recounting how his background in researching asset classes led him to move from what he calls “traditional investment management” into the art space (1:30). They then get into the democratization of the art investment space (4:18), how Masterworks’ proprietary database guides its investment process (6:24), the price range the firm focuses on and why it prefers post-World War II pieces to Old Masters (10:53) as well as Damien Hirst’s Sharpe ratio – “literally close to zero,” says Mr. Sukholitsky (13:50).
Other topics covered by the group include a look at selling and momentum strategies in the art space (15:32), art’s correlation profile and performance as a portfolio diversifier (19:27) and portfolio management (26:33). On investing in NFTs, Mr. Sukholitsky says that Masterworks has not figured out how to value digital art, noting, “I’m not sure anybody has sorted that question out.” This episode was recorded Aug. 30, 2022.
Todd Rosenbluth, head of research at VettaFi, an ETF data and analytics company, joins The Sherman Show on Aug. 9, 2022. The talk with hosts Jeffrey Sherman and Samuel Lau begins (1:13) with Mr. Rosenbluth discussing his career that progressively saw him advance from client adviser to equities analyst to mutual fund and exchange-traded fund analyst to director of ETF research. Mr. Rosenbluth describes (3:08) the regrouping of ETF Trends, ETF Database, $14 billion of assets in index strategies and other business lines under the newly branded name VettaFi.
Turning to the state of the ETF world (6:53), Mr. Rosenbluth notes the U.S. market totals $7 trillion in assets, “boosted by $900 billion of net inflows in 2021. We are on pace to probably have about $600 billion of money go into ETFs this year,” which for inflows would make 2022 “the second strongest year ever.” Where the money is going (9:16) has been interesting, he says, with dividend ETFs enjoying a record year, and covered-call strategies and defensive equity strategies focused on the real estate sector also attracting assets.
After the hellish first half of 2022 for fixed income, Mr. Rosenbluth says (11:58), “Certainly tax-loss harvesting is playing a role.” But he also notes that “money is going into both the short end, ultrashort ETFs have been relatively popular,” and investment grade and high yield bond ETFs. While the ETF marketplace has been much quicker (21:21) than mutual funds to roll out niche and thematic products, Mr. Rosenbluth remains impressed by the prudence of advisers in limiting these products to the edges of diversified core bond ETF holdings.
David Wong, Managing Director and head of the Portfolio Solutions Group at Toronto- and Montreal-based CIBC Asset Management, appears Aug. 2, 2022, as a guest with Sherman Show hosts Jeffrey Sherman and Samuel Lau. Among other topics, Mr. Wong discusses the differences between the far more fragmented banking system in the U.S. versus in Canada where the “Big Five,” including Canadian Imperial Bank of Commerce (2:30), have 80% market share; $200 billion CIBC Asset Management’s history and business (3:41); his role heading the firm’s manager research team (5:35), which analyzes investment managers across the globe and the firm’s own internal investment strategies “to find the best solutions for clients that best fulfill their objectives.”
While cautioning against “over-optimized” statistical approaches that work only in a back-tested manner for evaluating investments and investment managers, Mr. Wong describes (8:26) the portfolio solutions team’s analytical process, starting with long-term forecast modeling to help determine strategic asset class allocations. “From that, there’s a bit of an optimization, a bit of an art, a knowledge and awareness of the global markets in terms of the market-cap weightings out there, what’s the opportunity set. And then we’ll supplement that with kind of that subjective assessment of where the puck might go.”
Messrs. Wong, Sherman and Lau (19:25) devote much of their discussion to the art and science of selecting individual investment managers – an endeavor Mr. Wong says that is “more effortful than people want to believe.” He emphasizes the importance of going beyond the checkbox of manager credentials to assess their humility “and that open mindedness to know when they’re wrong.” He says gaining that insight into candidate managers that can only come through direct interviews with them. “Probably the biggest thing people get wrong” in the search for good forecasters (22:58), David Wong says, “is looking at past performance and all its variants” through simplistic attribute substitution and rear-focused metrics such as active share and R^2.
Lyn Alden, founder of investment research firm Lyn Alden Investment Strategy, appears as a guest on The Sherman Show, recorded July 19, 2022, with Jeffrey Sherman and Samuel Lau. The hosts and Ms. Alden begin (0:51) with her career, which began as an engineer working in automation and aeronautics, where she developed an approach to systems analysis that carries into her work providing independent investment research for retail and institutional clients. Turning to her read of today’s macroeconomic environment (5:03), Ms. Alden says, “If you were to look at one chart for macro, it would probably be the Purchasing Managers Index. PMI cycles: You have this roughly three-year sine wave, and ever since 2021, we’ve been in a pretty clear economic deceleration.” This cyclical downturn (6:13), however, has thrown investors a “curve ball” not experienced since the 1970s: “an inflationary decelerating environment – basically, stagflation.”
Looking beyond low unemployment rates, Ms. Alden makes a case that that the U.S. has probably already entered some degree of recession. While wages have been rising at the highest pace in decades, she notes (9:24) that wage growth is “actually farther below the inflation rate than normal. In some sense, people got a pay cut in real terms.” Imagining “a different world where all those wages were higher but fewer people were employed,” she notes the existence of “different release valves for weak labor.”
Asked for her medium-to-long-term view, Ms. Alden replies (12:48), “This is on average going to be a more inflationary decade than the previous decade. But just like other inflationary decades, I think there will be higher periods and lower periods, there will be recessions, contractions, maybe more disinflationary periods, within that structurally inflationary decade.” Much of the world, she believes (17:43), has entered “a long repricing cycle.” Citing debt-to-GDP ratios of 250% in Japan, 150% in Italy and 130% in the U.S., she says, “Those bonds don’t get realistically paid back fully in real terms over the next, call it, 15 years.”
Michael Green, portfolio manager and chief strategist of Simplify Asset Management, joins DoubleLine’s Jeffrey Sherman and Samuel Lau in this episode of The Sherman Show, recorded July 5, 2020. A student of market structure for more than 30 years, Mr. Green begins with a discussion (6:04) of how Simplify tries to deliver complex exposures and strategies in the form of simplified wrappers — specifically, exchange-traded funds – that allow investment advisers to deploy them to enhance or hedge client portfolios without having to actively manage those products. “The objective of this product,” Mr. Green says (14:05), “is to give you the ability to participate [in markets] while avoiding events, or reducing the impact of events, like March 2020 or a crash of ’87 or a 2008 sort of environment.”
Turning to macro (19:04), Mr. Green makes the case that the Federal Reserve “is in the process of making a terrible mistake. I understand that embedded in the American psyche is a component of puritanism that basically says we should suffer for our sins of the past.” In seeking to reverse its past “artificial suppression” of interest rates, the Fed has embarked on a path of raising rates. Unfortunately, Mr. Green points out, the level of interest rates has little impact on excess consumption. However, interest rate levels do have a significant impact on investment, he says. Thus, the Fed’s rate-raising campaign could discourage investment precisely at a time when the U.S. needs to reinvest in itself.
“We’re experiencing supply-chain shocks that were a function of us creating supply chains that were too dependent upon China” as well as European supply chains too dependent on cheap Russian energy imports, Michael Green says (21:00). The U.S. needs to be “subsidizing the investment in infrastructure, manufacturing, energy production, transportation networks,” he says. “And the only tools we have available to us perversely work in the opposite direction.” The Fed’s raising rates will ultimately slow consumption, Mr. Green notes, but not as a function of consumer behavior in response to interest rates, which is nonexistent, but “because people are going to lose their jobs.”
The iconoclastic interview with Mr. Green extends to what he considers the popular misperception (41:28) of the Federal Reserve’s approach to combatting inflation under the lionized Paul Volcker, Fed Chairman (1979-1987). “I think the entire Volcker narrative has been completely corrupted,” Mr. Green says. “[P]eople think Volcker was this hero who decided to hike interest rates to crush inflation. That’s not what he did. Going back and understanding that is really important. What he chose to do was to actually target the money supply in a monetarist framework, stealing the ideas of Milton Friedman. That meant that interest rates behaved wildly. And so Volcker actually spent more time in his administration cutting interest rates than he did raising interest rates, but the objective was to try to keep the supply of money relatively fixed by hiking and lowering interest rates. That volatility was catastrophic for the economy.”
Ugo Egbunike, a fixed income specialist at Jane Street, joins DoubleLine’s Jeffrey Sherman and Samuel Lau on The Sherman Show during the InsideETFs conference in Hollywood, Florida. Mr. Egbunike kicks the episode off by recounting his time as a Bowdoin University undergrad with authorial aspirations and pre-med designs who would end up an econ major jumping into the then-“bleak” hiring market of 2009. (1:14) His first job at Kellogg Capital Markets introduced him to ETFs, a focus that led him to the San Francisco startup scene and Index Universe, where he was “baptized in the comforts and the benefits of passive investing, and the good that ETFs were doing.”
Topics that Mr. Egbunike discusses with Messrs. Sherman and Lau include quantifying “best” exposures amid marketing messages of “cheap cheap, fees fees” (10:52), Jane Street’s place in the ETF ecosystem (13:42), fixed income ETFs’ price-discovery function (21:42) and risk management of passive and active products (28:06). The three also cover the secondary market for Air Jordans (7:25), thematic ETFs (11:48) and the three things that Mr. Egbunike says every ETF investor should know (37:39). This episode was recorded June 1, 2022.
Michael Imerman, financial data scientist and associate professor of finance at Claremont Graduate University, appears May 9, 2022, on The Sherman Show as he winds down a sabbatical as a visiting scholar to the Federal Reserve Bank of San Francisco. At the San Francisco Fed, he has been advising a dedicated fintech group at the bank of innovations in this field and emerging risks. (Standard disclaimer: Dr. Imerman notes the views and opinions he shares here are his own and do not necessarily reflect the San Francisco Fed or the Federal Reserve system.) Starting his conversation with hosts Jeffrey Sherman and Samuel Lau (2:51), Dr. Imerman defines fintech as “the collision of emerging technologies and financial services.” While financial services providers have been using information technologies for decades, something different has been occurring over the past 10-15 years. “We’ve had tech companies, both big tech – the Google, Amazon, Facebook, Microsoft, Apple – as well as start-ups moving into this space,” he says. “These are companies that historically have had nothing to do with financial services. Over the past 10 years, they’ve moved into the space that has been traditionally occupied by the incumbents: banks, asset managers, insurance companies.” Among other developments, Dr. Imerman discusses the “shakeup” posed by “neobanks and challenger banks” (13:05), fintech lending (14:17) and the financial “incumbents catching up” with the fintech challengers (16:33). Dr. Imerman stresses importance of regulatory oversight to ensure consumer protection and manage systemic risk at a time when fintech is accelerating and democratizing accessibility to financial services (20:29). Messrs. Imerman, Sherman and Lau also discuss central bank digital currencies (31:32) and what excites Imerman most about the future of financial tech innovation: quantum computing (36:15).
Macroeconomist Zoltan Pozsar, a Managing Director in the Investment Strategy and Research department at Credit Suisse, discusses with hosts Jeffrey Sherman and Samuel Lau, among other topics, the possibilities of “ugly versus beautiful” quantitative tightening by the Federal Reserve (13:18); his expectation of scant demand for Treasuries by FX hedge buyers, foreign central banks and domestic bank portfolios once those assets start rolling off the Fed’s balance sheet (15:44); a vulnerability of the U.S. banking system to mobile retail deposits (19:36) and commodity price spikes (21:48); and non-U.S. central banks diversifying part of their forex reserves away from the dollar (36:20). The podcast was recorded April 25, 2022.
In addition to his economic training in academia and market experience on Wall Street, Mr. Pozsar brings deep experience from within the financial and monetary system itself. Before joining Credit Suisse in 2015, he served as a senior adviser to the U.S. Treasury Department, focusing on matters of financial innovation. As part of the response to the global financial crisis and contributions to the resulting policy debate, in August 2008 he joined the Federal Reserve Bank of New York. There he oversaw market intelligence for securitized credit markets and served as point person on market developments for senior Federal Reserve, Treasury and White House officials. He also worked at the International Monetary Fund where he took part in framing the IMF’s position on shadow banking.
DoubleLine’s Jeffrey Sherman and Sam Lau welcome Ellen Carr, principal and high yield portfolio manager at majority-women-owned Barksdale Investment Management and adjunct professor of finance at Columbia Business School, to discuss her book on the lack of women in investment management as well as her take on the state of high yield credit. Ms. Carr shares what drove her to coauthoring “Undiversified: The Big Gender Short in Investment Management” with Katrina Dudley (a PM at Franklin Templeton) and what they hope to achieve with the book (2:27). Ms. Carr delves into some of the factors that push women away from a lucrative financial career that offers a nice work-life balance. Among the topics she discusses are how families might inadvertently communicate to children at a very young age that investing is the purview of men (10:21), widening the on-ramp for women at the undergrad and MBA level (14:56), the psychocultural barriers that can keep women from advancing after being hired (21:00) and how employers can cast a wider net (28:57). The trio also reviews the high yield credit sector, with Ms. Carr talking about the lack of public outrage over the pandemic-driven government stimulus that effectively bailed out high yield investors versus the outcry over banker bailouts in 2008 (38:01) and how pandemic-era pressures helped clean up the sector (40:20). This episode was recorded March 15, 2022.
