PIMCO短期主管谈美联储与流动性框架

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So you're one one year, you're in the 97th percentile.

Mhm.

You know, that's like, you know, the way the Red Sox have been playing ball.

Yep.

And then the three-year, you're in the 91st percentile.

Pretty good.

In the fiveyear, you slum. It's like the Dodgers losing eight in a row or whatever. You're in the 89%. You got to be kidding me. In short-term paper, darkening the door, Jerome Schneider, Pacific Investment Management, uh, uh, uh, company. Okay, cut to the chase. What's the methodology and process to deliver that shockingly rare outperformance?

Yeah, good morning, Tom. It's great to be here. Um, you know, it has to do with like less of making calls on the Federal Reserve, hardly what you might believe.

Thank you. Thank you. Thank you. And it's more about understanding the liquidity framework in the broader marketplace. And and that's ultimately what it is is encouraging clients, encouraging those in the marketplace to really understand what liquidity means to them in the broader investing paradigm. It could go with equities. It could go with infrastructure. It goes with private equity, private debt, and most importantly goes with cash.

And understanding how cash and liquidity go hand in hand. They're not the same thing. in 28 flavors of cash. Wicked sophisticated, folks. Is it picking up dimes in front of the cash bulldozer? No. Or is it more strategic?

It's more strategic because you have to look at the big picture. Structural changes, regulatory changes, how capital markets are functionally changing. I've been doing this 31 32 years, Tom, and and I would tell you that things have changed pretty dramatically over that time in terms of how things are funded, how sophisticated structured products can be. Obviously, we know the tail risks many times over and the reality is is that we're seeing it in real time calibrate.

Those adjustments can't be overlooked and that's where the structural opportunity to be in that performance helps to uh corroborate high returns for those looking to outperform basic cash performances and T bills etc. So, it's it is humbling to be in those in in that era uh of of high returns but at the same time it's repeatable with proper research and proper understanding of how liquidity moves through the marketplace.

Not just domestically but globally.

All right. At Pimco, you're head of short-term portfolio management. What's short-term for you?

Uh short-term for us has has evolved over time. Admittedly, traditional short-term management mean used to mean bank deposits. Then it evolved to money market funds. At PIMCO, we chose to believe in active money management. And that really was launched by by our predecessors, Bill Gross, etc. back in 1987 when the short-term fund came around. that that for us when we think about short-term it's really active management zero to five years focused on capital preservation liquidity management and ultimately returns which can be above uh uh a money market fund type of yield.

How do we do that? You create balance and diversification in in the marketplace.

How do you respond to funds that try to goose it with leverage like the triple leveraged dull cash fund?

Well, I think I think that's actually a really important a really important construct is leverage is one aspect. treating things as golden assets. AAA assets when there's obviously different mechanics in it are also in that. We look at AAA CLOS's great products, but they're not necessarily a money market surrogate. Yet, we see them branded often times as a money market equivalent. So, we want to be very truthful about what it is we're doing.

Active management doesn't necessarily mean you're owning a T- bill all the time, but what it does mean is you have the resources to underwrite risks and balance that conservative approach. Okay, I I can't say enough folks how you're getting a view here. The massive inside baseball of short-term paper Jerome Schneider Pimco with Paul Sween

BTMM go that is the Treasury and money market screen on the blue. That's your I mean I'm looking at this up I never look at this up but one year T bill I can get 4%.

Yeah, but you have to understand there's it's been pretty volatile because of the expectation for rate hikes. The one thing to keep in mind though in this whole construct is the me measure of inflation. Now, we have big numbers coming up as you all have stated throughout the morning tomorrow and Thursday, but the reality is for an investor in the money market space over time, it waivers from positive real returns, positive inflation adjusted returns to negative inflation adjusted returns.

And just because you're getting that 4% handle doesn't necessarily mean you're being compensated for the real inflation adjusted returns over that point in time. Now, PIMCO, we think that inflation is going to come down. But at the same time, if you believe that inflation is going to go remain static or maybe move even a little higher over that point in time, depending upon what your ALEC is, it may not necessarily be the right protection.

So you need to have a little bit more nominal return here, closer to 5% that you can have in the active management landscape.

Many of our guests look at the Warian opportunity, whether it's 30-year, tenure, or whatever in the Jerome Schneider short-term space. Is there a Kevin Worsh opportunity as he clarifies his path?

Well, not just the Jerome Schneider space, but the fixed income space in general. First of all, you have to approach this with an active open mindset. That means as you approach, understand that the landscape is undulating. It's changing and you have to have the tools and willingness and framework to change along with it. What's important about this is I think you know from a monetary policy perspective, let's not bet on what's going to happen in September, October, December, next year. understand that the framework which we are moving toward in the monetary policy sense is going back to the golden age of monetary policy.

One with flexibility, one where we have basically the idea of understanding the data in real time and having the ability to react to it. But now we're also moving that and coming with our lessons of the past 20 years having the platinum age of monetary policy overly which is understanding that there's liquidity issues, structural issues that the that central bankers have to be attuned to. Put those two together. While there might be some opaqueness in communication, it actually is quite constructive in terms of how markets should react in the media term and actually lower volatility, not increase volatility.

Now, markets don't necessarily see that at this point in time, and we're seeing markets react in a data dependent world. But from our perspective, this higher income that we're seeing is yes, on one hand, the very front end of the yield curve, five years in end, produces positive returns, positive nominal returns and real returns, but also helps to inoculate you to uncertainties that might be geopolitically driven, inflationdriven, or maybe just how how things are going to turn out in the technology sector going forward.

So, you're getting equity- like returns and fixed income without necessarily having equity volatility along the way.

People actually want to talk to you now at cocktail parties.

It's great. you know, I had to go I had to go get a new suit and a new tie, you know, just to have these conversations at this point in time.

So, do you like the way Chairman Marsh Wars is taking this Fed here with maybe some of the changes he's considering?

Listen, the markets are having a little bit of trouble uh to try to understand that less is more and but he's fine being in that in that paradigm. I think it's going to take a little time to understand what he's trying to do with the committees and the task forces. Ultimatel