April 16, 2025 • 9 mins
Rick Rieder, Senior Managing Director and Chief Investment Officer at Blackrock discusses taking an oportunistic position in the equity market. He is joined by Bloomberg's Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:07):
We begin the sound with trade tensions Wang on the
tech sector. Rick Reader of Black Croc writing. Taking opportunistic
positions in good quality companies in the equity market has
and should continue to pay off for investors with longer
time horizons. I'm pleased to say the Rick join us
now for more. Rick Reader, it's been too long, my friend.
Let's go straight to it. I just want to understand
what you've been seeing with the team over the last
(00:30):
week or so. Have the foreign buyers of treasuries been
pulling back.
Speaker 1 (00:35):
So? I mean, boy, it's been an incredible period.
Speaker 3 (00:38):
I mean, so you know, to start with, I mean
the treasury market to move back in the treasurer of
Friday was extraordinary. This pressure on the treasury market, concern
about international selling that was that was pretty amazing. And
then we bounced back pretty nicely as some calm has
come back in and then you know, the volatile and
the equity market of the daily volatile a little bit
calmer this week. Those present you know, similar to what
(01:00):
I said there before, it does present some opportunity in
these markets.
Speaker 1 (01:03):
It is, I will tell you.
Speaker 3 (01:04):
The uncertainty though has led to liquidity in these markets
that's pretty rough right now.
Speaker 1 (01:10):
When you go to execute, you've got to be very.
Speaker 3 (01:12):
Thoughtful and very tactical about how you do it because
markets are very jumpy and very uncertain these days.
Speaker 2 (01:17):
And Rick, typically the place you go FORLL liquidity is
the treasury market, deep predictable. That's why people buy treasuries. Rick,
can I get your view on what you think was
happening last week? Do you believe that was foreigners pulling back?
Is there a question mark over the US safe haven status?
Or is that just certain traits and winding things blowing up.
Speaker 1 (01:36):
It's a great question. I.
Speaker 3 (01:37):
So, first of all, you know when you have this
pressure on the currency market, and by the way, it's
super acute when you think about equities going down the
same time that the currency is going down.
Speaker 1 (01:46):
Usually the dollar appreciates when you're in this risk off mode.
Speaker 3 (01:49):
So you've unquestionably seen the pressure on equities and international
disposition of the equity of a number of US equities
in the rates market, it's a bit more, but there's
no question about it. There is some concern we fund
so much of our treasury debt internationally. There is some
concern with the currency depreciating, and then quite frankly, that
(02:10):
the back end of the curve going through these periods
of spasm where inflation is higher. You know, even if
the FED cuts, what does it do for the back end.
There's an argument that when you've been the FED cuts,
the back end becomes less tethered, and in fact you
get a steepening.
Speaker 1 (02:26):
Of the curve.
Speaker 3 (02:27):
So yes, I think there's some international disposition for sure
as the currency weakens. But I think broadly it's its
uncertainty and it's just hard. You see you watch days
like Friday. You know, it's just hard stepping in, particularly
in the back end, with this uncertainty still out there.
Speaker 4 (02:40):
So rack, at what point would you step in?
Speaker 3 (02:44):
So so I like gowning the belly of the yield curve,
and I like gowning you know, the front end has
gotten pretty well priced. I mean, you've got to and
I think the way you all described it, you know,
the FED you're pricing an awful lot of cuts for
the FED this year and you haven't seen that hard datauration.
I do think you'll see that in labor over the
next two or three months. You'll see some pullback of
(03:05):
probably some significance in place like healthcare and education, leisure
and hospitality, but we've got.
Speaker 1 (03:10):
To see it.
Speaker 3 (03:11):
But the ability of the Ueld curve, there are some opportunities,
and quite frankly, Europe is more interesting because you don't
have the inflation impact in Europe.
Speaker 1 (03:18):
The ECB has got to cut more aggressively.
Speaker 3 (03:21):
So I actually think, you know, we've you know where
we've seen some real opportunities.
Speaker 1 (03:24):
Actually European rates very different.