After a review of January market returns, co-hosts Jeffrey Sherman and Samuel Lau are joined by fellow DoubleLine portfolio manager Jeff Mayberry to discuss their outlooks for securities and ideas on asset allocation for 2022. Mr. Mayberry foresees a relatively benign economic backdrop (7:35) this the year, with positive GDP growth, particularly in the second half of 2022, and inflation likely to moderate to 3%. However, he adds, if inflation persists above 5%, the Federal Reserve would have to tighten more aggressively. Mr. Lau (17:31) observes that “inflation has been high enough, persistent enough (that) it’s made its way to wages, which are sticky. Ultimately, they’re probably going to make their way up the employment chain.” Mr. Sherman sees politics at work behind the Fed’s turn from dovish to hawkish monetary policy. “The Fed,” Mr. Sherman says, “cares more about inflation, not because of the Fed’s mandate, but because politically, that’s what the (White House) administration cares about.”
In terms of asset allocation, given a Fed so far bent on tightening and markets pricing in tighter financial conditions, Mr. Lau recommends (28:30) fixed income investors focus on quality, paring back on high yield corporate bonds in favor of investment grade corporates with strong fundamentals and less reliance on debt. He also likes floating-rate assets like collateralized loan obligations and non-Agency residential mortgage-backed securities. For an investor’s corporate exposure, Mr. Sherman likes a mix of 60% IG and 20-30% bank loans given their floating rate coupon and the rest in selective high yield names. Turning to equities (38:36), Mr. Lau expects U.S. equities to produce positive returns, but he notes that European stocks are starting to play catch-up. Mr. Lau says emerging markets equities could become a “top-performing region in 2022,” although he advises investors to practice patience, giving time for uncertainty over the macroeconomic environment and interest rates to moderate. Mr. Mayberry says (39:59) U.S. stocks, especially large-cap growth stocks, are expensive based on CAPE ratios versus European stocks. “It may be time,” he says, “to peel back a little U.S. exposure and move into Europe.” Mr. Sherman advises equity investors, especially those with heavy exposure to U.S. stocks, to “watch real yields. Real yields are what drive multiples, not nominal yields. And that’s what you’ve seen transpire. This has been a big real yield move,” which has compressed valuation multiples. This episode of The Sherman Show was recorded Feb. 2, 2022.
DoubleLine’s Jeffrey Sherman and Sam Lau welcome Jared Dillian, editor of The Daily Dirtnap market newsletter, investment strategist at Mauldin Economics, podcaster (Be Smart) and DJ (DJ Stochastic), for Mr. Dillian’s take on today’s markets and his thoughts on asset allocation. Messrs. Sherman, Lau and Dillian get into investor sentiment on inflation and market volatility (6:38), the risk tolerance of retail traders (13:34), what a Republican Congress in 2022 could mean for the economy (20:39) and where risk-averse investors should tread lightly (27:45), among other topics. In regard to austerity policies and cutting the budget deficit (23:57), Mr. Dillian notes, “The political will to reduce the deficit in the ’80s and ’90s was there. Now, nobody cares.” Other subjects include Mr. Dillian’s Theory of Constraints in relation to ESG investment (30:22) and The Awesome Portfolio, a 20% allotment each to stocks, bonds, cash, gold and real estate (33:11). This episode was recorded Dec. 9, 2021.
DoubleLine’s Jeffrey Sherman and Sam Lau welcome Bitwise Chief Investment Officer Matt Hougan for a deep dive into crypto investing. Messrs. Sherman, Lau and Hougan discuss why indexing is good in the crypto world (6:28), why crypto deserves a place in the portfolio (10:16), the impact of central bank digital currency on this emerging space (15:00) and what makes a crypto asset high quality (22:44), among other topics. The group also talks about the role of regulation in the crypto market (16:27), which Mr. Hougan sees as crucial to protect the growing industry from bad actors and bad press. “I think crypto needs some level of regulation to set it free,” he says. Other subjects covered include why bigger is better in crypto (7:35) and the crush of celebrity/meme coins (20:48). In addition, Messrs. Sherman and Lau (and Mama Lau in spirit) take up Mr. Hougan on his offer to explain cryptocurrency in three minutes, and he does so with 10 seconds to spare (30:27 – 33:17). This episode was recorded on Sept. 15, 2021.
DoubleLine’s Jeffrey Sherman and Sam Lau welcome David J. Kostin, chief U.S. equity strategist at Goldman Sachs, to talk about the dramatic comeback of profit margins (2:34), the impact of duration on investing (5:08), the demand and supply for equities (13:52), and the resurgence of retail trading (22:45), among other topics. Messrs. Sherman and Kostin also get into special purpose acquisition companies, SPACs, with Mr. Kostin detailing their nuanced appeal in the pandemic era (18:00). Mr. Lau brings up the impact of the Federal Reserve’s monetary policy on the U.S. equity market and the market’s potential reaction to a Fed tapering of asset purchases (30:20). Mr. Kostin notes that tapering is not tightening, and Goldman sees tightening, starting to hike rates, beginning in 2023. The trio also looks at the rise of ESG investing (34:50) (“E, S and G are three interesting letters of the alphabet, but they’re really not related to one another,” says Mr. Kostin) before getting into Mr. Kostin’s allocation advice (41:34). This episode was recorded Sept. 21, 2021.
Bob Froehlich, owner of the Kane County (Illinois) Cougars minor league ball club and a veteran observer of macro and markets, discusses with co-hosts Jeffrey Sherman and Samuel Lau, among other ideas, his favorable 12-to-18-month outlook for global growth and stocks (14:01, 24:32), the place for commodities in investor portfolios (22:00) and the re-imagining of corporations (31:02) as they evolve for hybrid home-office work environments and face the need to take stands on pressing societal issues.
The upbeat outlook for growth and equities comes with at least one caveat. While losing no sleep over what the Federal Reserve might or might not do (18:35), Dr. Froehlich keeps a weather eye for inflation (14:51). Rising prices, he says, form “a headwind that we really have to pay very, very close attention to because that changes the dynamics quickly for any long-term equity investor.”
As do all Sherman Show guests, Dr. Bob, as he is known especially among business executives and financial professionals in the Chicago metropolitan area, shares how he came to his career in markets and investing, a career preceded early in his adulthood with summer jobs working in Pennsylvania’s steel mills and two years playing center field for the Independent Minor League North Side Mets in the Greater Pittsburgh Semi-Pro Federation Baseball League.
The Kane County Cougars owner and CEO also talks about the business of pro baseball with Jeff Sherman, one of the San Francisco Giants faithful and, in his varsity days in Bakersfield, California, catcher for the South High Rebels. “I’ve always been a numbers guy,” Dr. Bob recalls (1:42). “So it was a natural transition for me to go from Wall Street to baseball. It’s just the type of type of numbers I focused on were way different. Instead of worrying about GDP and inflation, now I worry about attendance and how may beers are being sold on a given day. But it’s still a numbers game.”
DoubleLine’s Jeffrey Sherman and Sam Lau welcome Emidio Checcone, the firm’s portfolio manager of actively managed equity value and core strategies. Mr. Checcone shares how his history in the business, including experience at both growth- and value-focused shops, informs his investment philosophy and influences his differentiated equity research approach. He also highlights how incorporating DoubleLine’s macro viewpoints into his bottom-up research process confers added insights. The trio discusses the equities market’s performance amid the pandemic and whether we have seen “peak earnings growth” (starts at 6:01), how this period of unprecedented fiscal stimulus impacts traditional valuation metrics (11:12) and what it would mean for equities if the Fed tapers its bond purchases (14:00). They also examine the risk of inflation and even stagflation (18:24); the relative performance and attractiveness of value versus growth stocks (24:37); and current portfolio positioning within each strategy, including a discussion of some larger individual holdings (28:25). This episode was recorded Aug. 24, 2021.
Elizabeth Burton, Chief Investment Officer of the Hawaii Employees Retirement System (HIERS), discusses her management of the pension’s $21 billion in assets with DoubleLine’s Jeffrey Sherman, Deputy Chief Investment Officer, and Samuel Lau, Portfolio Manager. Among other issues, Ms. Burton discusses her objective as CIO (3:57) “to achieve our target return within the given level of risk the board sets out, which would be 7% target return…. At the end of the day, the Number One thing I have to do is protect retirement benefits.” That task, she says, is “getting more challenging,” particularly given the prospect for higher inflation. Whiles HIERS a couple years ago increased its private equity allocation from 6% to 13%, she does not anticipate a further increase given signs of froth in that asset class (17:36). “I don’t want to call a bubble here,” Ms. Burton says, “if you look at the definition of a bubble, there’s a lot of signals that might be happening.”
Regarding her macroeconomic outlook (33:54), Ms. Burton doubts inflation will be “transitory. I do think it’s a little bit longer lasting. I don’t have a ton of faith in the Fed to reign it in.” She expects the “helicopter money,” and its flow into the equity market, to persist longer than many people expect (42:38). “My concern’s more on the regulatory side. What is this administration going to do if this does go south?”
Gregory M. Dowling, Chief Investment Officer and Head of Research at FEG Investment Advisors, joins The Sherman Show. FEG is an independent investment consultant and provider of outsourced chief investment officer (OCIO) services to primarily nonprofit institutional clients throughout the United States. In this episode recorded July 27, 2021, with hosts Jeffrey Sherman and Samuel Lau, Mr. Dowling discusses among other topics how he entered his career, the quest for alpha in a time of overvalued public fixed income and equity markets, FEG’s approach to selecting active asset managements, developing individual profiles of clients to manage within their risk tolerance and time horizons, the new momentum to social awareness in client investment objectives and macro and market outlooks.
Paul Christopher, Head of Global Market Strategy for Wells Fargo Investment Institute (WFII), covers with co-hosts Jeffrey Sherman and Samuel Lau his macro outlook for growth and inflation, the case for cyclicals, small caps and value in the U.S. stock market, commodities as a current “tactical favorite,” shortening duration for fixed income allocations and the suitability of a managed allocation to cryptocurrencies for qualified investors among other topics. While Mr. Christopher suggests the reprise of inflation might be stickier than foreseen by the Federal Reserve, he does not expect a return to 1970s rates of rising prices. “Inflation is really going to go with growth,” he notes. “And if we’re at peak growth, then you have to figure we’re at peak inflation.” The WFII, he says, expects inflation settling in at 2% to 2½%. “We don’t think that the market is worried about the Fed letting inflation go too far. That’s why the Treasury curve flattened the way it has.” Thus, Mr. Christopher likes stocks better than bonds, although he still recommends some allocation to shorter duration munis, corporates and preferreds to provide some ballast against the volatility of equities. This edition of the Sherman Show was recorded July 13, 2021.
Entrepreneur, author, philanthropist and world-famous life and business strategist Tony Robbins joins DoubleLine’s Jeffrey Sherman and Samuel Lau for a special edition of “The Sherman Show.” Perhaps best known for his efforts to empower millions of people through his audio programs, educational videos and live seminars, Mr. Robbins also owns through his holding company more than 100 businesses with annual sales of $8 billion. He has been honored by Accenture as one of the Top 50 Business Intellectuals in the World; Harvard Business Press as one of the Top 200 Business Gurus; and American Express as one of the Top Six Business Leaders in the World. In a cover article on Mr. Robbins, Fortune magazine named him the “CEO Whisperer,” and he has been named in the Top 50 of Worth Magazine’s 100 most powerful people in global finance for three consecutive years.
Among other topics in this episode, Mr. Robbins discusses his daily morning mindset and physical-conditioning regimens to prepare him for the day ahead, modeling super-successful people to uncover the clues to their success and the three fundamental pieces to the creation of businesses that thrive for the long term. In his conversation with Messrs. Sherman and Lau, Mr. Robbins shares moments from his life as a child and as a young man that transformed his understanding of life. Among these, the direct experience of communism during a tour at age 23 of the Soviet Union opened his eyes to the creative power of free enterprise. And at age 8, at a time when his family could barely afford to feed itself, he tells how the kindness of a grocery deliveryman showed him some people do indeed care for the lives of complete strangers. That epiphany would grow into a philanthropic campaign that feeds millions in the U.S., and one day, Mr. Robbins believes, billions of people around the world.
DoubleLine’s Jeffrey Sherman and Samuel Lau welcome highly rated and much awarded analyst Jim Reid, Deutsche Bank Global Head of Credit Strategy and Thematic Research, to “The Sherman Show,” recorded June 15, 2021. The inflation debate quickly takes center stage, and Mr. Sherman praises Deutsche’s analysis for putting out both the transitory view and the higher-over-time perspective. Mr. Reid says that in his 17 years doing Deutsche research, he’s never experienced such as divisive subject. The bottom-up numbers support the transitory view, he says. However, other analysts on his team see a structural change going on that while hard to model points to a new economic orthodoxy “that is quite tolerant toward both high government spending and money printing.” The trio also discusses, among other topics, if debt still matters, whether the boom-bust cycle is over, pricing power and wage pressures, and will the Fed be stuck holding its large balance sheet forever. On that last subject, Mr. Reid says, “I’ve had a longstanding view that central banks will be buying government bonds for the rest of my career,” as the once extraordinary use of QE measures has become ordinary.
Lori Heinel, global chief investment officer at State Street Global Advisors, joins this episode of “The Sherman Show” in a wide-ranging discussion of State Street’s tactical investment allocations, the evolution of institutional and retail investing, the place of commodities and alternatives in portfolios, cryptocurrencies and blockchain, State Street’s organizational and decision-making evolution in a post-COVID-19/remote working world, and other topics. This episode was recorded April 20, 2021. Ms. Heinel oversees SSGA’s investment capabilities from index funds and exchange-traded funds to active, multi-asset class solutions and alternative investments. She leads an investment team of more than 600 professionals.