Speaker 3 (03:26):
And by the way, you don't you don't have the
international disposition there. In fact, that's where you have probably
international I'm sure you have international buying.
Speaker 1 (03:33):
So European rates is a place recently we've liked quite
a bit.
Speaker 4 (03:36):
Can we take this a step further? You talk about
how US treasury markets tend to be the deepest, most liquid,
and then you talk about how rocky liquidity has been
and how execution risk has become an increasing consideration for you.
Have we gone to the point where on some of
these days the European rates market has actually been more
liquid than the US rates market.
Speaker 3 (03:58):
Good question, More quid. I don't know if you know
certainly the back end of the yield curve. It takes
price to get to get execution. I don't know if
it's more liquid, it certainly feels to me like you
have this ballast of you've got an ECB moving, you've
got a yield curve that's also that's already pretty steep
in Europe. And by the way, if you're a dollar investor,
(04:19):
you get a cross currency swap benefit, and because of
curves so steep, you roll down. So you know, there
are a lot of reasons why I'm sure others as
well as ourselves have felt like it's a it's a
safer place to be, even though you're going to get
European funding of fiscal and issues over the next couple
of years.
Speaker 1 (04:35):
That just takes some time.
Speaker 3 (04:37):
But I don't, you know, I still say the traagery
market generally is much deeper, but you know, Europe, you
definitely see more buyers coming in internationally as well as
what we see in the States.
Speaker 4 (04:49):
It seems like the picture that you're painting is a
regime change. The picture that you're painting is shifting away
from the United States and following a real flood of
money into some of the or markets, and frankly not
betting that the long end of the yield curve will
provide the ballast that it has in the past. Can
you talk about what else has changed? Does this really
(05:10):
undermine or reshape the way you look at sixty forty
or the position of gold in your portfolio?
Speaker 1 (05:17):
That is a long it's a great discussion. That's a
long discussion. A ton has changed.
Speaker 3 (05:22):
Like you say, we've added in the portfolio, is not
in our fixed income. At other portfolios we've added gold.
We think gold is a is a is a good
hedge generally, you know, quite frankly, you have to do
during periods like this, you tactically hold more cash.
Speaker 1 (05:35):
In the portfolios.
Speaker 3 (05:36):
We've done that back end of the yield curve and
interest rates and as a hedge when you've got inflation
moving potentially signmularly higher, not really a big benefit to
the portfolio. So and then the other one, when you
get rates backing up, you can get your yield much
more attractively using high quality assets. So even though you
know you're you know, some pressure on parts of the
(05:57):
high yield market, pressure is in the left loan market,
can actually still create them. In one of our ETF
is bing ETF, we're able to create over seven percent
yield and actually improve the quality of portfolio. Run more cash.
That becomes super attractive. As long as you're not stretching,
go down the credit structure into the triple C rated
high yield, you can actually create more yield today.
Speaker 1 (06:17):
So I like the idea, build some more.
Speaker 3 (06:19):
Cash, use some tools that are different than in the past,
and then quite frankly, just get higher quality and more
liquidity in the portfolio.
Speaker 4 (06:26):
Do you think the rhetoric around the fact that some
investors are saying they're dumping dollar, dumping treasuries, that the
US is losing safe haven reserve asset level.
Speaker 3 (06:36):
Do you think that rhetoric is overblown.
Speaker 1 (06:40):
I'd say sentiment can change really quickly.
Speaker 3 (06:43):
I mean, we're in this period now where there's clearly
a concern about the currency, and there's clearly a concern
about how do we bring the debt down, how do
we get how do we get interest rates down?
Speaker 1 (06:53):
So I'd say near term, you know, there is a
question listen.
Speaker 3 (06:56):
I think reserve currency status status is something that is
absolutely critical to the United States.
Speaker 1 (07:01):
We fund a lot of deck globally. The number of
you know, the percentage of trades in the world.
Speaker 3 (07:05):
That happen in dollars bills as a collateral for for
for many of the transactions in the world. I think
reserve currency status is absolutely critical. Are you denting it?