Louis Gave, founding partner and CEO of @GavekalResearch, tells DoubleLine’s Jeffrey Sherman and Samuel Lau that the price shifts of three key assets is not a “dead-cat bounce” but “the start of a new trend” in markets that will require investors to make fundamental changes in portfolio allocations if they are to succeed. Hong Kong-based Gavekal Research provides research on global macroeconomics, financial markets and asset allocation. This episode of “The Sherman Show” was recorded on April 6, 2021. In the past three to five years, Mr. Gave observes, the markets have been priced to a “structurally rising dollar. I think this is now over. We’re now in an environment of a structurally weak dollar. We were in an environment of bond yields that were flat to down. In the past six months, we are now in an environment of bond yields moving higher. We were in an environment really since 2013-14 of falling oil prices, and I also think this is over. So this means the investment environment is changing before our eyes.” As a warning sign that U.S. policy is out of balance, Mr. Gave points to a moribund dollar despite a backdrop of rising Treasury yields, recovering U.S. economic growth and the country making better progress than most of the rest of the world in vaccinating its population for COVID-19. “The market is telling me that the policy settings in the U.S. are way too loose, both on the fiscal side and the monetary policy side.” Mr. Gave suggests that massive debt-financed fiscal deficits in fact mean the Treasury issuance has outstripped foreign investors’ and U.S. savers’ appetite for bonds and “captured” the Federal Reserve as the incremental buyer for the foreseeable future. Summing up some of the implications of this context for investors, Mr. Gave says, “You’re in a structural bear market on the U.S dollar. You’re in a structural bear market on bonds. And you’re in a structural bull market on energy.”
DoubleLine’s Jeffrey Sherman and Samuel Lau welcome political risk expert Lawrence McDonald, a New York Times bestselling author and regular contributor to CNBC, to “The Sherman Show.” Mr. McDonald is the creator of a finance and politics talk show on RealVision and The Bear Traps Report, a research platform with actionable trade ideas, which he serves up in this episode, recorded March 23, 2021. In addition to tips on shaping your portfolio, Messrs. Sherman, Lau and McDonald discuss the possibility of a supply-side squeeze in commodities, the Federal Reserve addressing inequality by a refocus from supporting assets to boosting the labor force and trillions moving out of tech stocks into value stocks. Of that equity shift, Mr. McDonald says, “I’ve never been more certain about a high-conviction thesis than this.” He also anticipates the Democrat-controlled Congress in the fourth quarter will use the reconciliation process to pass another trillion-dollar measure in the form of an infrastructure bill, widening already historic debt. As far as the Fed instituting yield curve control, Mr. McDonald sees it as inevitable while Mr. Sherman is skeptical Fed officials want to go down that slippery slope.
Alex Shahidi and Damien Bisserier discuss risk parity versus equity-centric and “crystal-ball” investing, the hazards of the 60-40 stock-bond allocation, crypto as a diversifier to gold, the reasons to hold Treasuries even at today’s low yields, the lessons of financial market history and other topics in this episode of “The Sherman Show” hosted by DoubleLine’s Jeffrey Sherman and Samuel Lau. Mr. Shahidi is Managing Partner and co-Chief Investment Officer at Evoke Advisors, a $20 billion registered investment adviser. Mr. Bisserier is also a Managing Partner and co-Chief Investment Officer at Evoke. The discussion was recorded on March 9, 2021.
DoubleLine’s Jeffrey Sherman and Samuel Lau welcome Richard Bernstein, CEO and chief investment officer of Richard Bernstein Advisors, to “The Sherman Show,” recorded on Feb. 22, 2021. The discussion kicks off with a reference to Mr. Bernstein’s 2001 book, “Navigate the Noise: Investing in the New Age of Media and Hype,” in which he writes about the tech bubble and how investors were being guided by secular stories and not fundamentals. “Buying a green pepper on the internet was technology, but building a fighter plane was not,” he recalls of some investors’ mind-set at that time. Mr. Bernstein sees that hype dynamic operating today at higher levels to the benefit of 30% of the equities market while opportunities in the other 70% are ignored. Among other topics, Messrs. Sherman and Lau get Mr. Bernstein’s thoughts on the difference between the stock market and a horse race: “It’s not like you’re betting on a horse, it’s like you’re buying a horse”; bitcoin: “It’s kind of loony”; and SPACs: “People have enough trouble understanding companies that do have fundamentals. I don’t quite understand why people would buy stocks of companies that have nothing. … Call me crazy on that one.”
“The Sherman Show” guest Grant Williams brings his wide experience across asset classes and the world’s financial centers to this Feb. 8, 2021, episode with DoubleLine’s Jeffrey Sherman and Samuel Lau. Mr. Williams is a senior advisor to Matterhorn Asset Management AG in Switzerland, and a portfolio and strategy advisor to Vulpes Investment Management in Singapore. He is a co-founder of Real Vision, an on-demand internet-based financial media platform, and writes the newsletter “Things That Make You Go Hmmm.….” In his more than 35 years in the financial markets, Mr. Williams has worked in postings to London, Tokyo, Hong Kong, Singapore, Sydney, New York and the Cayman Islands.
Amid market bubbles spurred by massive deficit spending and central bank monetary stimulus, Mr. Williams foresees the need to both hold cash against the ultimate bursting of those bubbles and to stress-test portfolios for inflation scenarios. “I wouldn’t shy away from starting to nibble at inflation trades even though they may not work for the near term,” he says. The prospective return of inflation “is arguably the most important secular change that we have to deal with in the last 40 years.”
Another secular change to prepare for, according to Mr. Williams, is value stocks breaking their long underperformance relative to growth and momentum stocks. “A few value managers that I’ve spoken to are starting to see people making inquiries, they’re starting to see inflows. That tells me that there could be a tremendous tailwind to that trade because value is so unloved at the moment.… You just have this beautiful setup where there are some great companies and great sectors that are really, really downtrodden and sold-out, and nobody wants to own them.”
Among the greatest and most-underappreciated risks in the present environment, Mr. Williams points to societal and political volatility as well as market volatility. “We are at a time where suppressed volatility is everywhere, and anytime you suppress volatility, at some point, … it’s going to explode.” After decades of the hollowing out of the middle class amid wealth creation that has privileged the people fortunate to be born in the 1960s, the millennial generation, whose leading edge is approaching age 40, is on the cusp of taking political power from the baby boomers. Having missed out on the wealth creation of the last two decades, he expects millennials elected to office to “make things right for their generation” by enacting policies redistributing that wealth.
Gerard Minack, founder of Minack Advisors, joins DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and Portfolio Manager Samuel Lau to discuss his global macroeconomic outlook and asset allocations. With U.S. stocks at or near record valuations, Mr. Minack also observes “so much good news is in the price. The consensus is so tightly clustered.” Even after stripping out the FAANGs and Microsoft, he regards U.S. stocks as expensive. These are among the factors behind his outlook for U.S. equities to underperform other equity markets.
Developed economies are on the cusp of reflation, which among other influences would serve as a further “carrot” to attract capital into non-U.S. stock markets. Mr. Minack describes a world shifting from “three decades of monetary-policy dominance to a new era of fiscal-policy dominance,” with “large, sustained fiscal deficits where central banks are playing a backstopping, supportive role” by monetizing most of those deficits. The catalyst for this sea change is the COVID-19 pandemic.
Broadly speaking, with respect to equities, Mr. Minack favors cyclical companies with operational leverage, especially in Japan, Europe and emerging markets. Among his industry themes, he likes the “beat-up goods producers,” including “conventional car makers” (not necessarily Tesla), construction companies and miners. “They’re all very cyclical, and the cycle looks very strong.” He also believes the commodity take-off of the last nine months has more room to run.
DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and co-host Samuel Lau with Portfolio Manager Jeff Mayberry conduct a brief recap of markets in 2020, then they turn to market expectations for 2021, and market pricings as well as possible mis-pricings. They note that Wall Street consensus estimates 1.8% for inflation in 2021 and a year-end yield of 1.3% for the 10-year Treasury seem at odds with the average sell-side forecast of 4.3% real gross domestic product (GDP) growth for the calendar year. Other topics discussed are the risks of the Federal Reserve mismanaging monetary policy amid the unknown path of the COVID-19 pandemic, limits on the utility of further asset purchases by the Fed, improvement and risks in the labor market, and the future of America’s damaged small-business sector. This episode of The Sherman Show was recorded Jan. 13, 2021.
“Wall Street is very quick to ratchet up GDP, they’re quick to ratchet up earnings estimates, anything that’s pro-growth,” Mr. Sherman says. “But even for all the talk of inflation going up, it’s shocking for me to hear that most people are essentially anchoring that to a 2% number.” Mr. Lau replies that perhaps Wall Street has a “fool me once, fool me twice mentality” after inflation’s repeated failure to accelerate despite past forecasts calling for higher prices.
With respect to sell-side analysts’ possible complacency regarding Treasury yields, Mr. Mayberry says Wall Street is counting on the Federal Reserve. “Markets are thinking that if we get too high of rates, it starts to affect equity markets, and you could start to see the Fed step in. Maybe not necessarily [with] explicit yield curve control, but pick up the pace of their purchases,” he says. “They’ve said they’re going to buy at least $80 billion Treasuries a month and $40 billion mortgages a month. The key word there is at least,’ so what they’re saying is,We can buy more.’ If rates go up to a place where the stock market as the risk barometer starts to feel a little bit shaky, they could pick up their purchases, and that will keep rates capped at a certain level.”
DoubleLine Capital’s Jeffrey Sherman and Sam Lau welcome Dr. Ben Hunt, co-founder and chief investment officer of Second Foundation Partners, and creator of Epsilon Theory, a newsletter and website that examines markets through the lenses of game theory and history. This episode was recorded on Dec. 15, 2020. Messrs. Sherman and Lau and Dr. Hunt discuss, among other topics, market narratives versus market fundamentals, common knowledge versus public knowledge, fiat news versus fake news and the value of working on social issues on the community level.
Dr. Hunt explains the focus of his professional career for 35 years: How are we as social animals, particularly in this biggest game in the world, public equity markets, systematically impacted by the messages and words we hear? And, why has that become a much more important driver of what happens in markets than anything to do with fundamentals? As an example, he cites Marc Benioff of Salesforce.com framing the firm’s quarterly performance by using the firm’s own metric “pro forma net revenue growth” to great effect. These types of executive performances take advantage of the 24-7 “news channels,” such as CNBC, which do not have a lot of fundamental financial news to cover every day. In response, to fill the time, you have a series of people come in and present their opinions as if they were news (“What’s your story about this sector?”). According to Dr. Hunt, it’s a “constant flow of what I like to call fiat news. It’s not fake news, but it’s opinion presented as if it were news.”
Abetting this dynamic, says Dr. Hunt, is a change in technology with “dopamine machines” that we are hardwired to respond to. They include “the dopamine machines that we all carry around in the form of our smartphones that present us this megaphone in our ear” that delivers narratives. There are also the always-on trading vehicles, such as Robinhood, that you treat like a game. “It really is a dopamine machine, right? … ‘Oh, you’ve mastered your first equity trade. Want to level up and try some call options?’”
DoubleLine Capital’s Jeffrey Sherman and Samuel Lau welcome Charles Schwab Senior Vice President and Chief Investment Strategist Liz Ann Sonders to “The Sherman Show,” recorded on Dec. 10, 2020. Messrs. Sherman and Lau speak to Ms. Sonders about market momentum and investor sentiment, and the impact of new, often younger retail investors on each; growth-value rotation; and how her optimism has been buoyed by human ingenuity in the face of COVID-19, among other topics. Mr. Sherman says there is no difference between retail and institutional investors when in the latter case it is still individuals making decisions influenced by sentiment. Ms. Sonders agrees, noting that retail investors are often classified as contrarian or so-called dumb money indicators, but dumb money has been optimistically positioned since March and for the most part has been right. Mr. Lau brings up the traditional 60-40 portfolio allocation between stocks and bonds, respectively, and wonders if a move to an 80-20 or even higher split might be warranted for retail investors in today’s environment and how often they should be reviewing their allocations. Ms. Sonders is doubtful that there is an “average retail investor” to be coached since there are so many factors that should be guiding portfolio composition including an investor’s age and emotional risk tolerance. In regard to rebalancing portfolios, she sees many investors rebalancing based on the calendar and would prefer it to be driven more by portfolio, volatility or rotation. This would force investors to do what they are supposed to do, which is not so much “Buy low, sell high,” but “Add low, trim high.”
James Grant, founder of Grant’s Interest Rate Observer and author of the biography “Bagehot,” the life of times of the muse of modern central banking (published in 2019), returns to “The Sherman Show” to discuss, among other topics, paradoxical market valuations, why the Federal Reserve is “a clear and present danger to your wealth,” the threat of central bank digital currencies to liberty, the accelerating “heretical union” of monetary and fiscal authorities, and the prospects for an acceleration in the rate of inflation. This discussion was recorded Nov. 17, 2020. Among his greatest market preoccupations, Mr. Grant tells podcast hosts Jeffrey Sherman and Samuel Lau, is the fact that “the world is in love with sterile securities … that pay you just about nothing. … The world’s central banks are pledging to depreciate or debase the currencies in which these ultra-low-yielding claims are denominated, and still we collectively can’t seem to get enough of them.” In a time of the Fed rapidly expanding its activities beyond its charter, Mr. Grant, a historian of the central bank, notes that Fed mission creep began almost from its beginning. “The Fed opened its doors in 1914,” Mr. Grant notes, “and within three years the United States was at war, and the entire business model of the Fed was turned upside down, and the Fed began doing things that the founders had never contemplated. It lent against the collateral of Treasuries in the banking system. It monetized debt hand over fist. It did everything that Carter Glass, the progenitor of the Fed, promised it would never do.” What at the Fed should shock us today? “That Jerome Powell, the chairman of the Fed, came out and said something about working `side by side’ (I think that was the phrase) with the Treasury. Every gold bull cocked his or her ears. We could not believe it because the chairman was advocating another breach of monetary best practices, namely, the separation of fiscal church from monetary state. In other words, the overt monetization of the public debt.” Central bank digital currencies (CBDCs) under study at the Fed and other central banks could endow government with “unlimited snooping power,” Mr. Grant warns. His “foremost objection” to CBDCs “is the nose of the camel under the tent of liberty. Why wouldn’t the government use digital currencies to abolish paper currency? Why wouldn’t it come to know how we are spending our money and where we have stashed those Krugerrands in expectation of a possible acrimonious divorce (although about that personal risk I assure you I wouldn’t know)?” People at the Fed “are idiot savants,” Mr. Grant tells Messrs. Sherman and Lau. “They know nothing about the past. Their entire focus is on their models and recent precedent. If you look at the scholarly citations in the back of any of the Fed position papers, the oldest citation goes back only as far as, say, 2010. They have no historical framework. They believe that they control events. No, events will presently control them because events are a little bit like the coronavirus. They are unpredictable. They are sometimes quite benign, but they are sometimes malevolent.”
Famed economist Ed Yardeni joins this episode of “The Sherman Show,” where he discusses, among other topics, the importance of monetary policy for stock and bond returns, the risks of the traditional 60-40 stock-bond allocation given the outlook for near-zero interest rates and the compromising of the Federal Reserve’s independence. Dr. Yardeni is President of Yardeni Research Inc., a provider of global investment strategy and asset allocation analyses and recommendations. The podcast was recorded Oct. 27, 2020. Dr. Yardeni calls Jerome Powell a “pragmatic pivoter,” given the willingness of the Chairman of the Federal Reserve to reverse himself on policy. For example, Dr, Yardeni notes that Powell has gone from being a hater of Modern Monetary Theory to its “No. 1 implementer.” While Powell is prepared to continue with unprecedented asset purchases, in Dr. Yardeni’s view, the Fed chairman probably won’t go so far as to implement negative interest rates, given the poor outcomes such policies have produced in the eurozone. One victim of the Fed’s new embrace of fiscal activism is probably the central bank’s independence. “Of course, over the years,” Dr. Yardeni notes, “presidents have on occasion tried to bend [the Fed’s] arm and get them to do policy their way. I think Arthur Burns caved in to Nixon a few times. But all in all, the Fed has maintained its independence. But now, too, for the Fed to, on a regular basis, be calling for more fiscal stimulus crosses that line. And that means that its independence, I think, has been somewhat compromised. As you know, President Trump several times urged Powell to lower interest rates, and Powell basically resisted and implied that he was going to remain independent. But circumstances changed. And basically Trump got what he wanted with low interest rates.”
DoubleLine Capital’s Jeffrey Sherman and Samuel Lau welcome back SkyBridge Founder and Co-Managing Partner Anthony Scaramucci and his trademark color and candor to “The Sherman Show,” recorded on Oct. 27, 2020. With one week to go before the Nov. 3 elections, Messrs. Sherman and Lau speak to “the Mooch” about the potential challenges to casting and counting votes, the path to an Ivanka Trump presidency (it’s shorter than you might think) and the timeline for improving the labor market (it’s longer than you might think), among other topics. Mr. Scaramucci is firmly in Joe Biden’s corner and believes he will win the White House, an outcome Mr. Scaramucci says is crucial for he sees a second term for President Trump further undermining democracy in the U.S. On the financial front, the Mooch talks about the attraction of Bitcoin in an era of Modern Monetary Theory and how cryptocurrency has led to a war between libertarians on one side and socialists and communists on the other side.
Ivy Zelman, CEO and co-founder of Zelman & Associates, speaks with “The Sherman Show” hosts Jeffrey Sherman and Samuel Lau on the state of the multifamily and single-family housing markets and her outlooks for these asset classes. Founded in 2007, Zelman & Associates provides research, analysis and advice about the U.S. housing market and related sectors to investors and business leaders. This edition of the podcast was recorded Oct. 12, 2020. Of the various housing subsectors, single-family housing is where Ms. Zelman sees the most-attractive investment opportunities. She is not advising investors to put capital into multifamily housing. Single-family housing is not without risks. Ms. Zelman is starting to see topping signs in some areas where builders are buying land at prices that don’t pencil out. While C-suite executives in housing-related businesses foresee “several years” of growth, she says her firm expects “year-over-year declines in existing-home sales, declines in new-home sales and housing starts” in 2022. “Builders right now are aggressively raising prices. They’re buying land more aggressively. And it just feels like something could go wrong. But the whole contingency is rates, in my opinion. Rates stay low, we’ll probably start to see some relative slowing in 2021 or 2022, but the builders might push too far in price, and that could slow things down even faster.” Ms. Zelman warns that some investors are acting on a bullish big-picture view without understanding “the local market dynamics. There’s plenty of bad investments being made because they’re just assuming that everything is sort of universal,” and they’ll “have the benefits of the overall market – and that’s just not the case.” Ms. Zelman draws a sharp contrast between extremely tight single-family inventories and overbuilt multifamily inventories as well as the demographics of those subsectors. The inventory of single-family homes for sale as a percentage of total households is about 1.2% versus a 30-year average of 2% and a peak of 3.5% during the Great Housing Bust. “That’s one of the reasons we thought, even in a great recession that we were faced with in March, that home prices could still increase – even in the face of double-digit unemployment. But now what we’re seeing is that despite unemployment being so high, with so many people being able to work remote, having their kids at home, learning online, they have a lot more flexibility and a lot more options. So the states that have been the winners are growing even more than they had been because of this new dynamic.” The inventory for multifamily housing,” she notes, “is now in backlog at an all-time, multidecade high. That was prepandemic. Now we layer on a substantial recession, and we look at urban cities that are hit the hardest, and people can work remote. And you’re seeing that supply is still there and still going forward. I think it’s kind of been a nightmare for those urban multifamily owner-operators that are dealing with so many headwinds that were prevalent pre-COVID.” Among those headwinds, she notes, is a demographic shift. The primary demographic cohort for multifamily housing comprises people between the ages of 20 and 34. The growth rate of this population is slowing and will turn negative in the second half of this decade. As people enter the 35-to-44-year cohort, they form couples, have children and migrate to single-family homes.
The movement toward work from home, while accelerated by shelter-in-place regimes due to COVID-19, marks a durable shift in the use of housing, according to Ms. Zelman. This change, she says, will add more momentum behind a years-along movement out of urban centers to suburban and exurban areas as well as from states with higher housing costs and taxes to states with more affordable housing markets, lower taxes and more favorable climates.
Ryan Simonetti, CEO and cofounder of Convene, joins “The Sherman Show” to discuss the future of commercial real estate, particularly in the office and hospitality sectors. Convene designs and services premium places to meet and work. Founded in 2009, Convene has transformed the workplace and meeting place by bringing together trends in technology, service and amenitization, which is the lifestyle movement that transformed hotels and luxury fitness clubs.
Convene also set out to provide businesses with a more-flexible and better-aligned real estate model. Key to Mr. Simonetti’s approach was to provide businesses “access” to workspaces without the need to own them or enter long-term leases. The ownership/long-term lease model, he realized, leaves companies with either too much or too little real estate. “If I was a company,” he notes, “would I rather design, build and manage all of my own hospitality space, my own meeting event and conferencing facilities that I use a few times a year? That’s not really my core business. Do I want to lease an extra 50,000 square feet of space that I may or may not need? Or do I want to sign a 10-year lease when I’ve only got a business model that gives me visibility for the next 18 to 24 months? … [I]t’s a shared consumption model, right? It’s outsource over insource; it’s shared infrastructure over owned infrastructure, and I believe pre-COVID and then coming out of COVID, access is the new ownership.”
Due to the COVID-19 pandemic, Convene, like many firms, had to close its locations in the U.S., and plans to open operations in the United Kingdom have been postponed. The process has been a tough one, but Mr. Simonetti and his team used the opportunity to reassess their strategic vision of the future of their economic sector.
“We had to close our entire portfolio in early March,” Mr. Simonetti tells podcast cohosts Jeffrey Sherman and Samuel Lau. “We’ve only chosen at this point to open up a portion of that portfolio. And we had to make all the really tough and hard decisions that companies that are, you know, I think kind of at ground zero of this crisis have had to make around cost cutting. And I’m sure for you guys, even as leaders, like the hardest conversations to have are the human ones. And this has been really, really tough on our team and our leadership team. But I’d say the hard part for us is over. We had a strategy called Survive and Thrive when we started, and I’d say the first 90 days was really about survival and doing the hard stuff like cutting costs and closing locations, raising capital restructuring deals that we had with landlords.
“And the last, I’d say, 90 days has been this amazing opportunity that I think most companies never get, especially at our stage. I mean, we were high flying about to do a pre-IPO around growing 60-plus percent a year. When do you ever get to take a giant step back and really question everything you’re doing and you just don’t? And so I think what we’ve done is really taken this as an opportunity to really ask ourselves in a post-COVID world, knowing that there’s going to be new challenges and new opportunities, where do we really strategically want to take the business? What are the core competencies and capabilities that we can leverage knowing that although the world is not going to be radically different, it’s going to be different enough that we need to think different? And where are the opportunities where we can invest in innovation to really position us while moving forward? And I’m really appreciative of our team and our board for not letting a good crisis go to waste, and I think have really positioned the company to be successful coming out of this.”
This podcast was recorded on Sept. 29, 2020.
Veteran investment executive Katie Nixon joins Jeffrey Sherman and Samuel Lau on “The Sherman Show” to discuss the ways in which her client-facing background as a portfolio manager informs her work as a chief investment officer, how meeting a client’s goals isn’t limited to maximizing wealth and tax strategies for wealthy Californians, among other topics. Ms. Nixon is an Executive Vice President and Chief Investment Officer for the wealth management business at Northern Trust. Private Asset Management in 2016 named Nixon one of the “50 Most Influential Women in Private Wealth.”
Ms. Nixon says that she looks at her work as a CIO through the lens of a client and that developing a strategy isn’t just an academic exercise for her. Dealing with people’s money is a huge responsibility. While it’s relatively easy to be empathetic and build relationships when times are good, it’s when things are rough, like in today’s investment environment, that you really need to turn on that empathy quotient. You have to get into the mind of a client to understand what they are going through. Turning back to the Global Financial Crisis, she recounts a coworker telling a client that “this is a three-standard-deviation event,” an explanation that provided no comfort or clarity.
Also in regard to her background as a portfolio manager, Ms. Nixon says she thought for her first two decades that “every client’s goal is more.” Maximizing wealth, she learned in 2008, is not a goal. Using “maximize wealth from a risk-adjusted perspective” is a very inadequate way of managing private wealth. This led her to focus at Northern on designing client portfolios around personal outcomes rather than an amorphous maximized wealth target. Some goals require a lot of risk; some don’t.
In response to Ms. Nixon’s reference to fees and tax efficiency for private clients, Mr. Sherman brings up a proposal in California to hike taxes on millionaires and asks if the best strategy is to leave for those who reach that strata of income. Ms. Nixon says that Northern goes through a regular exercise with clients who live in California and New York over the substantial financial impact of residency in those states. While there is a math side to the equation, there is also the impact of deciding “I have to move.”
Before wrapping up, Mr. Lau asks Ms. Nixon if she has any career guidance to share. Find something you really love and, on the practical side, find a mentor, advises Ms. Nixon, who credits the secret to her success to having strong mentors around her who advocated for her.
DoubleLine’s Jeffrey Sherman and Sam Lau welcome Daniel Crosby, a psychologist and behavioral finance expert, to “The Sherman Show” to discuss what roles education and experience play in investment decisions and how automation can counter an investor’s worst impulses. Mr. Crosby is Chief Behavioral Officer at Brinker Capital and is the author of several books, including “The Behavioral Investor” and “You’re Not That Great,” and coauthor of the New York Times bestseller “Personal Benchmark: Integrating Behavioral Finance and Investment Management.” The podcast was recorded July 20, 2020.
Mr. Crosby wastes no time in establishing a theme for the episode with his response to the most recent University of Michigan Consumer Sentiment Index survey, which was below expectations. “Asking people how they feel is effectively useless,” he says in regards to the creation of the Irrationality Index. “People are really poor predictors and poor descriptors of their own behavior.” Mr. Crosby cites a recent study that says your coworkers are much better than you are as descriptors of your personality and predictors of your behavior. With his index, instead of asking consumers and CEOs how they felt about things, Mr. Crosby combines data points on how people actually behaved to put a number on how irrationally exuberant or irrationally fearful people were at any given moment.
While Messrs. Sherman, Lau and Crosby agree there is no substitute for experience, they all share examples of the risk of drawing the wrong lessons from a particular event, with people tending to overrate their abilities. Mr. Lau points to the traders who are quick to share how they timed the markets to perfection but never disclose their missteps. Mr. Crosby references a study in which the correlation was basically zero in how investors recalled their behavior and how they actually behaved.