You're definitely denting it. And listen, I think that I
think this.
Speaker 1 (07:19):
Year is going to change.
Speaker 3 (07:20):
I think we've got a couple of months here where
there's a lot of uncertainty an economy that's probably in
the recession today in terms of certainly where corporate spend
will be. And then but I think as you get
to the back half of the year, things can really evolve.
So listen, I think you're chipping away at reserve currency,
but I don't think there's a natural alternative.
Speaker 1 (07:38):
So and I, you know, and I think I think
things can change. Hopefully they do.
Speaker 2 (07:41):
Rick hopefully they do. But that last point there, I
think is important. If we are in recession today, do
you think risk assets are approprily priced for that scenario?
Speaker 3 (07:52):
So I would say, I would say today, listen, I
think that I think the tail, the tail has the
taist has gotten fatter. I think quality assets there they
are pretty reasonable. There's a lot of quality assets we've
added to agency mortgages, et cetera. Listen, I think you've
got to put a wider range on the equity market
today than you've had before. You've got an economy that's
pretty uncertain, and you've got to you know, I think
(08:16):
you've got to keep your beta a bit more restrained today.
Quite frankly, one of the most interesting trades in the
last couple of weeks has been to sell puts. You know,
not to necessarily increase, but you know, the best time
to sell insurance is after a hurricane.
Speaker 1 (08:27):
And they've been some great trades. Actually sell downside. We
are Gosh.
Speaker 3 (08:31):
You know, if we go down another ten to fifteen
twenty depending on single name, go down ten fifteen twenty percent,
you get paid handsomely for taking that. So keep your
beta restrained, hunker down a bit in terms of risk,
but then find someplace like Gosh. I would add if
we came down, if we if markets went down significantly.
So anyway, a bunch of things to do in this market.
And I think, but I just think you have to
expand your the where you think your return objectives are
(08:54):
going to be, in the probability around it.
Speaker 2 (08:56):
In an environment like this, things have changed a lot.
Rick is good to see you as always Rick Reader
of black Rock there, Rick, Thank you sir. We'll doing
it again soon.
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:07):
We begin the sound with trade tensions Wang on the
tech sector. Rick Reader of Black Croc writing. Taking opportunistic
positions in good quality companies in the equity market has
and should continue to pay off for investors with longer
time horizons. I'm pleased to say the Rick join us
now for more. Rick Reader, it's been too long, my friend.
Let's go straight to it. I just want to understand
what you've been seeing with the team over the last
(00:30):
week or so. Have the foreign buyers of treasuries been
pulling back.
Speaker 1 (00:35):
So? I mean, boy, it's been an incredible period.
Speaker 3 (00:38):
I mean, so you know, to start with, I mean
the treasury market to move back in the treasurer of
Friday was extraordinary. This pressure on the treasury market, concern
about international selling that was that was pretty amazing. And
then we bounced back pretty nicely as some calm has
come back in and then you know, the volatile and
the equity market of the daily volatile a little bit
calmer this week. Those present you know, similar to what
(01:00):
I said there before, it does present some opportunity in
these markets.
Speaker 1 (01:03):
It is, I will tell you.
Speaker 3 (01:04):
The uncertainty though has led to liquidity in these markets
that's pretty rough right now.
Speaker 1 (01:10):
When you go to execute, you've got to be very.
Speaker 3 (01:12):
Thoughtful and very tactical about how you do it because
markets are very jumpy and very uncertain these days.
Speaker 2 (01:17):
And Rick, typically the place you go FORLL liquidity is
the treasury market, deep predictable. That's why people buy treasuries. Rick,
can I get your view on what you think was
happening last week? Do you believe that was foreigners pulling back?
Is there a question mark over the US safe haven status?
Or is that just certain traits and winding things blowing up.
Speaker 1 (01:36):
It's a great question. I.
Speaker 3 (01:37):
So, first of all, you know when you have this
pressure on the currency market, and by the way, it's
super acute when you think about equities going down the
same time that the currency is going down.