Mr. Sherman asks why this disconnect seems to be a fundamental part of being human. Mr. Crosby says that there are two factors influencing people’s behavior. One is “rosy retrospection,” where people look back on events that weren’t that great, like a hectic family vacation at Disneyland, and only remember the moments that were positive. At the same time, human brains have an outsized stickiness for emotion-inducing negative events and are prone to hold on to the most-negative things that happen in order to steer people away from enduring them again.
In order to counter investors’ negative impulses, Mr. Crosby uses the three T’s: training, tools and technology. These factors are combined with the goal of providing “just in time” advice to prevent bad decisions in a time of panic. Personal advisers and automation of investment decisions are vastly superior to trying to educate oneself into a “willpower warrior” to take on the markets, he says.
In a tour d’horizon of markets, macro and monetary mavens, returning guest Danielle DiMartino Booth joins DoubleLine’s Jeffrey Sherman and Samuel Lau to survey the landscape post-COVID-19. This episode was recorded July 10, 2020. Ms. DiMartino Booth is CEO and Director of Intelligence at Quill Intelligence. A former official of the Federal Reserve Bank of Dallas, she is author of the critically acclaimed book “FED UP.” Ms. DiMartino Booth sees trouble for the economy in the latest producer price data print, crushed corporate profit margins and the frozen state of the credit cycle. For those who have been hoping for a V-shaped economic recovery in the U.S., she warns, “The second side of the V is going to be shallower as we veer into W.” Confirming reports of this expectation should appear in the regional Federal Reserve surveys. Income inequality amid today’s economic hardship, the guest and the hosts note, could lead to a Democratic sweep of November elections, which would represent a watershed for the government’s agenda and central bank policy. “If you push the inequality divide too far,” Ms. DiMartino Booth says, “you’re going to end up with a sufficient mass of votes who want to bring in Modern Monetary Theory, who want to have universal basic income.” That in turn could lead to a rapid doubling of the federal debt and the reprise of inflation. Among other topics, Ms. DiMartino Booth says that heavy levels of corporate debt amid skyrocketing bankruptcies pose another long-term threat to the economy, particularly in the retail sector. “Bankruptcy doesn’t mean what it used to mean because companies are so levered up that there’s not enough value that they can pull out and come all the way through restructuring and maintain the same footprint, … the same headcount,” she says. What does Ms. DiMartino Booth believe investors might be overlooking or underappreciating? One area is the excess supply in the lodging sector, in particularly in full-service hotels and luxury apartments in central business districts. Much of this overbuilding, she notes, was financed by private equity and single-asset, single-borrower debt, a “wicked risky” asset class that did not exist a few years ago and in 2019 accounted for 47% of the issuance of commercial mortgage-backed securities. “Pensions, endowments, life insurance companies – inappropriate investors – have piled into this asset class,” she says. Where might opportunities lie? “For people who understand office [property] and have dry powder,” she says, “I think there will be some historically amazing deals that get done on the cheap.”
Bob Brinker, founder and publisher of the Marketimer Investment Letter, comes on The Sherman Show to discuss “Quantitative Easing Infinity” under Federal Reserve Chairman Jerome Powell, the consequences of a Biden versus Trump election victory for the federal deficit, “free money” in times of negative interest rates, his investing concept of “critical mass” and other topics with podcast hosts Jeffrey Sherman and Samuel Lau. The podcast was recorded July 8, 2020.
Now in its 35th year and listed on the Hulbert Financial Digest Investment Letter Honor Roll, Marketimer covers the economy, Federal Reserve Policy, technical analysis of the markets and market timing. Among Mr. Brinker’s outlooks is the idea that as long as real interest rates remain negative, the Federal Reserve will continue to buy the U.S. government’s debt. “The question here is going to be whether interest rates are going to stay near zero forever, which would, by the way, accommodate Modern Monetary Theory because, what the heck – if you don’t have to pay for the money, who cares?” Mr. Brinker tells Messrs. Sherman and Lau. “That’s where we are right now in my opinion…. The reason Modern Monetary Theorists are getting away with this right now is because we’re not paying for the money. The real interest rate on the 10-year Treasury is negative. So we’re getting paid to borrow in real terms, which is a good way to borrow if you can figure it out.”
Of course, how long rates can stay negative in inflation-adjusted terms is the open question. “Where does this all come to, one way or the other? Interest rates,” he notes. “If we ever get into a situation where interest rates go up, you do the math, the interest on the national debt is going to be a really big number. That is going to drive whether Modern Monetary Theory has legs or not.”
Asked for a few of the most valuable lessons from his long career investing in securities markets, Mr. Brinker replied, “The most important thing is to keep emotion out of your investment decisions. That’s what we did this year – well, we always practice this, but we showed that this year when we maintained our fully invested position even though there was that very brief panic in March. We maintained our fully invested position; we told our subscribers to dollar-cost average additional money into the market as they wished. And look what’s happened in the market. The market is back near all-time record highs.”
Ed Hyman, Chairman of Evercore ISI and head of the firm’s Economic Research Team, shares with DoubleLine’s Jeffrey Sherman and Samuel Lau the macroeconomic insights he believes are most relevant to investors at this time. This episode of The Sherman Show was recorded June 29, 2020. With inflation a no-show on the foreseeable investment horizon, Mr. Hyman is focused on three variables, all of which are global: fiscal and monetary stimulus, the COVID-19 pandemic and the economy. In his view, the massive quantity of stimulus “has the upper hand over the virus,” although he warns that the possibility of more lockdowns cannot be ruled out. In response, Mr. Sherman notes, “It seems that the market has ignored the increase of the virus as of late and seems to really be focused on what you’re talking about: this commitment to keep things going, to keep the economy going.” Among other topics, Mr. Hyman and the hosts discuss behavioral shifts caused by the pandemic and government measures in response. “I assume that working in an office will be less attractive for a long time, and working from home will be more attractive,” Mr. Hyman says. “So house prices away from downtowns are going up.” He is optimistic about the prospects for an effective COVID-19 vaccine next summer. Modern Monetary Theory (MMT), the idea that governments can create an economic free lunch by issuing debt for purchase by their central banks, also comes up. “Most of the MIT guys or the Harvard guys find MMT to be pretty lacking in credibility,” Mr. Hyman says. “But it seems to me as a practical matter, it definitely has the upper hand at the moment. It just seems like there’s no limit to monetary or fiscal stimulus initiatives – as long as it seems that there’s a need for them.”
Mark Zandi joins DoubleLine’s Jeffrey Sherman and Samuel Lau to discuss, among other topics, if June’s recovery means an end to the recession, what shape the next federal fiscal package might take, the fallout from layoffs possibly spreading into higher-wage jobs and the economic outlook for the second half of 2020. Mr. Zandi is the Chief Economist for Moody’s Analytics. The podcast was recorded June 25, 2020.
Mr. Zandi says a June end to the recession would make the three-month recession the shortest on record as the typical recession lasts nine months. But, Mr. Zandi notes, it would also be the most severe, with a peak-to-trough decline in GDP on a monthly basis of 12% to 14%, contrasting to a peak decline of 4% during the Global Financial Crisis. And while he says that he did feel the long post-Global Financial Crisis expansion was leading to the preconditions for a recession, with the chances for one in 2020 likely, the COVID-19 blow to the economy was unprecedented.
Messrs. Zandi, Sherman and Lau speculate on what further fiscal aid might be coming from the U.S. government, with the Federal Reserve having firmly passed the baton to Congress. Mr. Zandi says three things need to happen: The package has to be at least $1 trillion, with his number rising in the face of the re-intensification of COVID-19; it has to happen before the August congressional recess, with the $600 boost to unemployment insurance set to expire at the end of July; and half of that $1 trillion has to go to state and local governments. Mr. Zandi says housing has held up remarkably well in the pandemic, bolstered by the government agencies. The other surprise is the stock market, supported by the performance of very large companies. He sees one of the longer-term impacts of the pandemic being the concentration of business activity into the hands of fewer companies across all industries. “The stock market is now a market for winners,” he says. In terms of risks for the second half of 2020, Mr. Zandi sees the continuing lack of leadership in handling the pandemic as incredibly disconcerting. He also expects November’s presidential election to be “really ugly,” with COVID-19 impacting voting procedures and a nightmare scenario playing out if there is no clear winner on election night.
Sean Trende joins DoubleLine’s Jeffrey Sherman and Samuel Lau to discuss, among other topics, the use of aggregate polling to forecast election results, the challenges in creating accurate sample sizes in the era of the cellphone and internet, how personal biases impact not only how data models are interpreted but how the models are built and what COVID-19 might mean for November’s election process. Mr. Trende is the Senior Elections Analyst for news website RealClearPolitics. The podcast was recorded June 18, 2020.
Mr. Trende says the aggregation approach used by RealClearPolitics in its tracking of political polling is an advantage over single-sample polling, and the news site’s averaging methods promote transparency. He notes the difficulty of creating accurate polls when “everybody lies about voting and going to church.”
Mr. Sherman raises the issue of how to accurately capture public political sentiment considering the difficulty pollsters must have in getting people to respond to an unknown caller ringing their cellphones. This leads to a discussion among Mssrs. Trende, Sherman and Lau about the challenges of modeling in the worlds of politics and finance with a comparison made to recent questions about unemployment data. Mr. Trende says models using online polling still have a way to go.
Mr. Sherman wonders what the blown predictions that “remain” would carry the day in the Brexit vote means for the reliability of voter polling. Mr. Trende responds that the polls were accurate, and it was the analysts who blew the call, revealing their political biases. They talk about the problem of confirmation bias in modeling and reporting an era in which news consumers can filter out information they find disagreeable. Mr. Trende found this out personally in 2016 when he was savaged online after writing an article about data pointing to a possible Trump victory in November.
Mr. Trende sees Democratic candidate Joe Biden with a big lead today in the national popular vote, but there is still time for President Trump to rebound in the electoral vote by Election Day.
David Rosenberg joins DoubleLine’s Jeffrey Sherman and Samuel Lau to share, among other topics, his view on the (dim) prospects for a sustained V-shaped recovery; his choice of indicators for how the economy is progressing; the 10-year divorce between the U.S. economy and stocks; and, beyond the COVID-19 crisis, a future of stagflation. Mr. Rosenberg is the President and Chief Economist & Strategist of the economic consulting firm Rosenberg Research & Associates Inc. The podcast was recorded June 8, 2020.
In regard to his near-term view of the markets and the economy, Mr. Rosenberg argues, “The stock market and the economy became divorced a decade ago.” The rally off the March low, he says, “is all about Fed-induced liquidity.” “We have a lot of hopes over a vaccine,” he says. “Maybe the ‘V’ recovery stands for ‘vaccine.’ But let’s face it: This is the mother of all liquidity rallies that we’ve ever seen.” To illustrate, he cites M2, an important Fed measure of the size of the U.S. money supply. He notes that the Fed has boosted M2 by $2½ trillion since mid-March. “And what do you know … the market cap of the S&P 500 has gone up in that same time period by $2½ trillion.”
Mr. Rosenberg expects the economy, as measured by conventional economic metrics and data points, to stage a “reflexive rebound” in the months ahead with the turn in the weather and all 50 states out of lockdown. “The question is, beyond the third quarter, will it be prolonged? And that’s going to be dependent on demand,” Rosenberg says. Rather than looking at coincident indicators, he advises watching spending intention surveys and consumer confidence. He was unimpressed by the prior week’s positive nonfarm payroll report, which was fraught with reporting irregularities and other problems. The critical determinant for demand, he says, is the timely arrival of a vaccine or effective treatment.
Over the long term, Mr. Rosenberg sees no return to the state of the economy pre-COVID-19. “There is no such thing in this business as a get-out-of-jail-free card,” he says. “This is only a business of Newtonian physics where every action has an equal and opposite reaction, but there are lags.” At some point in the future, he expects aggregate to stabilize, and “we’re going to be left with a regulatory, (flatter) world and shrinking globalization that is going to mean cost-push inflation, and localized supply chains taking precedence over globalized supply chains. The corporate cost curve is going to look different, and the aggregate supply curve is going to be looking a lot more inelastic or sclerotic than it has in the past. So, we’re going to supply-side inflation. We’re going to have a form of stagflation in the future.”
Sherman Show hosts Jeffrey Sherman and Sam Lau are joined by returning guest Jeff Mayberry as they try to assess how macroeconomic fundamentals stack up versus U.S. market prices. Among other issues in this June 3, 2020, discussion, Messrs. Sherman, Lau and Mayberry talk about COVID-19 trends in the U.S., noting that much of the good news was driven by decreased cases in the New York City tri-state area; if there are any positive indicators to be found in noisy jobless numbers; and whether the month’s data points back some of the more optimistic projections for the economy’s recovery.
Some have interpreted a recovery in personal mobility data and rising TSA travel as positive signs for an economic rebound. Mr. Sherman, however, voices some skepticism. While TSA travel activity has marked improvements month to month, year-to-year the figures are way down, with TSA reporting travel numbers 90% below those of 12 months ago. Gasoline consumption is also down year-over-year.
They also review the massive quantitative easing initiatives by the Federal Reserve and the reaction of the markets that have been targeted. There has been zero interest from companies, notes Mr. Sherman, who points out that jawboning about the programs is having more of an impact than participation in the programs.