Speaker 1 (01:46):
Usually the dollar appreciates when you're in this risk off mode.
Speaker 3 (01:49):
So you've unquestionably seen the pressure on equities and international
disposition of the equity of a number of US equities
in the rates market, it's a bit more, but there's
no question about it. There is some concern we fund
so much of our treasury debt internationally. There is some
concern with the currency depreciating, and then quite frankly, that
(02:10):
the back end of the curve going through these periods
of spasm where inflation is higher. You know, even if
the FED cuts, what does it do for the back end.
There's an argument that when you've been the FED cuts,
the back end becomes less tethered, and in fact you
get a steepening.
Speaker 1 (02:26):
Of the curve.
Speaker 3 (02:27):
So yes, I think there's some international disposition for sure
as the currency weakens. But I think broadly it's its
uncertainty and it's just hard. You see you watch days
like Friday. You know, it's just hard stepping in, particularly
in the back end, with this uncertainty still out there.
Speaker 4 (02:40):
So rack, at what point would you step in?
Speaker 3 (02:44):
So so I like gowning the belly of the yield curve,
and I like gowning you know, the front end has
gotten pretty well priced. I mean, you've got to and
I think the way you all described it, you know,
the FED you're pricing an awful lot of cuts for
the FED this year and you haven't seen that hard datauration.
I do think you'll see that in labor over the
next two or three months. You'll see some pullback of
(03:05):
probably some significance in place like healthcare and education, leisure
and hospitality, but we've got.
Speaker 1 (03:10):
To see it.
Speaker 3 (03:11):
But the ability of the Ueld curve, there are some opportunities,
and quite frankly, Europe is more interesting because you don't
have the inflation impact in Europe.
Speaker 1 (03:18):
The ECB has got to cut more aggressively.
Speaker 3 (03:21):
So I actually think, you know, we've you know where
we've seen some real opportunities.
Speaker 1 (03:24):
Actually European rates very different.
Speaker 3 (03:26):
And by the way, you don't you don't have the
international disposition there. In fact, that's where you have probably
international I'm sure you have international buying.
Speaker 1 (03:33):
So European rates is a place recently we've liked quite
a bit.
Speaker 4 (03:36):
Can we take this a step further? You talk about
how US treasury markets tend to be the deepest, most liquid,
and then you talk about how rocky liquidity has been
and how execution risk has become an increasing consideration for you.
Have we gone to the point where on some of
these days the European rates market has actually been more
liquid than the US rates market.
Speaker 3 (03:58):
Good question, More quid. I don't know if you know
certainly the back end of the yield curve. It takes
price to get to get execution. I don't know if
it's more liquid, it certainly feels to me like you
have this ballast of you've got an ECB moving, you've
got a yield curve that's also that's already pretty steep
in Europe. And by the way, if you're a dollar investor,
(04:19):
you get a cross currency swap benefit, and because of
curves so steep, you roll down. So you know, there
are a lot of reasons why I'm sure others as
well as ourselves have felt like it's a it's a
safer place to be, even though you're going to get
European funding of fiscal and issues over the next couple
of years.
Speaker 1 (04:35):
That just takes some time.
Speaker 3 (04:37):
But I don't, you know, I still say the traagery
market generally is much deeper, but you know, Europe, you
definitely see more buyers coming in internationally as well as
what we see in the States.
Speaker 4 (04:49):
It seems like the picture that you're painting is a
regime change. The picture that you're painting is shifting away
from the United States and following a real flood of
money into some of the or markets, and frankly not
betting that the long end of the yield curve will
provide the ballast that it has in the past. Can
you talk about what else has changed? Does this really
(05:10):
undermine or reshape the way you look at sixty forty
or the position of gold in your portfolio?
Speaker 1 (05:17):
That is a long it's a great discussion. That's a
long discussion. A ton has changed.
Speaker 3 (05:22):
Like you say, we've added in the portfolio, is not
in our fixed income. At other portfolios we've added gold.
We think gold is a is a is a good
hedge generally, you know, quite frankly, you have to do
during periods like this, you tactically hold more cash.