The Sherman Show hosts Jeffrey Sherman and Samuel Lau are joined by Bart van Ark and Erik Lundh, economists at The Conference Board, a leading non-profit think tank and economic forecaster. Dr. van Ark is Chief Economist and Executive Vice President at The Conference Board. Mr. Lundh is Senior Economist. Among other issues in this May 28, 2020, discussion, Dr. van Ark and Mr. Lundh talk about how the unique circumstance of the present economic downturn – due to the exogenous shock of COVID-19 rather than a classic weakening of the business cycle – necessitates a different approach to modeling how to investigate possible futures for the U.S. economy. They foresee three main possibilities: a gradual U-shaped recovery, which they consider the most likely; a rapid recovery; and a W-shaped event in which a too-rapid recovery triggers a second wave of COVID-19 cases, prompting more social-distancing policies. Other eventualities include the possibility the present supply-side shock becomes a more classical demand-side recession. That’s an open question still being debated at The Conference Board. “But certainly,” Mr. Lundh says, “the longer businesses stay shut, the longer the economy stays shut, the more income impact there is, the higher the probability that this is going to have second-order impacts and this turns into a longer-term, more-difficult-to-recover-from recession.” Some observers have taken heart from the latest initial jobs claims report and the fact that The Conference Board’s Consumer Confidence Index halted its free fall in May. However, Dr. van Ark strikes a skeptical note regarding those data points as well as the improvement registered in the Consumer Expectations Index for the future. “There are three expectations components,” Dr. van Ark notes, “business conditions, employment and income. All the improvement in expectations in May was due to business conditions…. When it comes to employment, it’s true that there were more consumers who think that there will be more jobs available than less, but it didn’t really improve a lot compared to what it was last month. But the big news is on the income side. On the income side, we actually saw more consumers being negative about income than positive. That’s been quite unique. You rarely see negativity outpacing positivity.” Among other ideas discussed during this episode, the hosts and guests note that Federal Reserve interventions today have almost made so-called Modern Monetary Theory a reality, much of the expansion of the money supply as measured by M2 is going into savings rather than consumption, and the increasingly confrontational relationship between the U.S. and China.
For more Conference Board podcasts, please visit: https://conference-board.org/podcasts
Gregory Whiteley Tours the Treasury Market
Gregory Whiteley, head of DoubleLine’s U.S. government debt team, delves into the strange new world of Treasury securities, a market today priced by quasi-permanent manipulation by the Federal Reserve rather than markets. Among other topics, Mr. Whiteley and podcast hosts Jeffrey Sherman and Samuel Lau discuss the wild ride of March and the danger of Fed’s underwriting moral hazard in the private sector in this episode of The Sherman Show, recorded the morning of May 20, 2020. While the current state of the economy, markets and monetary policy leaves much to be desired, Mr. Whiteley does see one bright point: contrary to indications in corners of the derivatives markets, he takes Jerome Powell at his word: the Fed is set against negative interest rates. Mr. Whiteley sees the Fed focused on the short end of the Treasury yield curve and not that concerned with absolute yields at the long end.
Mr. Whiteley began his career in the salad days of Salomon Brothers before joining the team of Jeffrey Gundlach two decades ago. Like Messrs. Sherman and Lau, Mr. Whiteley became part of the original team which launched DoubleLine under Mr. Gundlach’s leadership in 2009.
After Samuel Lau and Jeffrey Sherman march through their mid-week macro-market-monetary menagerie, DoubleLine CLO analyst Joe Mezyk returns to the Sherman Show to discuss the state of the $750 billion market of collateralized loan obligations. In the wake of the market dislocations due to economic shutdown and massive intervention by the Federal Reserve, Mr. Mezyk observes a tale of two worlds in CLO Land. On one hand, there are securitized bonds backed by “good companies [which] will have the liquidity to ride out this pandemic.” On the other hand, generous liquidity is “putting extra debt on zombie companies.” In this juxtaposition of fundamental economic crunch and engineered liquidity boom, Mezyk discusses the “opportunities to pick through the ruble and find things we like.”
Bill Campbell on Global Bond Markets over the Near and Medium Term
In this episode of the Sherman Show, recorded the morning of May 6, 2020, Sam Lau does the weekly macro and market update; then DoubleLine’s Bill Campbell joins the Sherman Show to discuss the global markets. Mr. Campbell organizes the discussion by timeframe, for he sees the near-term risks giving way to a very different picture in the medium term, and by region, including breakouts for Europe, emerging markets and China. As he tells Mr. Lau and co-host Jeffrey Sherman, Mr. Campbell warns that risk managers may be misdiagnosing today’s investing conditions.
“We’ve been in a late-cycle phase for several years, and we’ve been waiting for the crisis that would take us into the cyclical downturn. In 2018, it was the Fed over-hiking interest rates. In 2019, it was trade. Then finally in 2020, we get the COVID crisis,” Mr. Campbell says. “And now, people have pulled out the cyclical playbooks and said, `OK, the government has come in and given a bridge loan to a lot of businesses and to individuals to try to get us to 2021.’ And then if we look out, and there’s GDP and activity repair, maybe there are a lot of good investments. I think that cyclical playbook needs to be used with an element of caution this time around. There are some serious structural changes happening in the global economy” outside of the business cycle. Among these are the rebalancing of the global supply chain away from U.S. dependence on China, changing work behaviors and consumer preferences in response to the COVID-19 pandemic, and the buildup of U.S. debt to the point of constraining economic activity. “These are big structural items that may disrupt that the cyclical playbook,” he says. Furthermore, the “full stop,” government-ordered shutdowns around the world, he notes, are different from the cyclical downturns of the past. Another medium-term factor: the Federal Reserve has injected a massive dollars into the financial system, not only via quantitative easing, but also by extending its dollar swap lines and repo facilities, including to emerging market central banks.
In contrast to rebounds in U.S. equities and corporate credit, emerging markets have less policy power to cope with crises, including the COVID-19 pandemic and related economic shock. “Emerging markets are a derivative play on growth,” Campbell says. They “need to have those growth prospects for investors to get excited to deploy capital.” Emerging markets in fact have been hit by three shocks: the COVID economic shock, the collapse in industrial commodity prices, and record outflows of foreign capital. One EM debtor Mr. Campbell likes: Peru (for its stable currency policy).
In developed markets, central banks and governments appear to have room in the near term for further monetary and fiscal action. However, looking out to the medium term, Mr. Campbell warns the debt load threatens “to hamper the ability of global growth to rebound back to the levels of even pre-crisis.” Europe faces an interesting crossroads this summer. In response to a lawsuit brought by German businesses against the European Central Bank’s asset purchase program, Germany’s constitutional court this week ruled that the ECB must explain how the program is “proportional,” i.e., not intruding into the domain of fiscal policy. The ECB has three months to respond. Mr. Campbell cautions against treating Berlin as a rubber stamp. If the German court is dissatisfied with the ECB’s answer, he believes it could stop the Bundesbank of purchasing Bunds (the sovereign bonds of Germany). This would seriously crimp ECB’s ability to implement quantitative easing. In the near term, Mr. Campbell’s developed market positioning favors investments which he thinks can weather another leg down in the risk markets. This includes “avoiding Italy completely” and exposures to the Japanese yen and to Australia while hedging out that country’s currency.
Ken Shinoda Joins This Week’s Market Round-Up with His Review of the Housing and Mortgage Sectors
DoubleLine Portfolio Manager Ken Shinoda, appears as a guest on this episode of The Sherman Show to explain the state of the housing market and housing finance system in the wake of the national economic shutdown. This episode is part of the podcast’s weekly round-up of the major markets, including equities, fixed income and commodities; monetary and fiscal measures; and the macroeconomic data. In their macro and markets round-up, podcast hosts Jeffrey Sherman and Samuel Lau comment on the big disconnect between the sharp rebound in stocks, which has lifted the Nasdaq Composite Index into positive territory year-to-date, versus economic data telling a story of malaise. In particular, Sherman points out the deep hit to personal consumption in the first quarter – trouble which will carry over into the month of April. A veteran of DoubleLine’s mortgage-backed securities team, Mr. Shinoda walks listeners through the mechanics for the mortgage servicing systems for loans in pools of Agency mortgage-backed securities (Agency MBS) and for those of non-Agency (aka private label) mortgage-backed securities. He also reviews the price action of non-Agency MBS, which initially declined, although much less due to fears over rising delinquencies than to forced selling by mortgage real estate investment trusts and hedge funds. Mortgage REITs and some hedge funds were caught in a vicious cycle of margin calls, deleveraging, forced selling and declining asset prices, he notes. The non-Agency market has since bottomed and partly rebounded. It will be a couple months before data on mortgage remittance clarifies the default picture. However, Mr. Shinoda says the data on forbearance requests (whereby homeowners seek to miss payments with the idea of later making up those payments) so far paints a picture which should be manageable by the mortgage servicers. Mr. Shinoda also reviews rental collections within the multi-family housing market. Here too, the rise in missed collections appears to be manageable thus far. This episode of The Sherman Show was recorded on April 29, 2020.
For these extraordinary times, The Sherman Show has been producing weekly reviews of the financial markets, macroeconomic data, fiscal actions by the U.S. government and monetary actions by the Federal Reserve. In this episode, recorded the morning of April 22, 2020, hosts Jeffrey Sherman and Samuel Lau and guest Jeff Mayberry also discuss in depth the causes and lessons of the unprecedented April 20 negative price settlement for the May contract on West Texas Intermediate crude oil at $37 per barrel (after marking an intraday low of -$40). They also try to clear up misinformation about the causes of the negative pricing, particularly in social media where some critics have wrongly blamed the market dislocation “financialization” of commodities trading by exchange-traded funds and exchange-traded notes. The true cause, Mr. Lau argues, was the confluence of a supply glut, perhaps years in the making, demand destruction by the economic shutdowns ordered by governments in response to the COVID-19 pandemic and lack of access to oil storage facilities for buyers of May contracts to take physical delivery of oil. If those conditions remain in place by the time of future expiry dates, Mr. Lau suggests, WTI contracts could settle at negative prices again. “Will the buyers, the people who actually go long into the expiry and take delivery, are they going to continue to demand the negative price?” he asks. “I think it’s very possible if we still have … the surplus tied to storage concerns.”
Andrew Hsu, a DoubleLine Portfolio Manager who trades and constructs portfolios from nearly all major sectors of the securitized asset universe, explains on The Sherman Show the basics of this market and its revisions in the wake of the present economic crisis. In response to the economic shock of the government-ordered COVID 19 lockdowns, as Mr. Hsu explains, the Federal Reserve implemented asset purchases and other measures which supported not only investment-grade corporate bonds but in some cases below-IG corporate securities. Fed support of securitized assets, aka structured product, has been limited to bonds rated AAA, whether in Agency mortgage-backed securities (Agency MBS), which by definition enjoy principal guarantees by the U.S. government, or private-label securitizations of credits such as auto loans, student loans, credit card receivables and other cash flows in addition to residential and commercial mortgages. Thus below AAA, especially in the mezzanine/high yield areas, of structured product, investors expect high loss severities and so buyers want significant discounts to par. This episode of The Sherman Show, hosted by DoubleLine’s Jeffrey Sherman and Samuel Lau, was recorded on April 16, 2020.
In a discussion recorded the morning of April 8, 2020, Sherman Show co-hosts Jeffrey Sherman and Samuel along with returning guest Jeff Mayberry conduct a tour d’horizon of stocks, gold and bond markets and a review of the macroeconomic and stimulus fronts. They ponder the long-lasting effects of the lockdown after it ends. They discuss how the Federal Reserve is using its balance sheet and the meaning of the curious rise of Treasury yields despite $100 billion of daily asset purchases by the central bank. They also consider the prospects for a revival of inflation given the trillions of dollars spending coming out of Congress for President Trump’s signature.
Jeffrey Sherman, Deputy Chief Investment Officer of DoubleLine Capital, and Samuel Lau are stepping up the frequency of episodes of The Sherman Show to address the extraordinary changes in our post-COVID 19 world. In this episode, the co-hosts are joined by Jeffrey Mayberry, portfolio manager and fellow member of DoubleLine’s Macro Asset Allocation Team. They discuss the state of the bond, stock and commodity markets, the raft of interventions by the Federal Reserve and U.S. government to stave off an economic depression and what may lie ahead.
Terry Savage, personal finance professional, nationally syndicated columnist and author of best-selling books, including The Savage Truth on Money, joins DoubleLine’s Jeffrey Sherman and Sam Lau on the Sherman Show. In this episode, recorded January 23, 2020, the Sherman Show hosts discuss with Ms. Savage her financial career, then segue into her views on personal finance and her work to educate Americans on managing their financial lives. Among other insights, she explains the need to vet financial advisors (to avoid rip-off artists in the advisory industry), insurance plans for long-term custodial care, the vital role of “chicken money” and how to determine what one needs to retire. While Ms. Savage opposes proposals to forgive student debt, she calls for Washington to “adjust the rate on outstanding student loan balances every six months to be 50 basis points above the 10-year Treasury yield. That would cut a huge amount of the burden off of people who are still repaying.” She warns of the dangers of parents investing in prepaid college tuition plans. Instead, parents should open tax-advantaged 529 plans to save for future education.
Rob Stein, Founder of Astor Investment Management, Discusses Macro and Markets on the Sherman Show
Rob Stein, founder and CEO of Astor Investment Management, joins Sherman Show hosts Jeffrey Sherman and Samuel Lau in an interview recorded January 22, 2020 in Chicago. Mr. Stein began his career at the Federal Reserve under the legendary Paul Volcker before going on to trading and portfolio management positions at money-center Wall Street Banks. In 1994, he founded his registered investment advisory firm.
On the Sherman Show, he discusses his proprietary Astor Economic Index, designed to give a “now-cast” of the U.S. economy and used by the Astor team to set portfolio asset allocations. Rather than relying on economic forecasts, Mr. Stein and his team use contemporaneous reads of jobs, output and other data points, distilled into the Astor index, to weight portfolios toward or away from equities. “You can make portfolio shifts at a time that will still help prevent wealth destruction,” Mr. Stein says. In 2008, he notes, whether one identified recession “in January, February or March, April, May, June, you still were able to protect portfolios.”
Mr. Stein draws parallels between monetary policies at work today and those at the end of 1999. In both cases, the Federal Reserve injected significant liquidity into the system, liquidity that found its way into the stock market. He believes the U.S. will remain “in a low growth environment for a long period of time.” In support of that outlook, Mr. Stein cites the yield on the 30-year Treasury, “changing demographics, efficiencies in the efficiencies [of the economy], companies that are being supported by venture capital money that cannot go on forever.”
The Sherman Show Interviews James Bianco in Chicago
Jim Bianco, a favorite guest of the Sherman Show, returns for another discussion with DoubleLine’s Jeffrey Sherman and Sam Lau. Among other topics, Mr. Bianco, president of Chicago-based Bianco Research, shares his insights into the European Central Bank’s negative-rate dilemma and the Federal Reserve’s balance-sheet dilemma. A return of inflation, Mr. Bianco predicts, could overturn investors and advisors’ addiction to 60-40 stock-bond allocations as well as force the Fed to unwind its balance sheet. Mr. Bianco also discusses the necessary precursor for U.S. Treasury rates to break out of their trading range and head higher. Messrs. Bianco, Sherman and Lau enjoy some laughs over the ghost of Irving Fisher, who showed up, alive and well, at Davos. And Mr. Sherman vents his ire with delusional Ph.D’s at the International Monetary Fund. The podcast was recorded January 22, 2020 in Chicago.
David Rosenberg, widely regarded for his decades of original and insightful research on macroeconomic cycles and financial markets, joins DoubleLine’s Jeffrey Sherman and Samuel Lau in this episode of the Sherman Show. Mr. Rosenberg is founder, chief economist and strategist of Rosenberg Research and Associates, an economic consulting firm providing analysis and insights to help investors make well-informed decisions. Before founding his firm, Mr. Rosenberg was chief economist and strategist at Gluskin Sheff and Associates. From 2002 to 2009, he held those positions at Merrill Lynch in New York where he was consistently ranked in the Institutional Investor All-Star Analyst Rankings. In this episode of the Sherman Show, Mr. Rosenberg first discusses his career path into economics and markets. Then he shares how he combines economics, market research, fundamental analysis and technical analysis to uncover “the data beneath the data.” This podcast was recorded January 6, 2020.
Jeffrey Sherman, Deputy Chief Investment Officer of DoubleLine Capital, and portfolio managers Samuel Lau and Jeffrey Mayberry review the markets in 2019 and share their outlooks for 2020 on The Sherman Show. Among their ideas, Mr. Mayberry suggests U.S. stocks may surprise to the upside, Mr. Sherman advises the 10-year Treasury needs to yield more than the current inflation rate to be considered as a potential buy, and Mr. Lau recommends keeping an eye for trouble for workers and consumers by watching the Employment Cost Index. The podcast was recorded January 8, 2020.
Stephanie Lang, CFA, Principal and Chief Investment Officer at Homrich Berg Wealth Management, joins as guest on the Sherman Show. She discusses her firm’s use of fund of funds, the search for private assets offering a premium over public markets, role of alternatives and private placements in client portfolios, the progression of her career, her role as CIO and the investment process at Homrich Berg. As she explains to DoubleLine’s Jeffrey Sherman and Samuel Lau, a key question at her firm’s investment committee is “are we going into recession and when?” She finds worrisome signs in the Treasury curve and manufacturing, but the consumer, who represents 70% of the U.S. economy, is holding up well as exhibited by such data as retail sales and consumer confidence. A key risk she sees for the consumer is the possibility of an escalation of the U.S.-China trade war, the confrontation already having led to tariffs on trade goods. Outside the economy, Ms. Lang also considers such factors as momentum (“looking pretty good”) and valuations (“average” at present). Another big question facing Lang and the Homrich Berg investment committee is the mix between domestic and international equities. Advantage: domestic equities. The podcast was recorded on September 5, 2019.
Michael Ryan, Chief investment Officer, Americas, at UBS Wealth Management, joins DoubleLine’s Jeffrey Sherman and Samuel Lau on the Sherman Show. Among the topics Mr. Ryan discusses are the three critical functions of his role as CIO (helping to shape to global investment view, managing a 60-member team and communications), the importance (or lack thereof) of the political party in power to market performance, investment versus speculation, how he forms his economic outlook, and the odds of U.S. recession. The discussion was recorded September 13, 2019.
Wayne Wicker, Senior Vice President and Chief Investment Officer for Vantagepoint Investment Advisors and ICMA-RC, is a guest on the Sherman Show. This is a new set of podcasts devoted to chief investment officers. The idea is to delve into the thinking of these heads of the investment process at different advisory and investment firms about how they serve their clients. In this inaugural episode in the CIO series, Mr. Wicker describes his unique career path into investing, which began as a teenager, working after classes at an old-school brokerage firm in the late 1970s. Today he leads Vantagepoint’s Investments Division which is responsible for investment management, due diligence, and contract negotiations of more than 30 investment funds. Mr. Wicker has more than 33 years of investment industry experience with equities, fixed income, and alternative investment portfolios. The discussion with Mr. Wicker and DoubleLine’s Jeffrey Sherman and Samuel Lau was recorded on July 23, 2019.
Dr. Robert Shiller, Sterling Professor of Economics, Yale University, returns to the Sherman Show to discuss his latest research in behavioral finance and his new book, “Narrative Economics: How Stories Go Viral and Drive Major Economic Events”. The podcast, hosted by DoubleLine’s Jeffrey Sherman and Samuel Lau, was recorded on October 23, 2019.
Chris Hyzy, managing director and chief investment officer at Bank of America Private Bank and Merrill Wealth Management, joins Jeffrey Sherman and Sam Lau on the Sherman Show. Mr. Hyzy discusses private banking, his team’s investment process, their approach to goals-based asset allocation, the management of risk, and timely market themes. The latter include his cautious outlook for the U.S. consumer, based in part on expectations of job growth and a strengthening housing market. Mr. Hyzy takes issue with those who believe central-bank monetary policy has reached the point of “pushing on a string.” In his view, the world’s central banks still “have many tools to reflate the economy,” not the least being the power of messaging. As for areas of concern, he foresees the U.S.-China trade war, which is actually a technology war, represents a long-term, strategic change, and he doubts a material negotiated deal will emerge soon. A comprehensive trade agreement with China, however, is not necessary for sustained economic growth. Rather, business leaders need clarity on the trade situation in order to manage around it. This episode of the Sherman Show was recorded on September 18, 2019.
Raoul Pal, founder of Real Vision after retiring at age 36 from running one of the world’s largest hedge funds, joins DoubleLine’s Jeffrey Sherman and Sam Lau on The Sherman Show. Mr. Pal discusses his career as a hedge fund manager before opting out of the “rat race” to create Real Vision with its mission to “democratize the best financial intelligence.” Then among other topics, the discussion dives into Mr. Pal’s views on the “increasingly high probability of a global recession,” the U.S. president after the next election hitting “the nuclear fiscal stimulus button,” U.S. interest rates following those of Europe into negative territory, gold and Bitcoin as options in the event of “something really bad breaking,” the risk China may lose control of both the Chinese and Hong Kong currencies, the conflict between China and the U.S. over intellectual property and technology and the rise of cryptocurrencies. In a world largely caught between slowing growth, aging populations and massive debt, Mr. Pal also identifies the region which is the exception, with young populations, strong savings rates, low debt and strong growth: India and the Islamic trading nations around the Indian Ocean. The podcast episode was recorded September 26, 2019.
DoubleLine Capital portfolio manager Brendt Stallings joins DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and portfolio manager Samuel Lau for a broad discussion of the U.S. equity market on The Sherman Show. Much of their discussion centers on the prospects for forward-looking, long-term returns based on the Cyclically Adjusted Price-to-Earnings (CAPE®) ratio devised by Dr. Robert Shiller; the ratio’s use as a tool in making allocation decisions; the calculation of the ratio; and critiques of the CAPE® ratio as well as Mr. Stallings’ critiques of those critiques. Among other topics, the discussion also covers the divergence between the U.S. stock market versus stock markets outside the U.S., the durability of business-cycle theory in the face of the longest U.S. economic expansion post-World War II and valuing equities in a “bizarro world” of negative interest rates. This segment of The Sherman Show was recorded August 26, 2019.
CLO analyst Joe Mezyk joins The Sherman Show to explain the $750 billion collateralized loan obligation market with DoubleLine’s Jeffrey Sherman and Samuel Lau. Their discussion starts by explaining floating-rate bank loans which form the collateral of CLOs and how the securitization process of a CLO allows the creation of equity and below investment grade obligations as well senior, AAA-rated securities. Mr. Mezyk then describes the risks and advantages of CLOs, the reasons for the growth in the sector’s popularity with investors, the historical default and recovery rates of CLOs (including in the credit crisis of 2008-2009 and the energy-sector downturn in 2015) and how he analyzes CLOs and CLO collateral managers in order to invest in these securities. Among further topics, Mr. Mezyk describes how the CLO market has evolved, more than doubling in size since the credit crisis and the growth of “covenant-lite” loans with their lessened protections for investors to make up 80% of the sector. He also delves into the evolution of the underlying bank loan sector. This episode of The Sherman Show was recorded on September 9, 2019.
Gad Levanon, Ph.D., The Conference Board’s chief economist for North America, joins DoubleLine’s Jeffrey Sherman and Sam Lau to discuss his work in forecasting the U.S. economy and his new research on labor markets. In 2014, Dr. Levanon issued a report from The Conference Board warning of a looming labor shortage in the U.S. That report, which was met with skepticism in many corners, proved to be prescient with the unemployment rate falling over the subsequent five years to its lowest level in half a century. Among new research initiatives led by Dr. Levanon, The Conference Board has been collecting, classifying and analyzing job-opening ads from every job board in the U.S., creating a real-time data set to spot labor trends. Job openings, which he explains serve as a leading indicator of employment, have been declining for several months. Within the corporate sector, he sees an acceleration in labor costs eroding the bottom line of businesses. So far, these pressures have not resulted in inflation, but an eventual acceleration in inflation remains a possibility. The retirement of baby boomers and weak productivity growth, he notes, have exacerbated the tightness of the labor market. Contrary to fears that technology will replace workers, creating a large unemployed population, Dr. Levanon points out that most of the worker replacement with technology occurred in previous decades. This process, he observes, is continuing but at a much slower place, although some companies are showing signs of refocusing efforts on raising productivity growth through technology. The podcast was recorded August 12, 2019.
Anthony Scaramucci brings his trademark color and candor to The Sherman Show in a conversation recorded with DoubleLine Capital’s Jeffrey Sherman and Samuel Lau May 9, 2019 during Mr. Scaramucci’s SALT conference in Las Vegas. Scaramucci shares his views of politics from his time as a donor in 2008 to then-presidential candidate Barack Obama as well as a supporter of the Trump campaign in 2016 and of course his famous and short-lived service as White House Director of Communications under President Donald Trump. While describing Washington as “a gold-plated hot tub without a drain” which has left America’s working class in desperate straits, Mr. Scaramucci believes America’s long-term strategic problems are “totally fixable.” The Mooch discusses how successful people who are targeted for personal destruction by the politico-media establishment can turn the tables on the “gold-plated hot tub” and go on to greater success. The founder of $12 billion investment firm SkyBridge Capital discusses the importance of not allowing politics or partisanship to compromise one’s objectivity as a money manager. He also highlights his plans for SkyBridge to develop products to heightened volatility in the financial markets.
Andrew Hsu Conducts a Tour d'Horizon of the Structured Products Universe
Andrew Hsu, a founding partner of DoubleLine Capital and head of the firm’s Global Infrastructure and Asset-Backed Securities teams, takes listeners on a survey of structured products, from one of the most diverse asset classes in the fixed-income investment universe. In a July 18, 2019 conversation with Sherman Show co-hosts Jeffrey Sherman and Sam Lau, Mr. Hsu describes his career analyzing, trading and managing portfolios in structured products, which began in 2002 on the mortgage-backed securities team led by DoubleLine founder and CEO Jeffrey Gundlach. He discusses his work in a wide array of structured products, including Agency and private-label mortgage-backed securities, and asset-backed securities. The latter can range from traditional securitizations of auto and student loans to securitized products created to finance traditional infrastructure such as transportation and shipping to next-generation infrastructure such as renewable energy and 5G digital networks. The discussion also explores the diversity of cash flows and structures available in the structured product enables investors to sculpt portfolios customized to their needs and risk tolerance.
Mr. Hsu also is a permanent member of DoubleLine’s Fixed Income Asset Allocation and Structured Products committees. He holds a BS in Finance from the University of Southern California and is a CFA charterholder.
In a conversation recorded July 9, 2019 for The Sherman Show, DoubleLine CEO Jeffrey Gundlach, Deputy Chief Investment Officer Jeffrey Sherman and portfolio manager Samuel Lau, among other topics, cover the roller-coaster ride in the equity markets, rising odds of a U.S. recession, the knock-on effects of China-related supply-chain disruptions, how to interpret the Treasury yield curve and the dangers and popularity of Sen. Elizabeth Warren’s wealth tax proposal.