Speaker 1 (05:35):
In the portfolios.
Speaker 3 (05:36):
We've done that back end of the yield curve and
interest rates and as a hedge when you've got inflation
moving potentially signmularly higher, not really a big benefit to
the portfolio. So and then the other one, when you
get rates backing up, you can get your yield much
more attractively using high quality assets. So even though you
know you're you know, some pressure on parts of the
(05:57):
high yield market, pressure is in the left loan market,
can actually still create them. In one of our ETF
is bing ETF, we're able to create over seven percent
yield and actually improve the quality of portfolio. Run more cash.
That becomes super attractive. As long as you're not stretching,
go down the credit structure into the triple C rated
high yield, you can actually create more yield today.
Speaker 1 (06:17):
So I like the idea, build some more.
Speaker 3 (06:19):
Cash, use some tools that are different than in the past,
and then quite frankly, just get higher quality and more
liquidity in the portfolio.
Speaker 4 (06:26):
Do you think the rhetoric around the fact that some
investors are saying they're dumping dollar, dumping treasuries, that the
US is losing safe haven reserve asset level.
Speaker 3 (06:36):
Do you think that rhetoric is overblown.
Speaker 1 (06:40):
I'd say sentiment can change really quickly.
Speaker 3 (06:43):
I mean, we're in this period now where there's clearly
a concern about the currency, and there's clearly a concern
about how do we bring the debt down, how do
we get how do we get interest rates down?
Speaker 1 (06:53):
So I'd say near term, you know, there is a
question listen.
Speaker 3 (06:56):
I think reserve currency status status is something that is
absolutely critical to the United States.
Speaker 1 (07:01):
We fund a lot of deck globally. The number of
you know, the percentage of trades in the world.
Speaker 3 (07:05):
That happen in dollars bills as a collateral for for
for many of the transactions in the world. I think
reserve currency status is absolutely critical. Are you denting it?
You're definitely denting it. And listen, I think that I
think this.
Speaker 1 (07:19):
Year is going to change.
Speaker 3 (07:20):
I think we've got a couple of months here where
there's a lot of uncertainty an economy that's probably in
the recession today in terms of certainly where corporate spend
will be. And then but I think as you get
to the back half of the year, things can really evolve.
So listen, I think you're chipping away at reserve currency,
but I don't think there's a natural alternative.
Speaker 1 (07:38):
So and I, you know, and I think I think
things can change. Hopefully they do.
Speaker 2 (07:41):
Rick hopefully they do. But that last point there, I
think is important. If we are in recession today, do
you think risk assets are approprily priced for that scenario?
Speaker 3 (07:52):
So I would say, I would say today, listen, I
think that I think the tail, the tail has the
taist has gotten fatter. I think quality assets there they
are pretty reasonable. There's a lot of quality assets we've
added to agency mortgages, et cetera. Listen, I think you've
got to put a wider range on the equity market
today than you've had before. You've got an economy that's
pretty uncertain, and you've got to you know, I think
(08:16):
you've got to keep your beta a bit more restrained today.
Quite frankly, one of the most interesting trades in the
last couple of weeks has been to sell puts. You know,
not to necessarily increase, but you know, the best time
to sell insurance is after a hurricane.
Speaker 1 (08:27):
And they've been some great trades. Actually sell downside. We
are Gosh.
Speaker 3 (08:31):
You know, if we go down another ten to fifteen
twenty depending on single name, go down ten fifteen twenty percent,
you get paid handsomely for taking that. So keep your
beta restrained, hunker down a bit in terms of risk,
but then find someplace like Gosh. I would add if
we came down, if we if markets went down significantly.
So anyway, a bunch of things to do in this market.
And I think, but I just think you have to
expand your the where you think your return objectives are
(08:54):
going to be, in the probability around it.
Speaker 2 (08:56):
In an environment like this, things have changed a lot.
Rick is good to see you as always Rick Reader
of black Rock there, Rick, Thank you sir. We'll doing
it again soon.
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