In a discussion on July 1, 2019, Jeffrey Sherman, deputy chief investment officer of DoubleLine, and portfolio managers Jeff Mayberry and Sam Lau conduct their mid-year review of the financial markets, including the return of “central bankers back in charge,” Treasuries seemingly priced for recession amid U.S. stocks at all-time highs and concerning signs in purchasing managers and sentiment indicators. “It kind of feels like we’re being driven by the global forces today,” Sherman says. “We look at the U.S. economic data, and … the numbers are still pretty positive…. Our recession indicators, there’s a couple of them yellow, there’s a couple that are red, that say recession, but all of the ones that are red are actually yield curve-related, which can be fixed by the Fed. Perhaps that’s what some of the markets are thinking.” Sherman also perceives a turning point in the form of a “drastic” change in inflation expectations at the Federal Open Markets Committee meeting on March 20. Sherman asks “are we in this self-fulfilling idea that prices will not accelerate to the upside.”
Nancy Davis, founder, managing partner and chief investment officer of Quadratic Capital Management, discussed May 9, 2019 on The Sherman Show her philosophy toward options trading, Quadratic’s plan to democratize the markets by giving investors more choices better access to interest-rate volatility and, among other topics, where she thinks investing opportunities lie in the options market. Ms. Davis began her career at Goldman Sachs where she rose to become head of credit, derivatives and over-the-counter trading. Before launching Quadratic in 2013, she served as a portfolio manager at Highbridge where she managed $500 million of capital in a derivatives-only portfolio. She later served in a senior executive role at AllianceBernstein.
Last year on The Sherman Show, Danielle DiMartino Booth, CEO and Director of Intelligence at Quill Intelligence, discussed her optimism in Jerome Powell’s leadership at the Federal Reserve. In her return recorded May 7, the author of the best-selling book FED UP explains why she’s disbanded the Powell Fan Club. In a conversation with DoubleLine Capital’s Jeffrey Sherman and Sam Lau, Ms. DiMartino Booth also covers among other topics how the post-Halloween junk-credit paralysis “dominoed” into the “Christmas Eve bloodbath,” obsolescent monetary policy tools in the U.S., the even-worse fiscal and monetary basket case in Europe, and a manufacturing slowdown in the U.S. which belies otherwise rosy economic news and explains rising layoffs year-over-year.
In this episode of The Sherman Show, David Zervos, Ph.D., Chief Market Strategist for Jefferies LLC and Chief Investment Officer for the Global Macro Division of Jefferies Investment Advisers, LLC, describes how his academic path mutated to macroeconomics from electrical engineering, his stints in the Federal Reserve and Bank of England, and ultimately making his way into the private sector, including hedge funds and sell-side firms before matriculating at Jefferies. Then Mr. Zervos and DoubleLine’s Jeffrey Sherman and Samuel Lau dive into a discussion of managing money through financial crises, his insider’s view at the Fed during the crafting of Quantitative Easing to avoid another Great Depression, unconventional monetary policy becoming conventional, why he disbelieves Phillips Curve theory, his evolving views on inflation and risk parity among other topics.
A broad macroeconomic thinker and keen Fed watcher, Jim Bianco returns as a guest on the Sherman Show. In this episode, recorded April 16, 2019, the president of Chicago-based Bianco Research shares with DoubleLine’s Jeffrey Sherman and Sam Lau his views on the state of the global economy, the market divergence of the sovereign bonds from stocks, credit and commodities, and a glimpse behind the scenes at the Federal Reserve. The latter topic includes why the Fed clings to dubious Phillips Curve theory as its basis for interest-rate policy, the dilemma for central bankers of the near disappearance of the fed funds futures market and “Powell ping pong.” Messrs. Bianco and Sherman also lift the veil, a bit, on Mr. Bianco’s and DoubleLine’s own conversations with people, respectively, at the Federal Reserve Banks of Chicago and New York.
Ron Redell, president of DoubleLine Group, discusses his career in asset management, the creation from scratch of DoubleLine’s operational infrastructure, the challenges of navigating the changes in asset management and the DoubleLine culture in a Sherman Show podcast recorded March 22. Mr. Redell’s academic and professional careers have taken him from defensive back on the Stanford Cardinal football team to trying out for the Indianapolis Colts to finding his way into the financial sector to an instrumental role in a rare event: the operational launch of a successful mutual fund company.
Francisco Blanch, head of Global Commodities and Derivatives at Bank of America Merrill Lynch, joins DoubleLine’s Jeffrey Sherman and Sam Lau to discuss his pioneering work in the creation of enhanced commodities indices and the complex web of supply, demand, currency exchange rates, politics and other factors which move commodity prices. In this segment of The Sherman Show, recorded March 14, 2019, Blanch also foresees a regime change in commodities, particularly with the respect to oil, which should support higher oil prices in the future. That transition includes oil production cuts by Russia and Saudi Arabia, slowing oil-production growth in the U.S. and a weaker dollar due to America’s ballooning current-account, trade and fiscal deficits.
Jeffrey Sherman, deputy chief investment officer of DoubleLine, and portfolio manager Samuel Lau welcome to The Sherman Show podcast Torsten Slok, chief international economist at Deutsche Bank Securities, Inc. Among their topics are the mirage of Modern Monetary Theory (a mere postulate, not a theory, according to Mr. Sherman, untestable per Mr. Slok), the danger of misreading into Japan’s fiscal and monetary experiments a precedent for the U.S. and the relative impacts of Federal Reserve balance sheet reduction and Trump tax cuts on the supply of Treasuries. And they discuss voodoo economics and magic policy.
In his return to The Sherman Show, Peter Cecchini, global chief market strategist at Cantor Fitzgerald, discusses the unfolding intersection of the end of the secular decline in interest rates and the next recession. Mr. Cecchini, DoubleLine Deputy Chief Investment Officer Jeffrey Sherman and portfolio manager Sam Lau also delve into the dilemma confronting the Federal Reserve and the European Central Bank: the difficulty of raising rates and reducing balance sheets before economic slowing turns into economic contraction. (Cecchini was one of the few last year to predict the Fed would put its rate-hiking plans on hold.) Cecchini regards the recent surge in stocks as a bear market rally. He expects the dollar and interest rates to “push and pull against each other,” resulting in both staying range-bound in 2019. The Sherman Show discussion also popularizes an insider’s term for an especially violent episode of market volatility: the notorious “face-ripper-offer.”
On his way to the World Economic Forum in Davos, Dr. Robert Shiller, Sterling Professor of Economics, Yale University and CAPE Index co-creator, sat down in Zurich, Switzerland, as guest on The Sherman Show with DoubleLine’s Jeffrey Sherman and Sam Lau. Among the topics covered: the interplay of factors driving the markets in 2017 and 2018 and Dr. Shiller’s forthcoming new book on narrative economics: the phenomenon of stories which go viral to shape people’s behavior on a mass scale.
Bill Hughes, a managing director at Colony Capital, discusses real estate investment trusts (REITs) as a source of attractive returns and diversification in the latest edition of The Sherman Show™ podcast hosted by Jeffrey Sherman and Samuel Lau. However, the quest for higher-yielding investments and the misapplication of traditional stock metrics mislead many investors into riskier, lower-quality investments in the REIT sector. Mr. Hughes explains how Colony Capital’s different approach to investing in REITs seeks to exploit these inefficiencies.
Political brinksmanship as a source of a deceleration in consumer & business sentiment, market complacency over the Fed’s commitment to tightening and likelihood of higher rates come up in a tour d’horizon by DoubleLine’s Jeffrey Sherman, Jeff Mayberry and Sam Lau in the latest segment of The Sherman Show™.
DoubleLine portfolio manager Brendt Stallings joins Jeffrey Sherman and Sam Lau on The Sherman Show to discuss the change of the S&P 500’s former Telecommunication Services sector into the new Communication Services sector. This represents the biggest change to the Global Industry Classification Standard (GICS) used to categorize 95% of global publicly traded companies in nearly two decades.
Drawing on his decades in the financial markets, Joseph Galligan, a founding partner of DoubleLine, shares lessons on crowd behavior, market bubbles and panics, and how to risk-manage and survive them, with DoubleLine Deputy CIO Jeffrey Sherman and portfolio manager Sam Lau in the September 27, 2018 edition of The Sherman Show.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Portfolio Manager welcome to the studio Josh Emanuel, CIO of Wilshire Funds to chat about diversification, risk and managing expectations within the wealth management business
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Portfolio Manager talk with Danielle DiMartino Booth, CEO and Director of Intelligence at Quill Intelligence, LLC about Wall Street, The Fed and writing her book.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Portfolio Manager discuss market “truisms” with DoubleLine’s CEO, Jeffrey Gundlach
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Portfolio Manager talk commodities, the Fed and fiscal tenability with Peter Schiff, founder and chairman of SchiffGold
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, from DoubleLine’s Asset Allocation team welcome Noreen Beaman, CEO of Brinker Capital, to discuss Brinker Capital as a solutions based provider, empowering the financial advisor and the evolution of advisory business.
Jeffrey Sherman, DoubleLine’s Deputy CIO, Sam Lau, DoubleLine Asset Allocation Analyst & Jeff Mayberry, DoubleLine Asset Allocation Analyst talk about where the markets are headed in the premier episode to begin season 4.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Asset Allocation, sit down to discuss the Financial side of Journalism, the recent history of the Fed and the current state of the economy with Jim Grant, the Founder of "Grant's Interest Rate Observer.”
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Asset Allocation, talk financial reporting with the host of CNBCs Fast Money Halftime Report, Scott Wapner.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Asset Allocation, sit down to discuss the recent market volatility and fed policy with Pete Cecchini, the Global Chief Market Strategist at Cantor Fitzgerald.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Asset Allocation, welcome DoubleLine PM Morris Chen to discuss commercial mortgages & commercial real estate.
Description: Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Macro Asset Allocation, welcome Mark Christiansen and Su-Fei Koo from DoubleLine’s International Fixed Income team to discuss Emerging Markets.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Macro Asset Allocation, host Jim Bianco of Bianco Research to discuss current market conditions, inflation, bond markets and independent research.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Macro Asset Allocation, strike up a conversation with Bill Harding , Senior VP & CIO at Jackson National Asset Mgmt, to talk about variable annuities and the insurance space.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine Macro Asset Allocation, talk to Ryan Kimmel, DoubleLine Multi-Asset Growth Analyst about the markets, macro-asset strategies, trading and surfing.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, talk about where the markets are headed in the premier podcast to kick off 2018.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, sit down & chat Emerging Markets with Luz Padilla, DoubleLine’s Director of Emerging Markets Fixed Income
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, talk behavioral alpha, opportunistic investing and the investment process within the Closed End Fund space with Patrick Galley, CIO of RiverNorth.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, have a colorful conversation with Jim Ross, Executive Vice President of State Street Global Advisors (SSGA) and Chairman of the Global SPDR Business. He also serves as Chairman of the Board of SSGA Funds Management, Inc.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, visit with Meb Faber co-founder and Chief Investment Officer of Cambria Investment Management. He manages Cambria’s ETFs, separate accounts and private investment funds. He has authored numerous white papers and five books. He hosts his own podcasts “The Meb Faber Show” and a blog at mebfaber.com.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, discuss Fixed Income Allocation in the mortgage sector with Joe Galligan, Executive Vice President and founding member of DoubleLine.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, host a candid conversation with Jeff Mayberry, member of the management team and trading for derivatives based and multi-asset strategies at DoubleLine, discussing commodities, Europe, the economy, and equity markets. The Shiller CAPE® Ratio includes back-tested data to 1871. For detailed information regarding data collection visit http://www.econ.yale.edu/~shiller/data.htm
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, host a candid conversation with Barry Ritholtz, Founder of Ritholtz Wealth Management. Bloomberg view columnist and host of Bloomberg’s “Masters in Business” podcasts. Discussing everything from how Barry got started, 911, his blogs and evidence-based investing.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, host a candid conversation with Josh Brown, CEO of Ritholtz Wealth Management. Author of financial blog “The Reformed Broker” and regular contributor on CNBC. They discuss everything from how Josh started in the business, how he started working with Barry Ritholtz developing a better business model to Rap music and politics.
Sherman Show’s, Jeffrey Sherman, Deputy CIO and Sam Lau, DoubleLine’s Asset Allocation Analyst host an interesting interview with Jeffrey Gundlach, DoubleLine’s CEO, who turns the tables on the fearsome duo.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, discuss “DoubleLine’s Credit, team, Floating Rate and Loans” with Robert Cohen, Director of DoubleLine's Global Developed Credit team.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, discuss “U.S. Credit” with Monica Erickson, DoubleLine's Global Developed Credit portfolio manager.
Jeffrey Sherman, DoubleLine’s Deputy CIO & Sam Lau, DoubleLine’s Asset Allocation Analyst, talk “Global Investment Strategies” with Bill Campbell, DoubleLine's Global Bond portfolio manager.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine’s Asset Allocation Analyst, talk “Rising Rates, Markets and Fixed Income” with Jeff Mayberry, a member of DoubleLine’s Asset Allocation portfolio management team.
Jeffrey Sherman, DoubleLine’s Deputy CIO and Sam Lau, DoubleLine’s Asset Allocation Analyst, talk “Infrastructure” strategy & investing with Damien Contes and Andrew Hsu, DoubleLine’s Global Infrastructure Investment Portfolio Managers.
Jeffrey Sherman, Doubleline’s Deputy CIO and Sam Lau, Doubleline’s Asset Allocation Analyst, host Dr. Robert Shiller, Sterling Professor of Economics, Yale University.