Bob Doll, CIO at Crossmark Global Investments Talks Bond Market

Bob Doll, CEO & CIO at Crossmark Global Investments, discusses market reaction to the Moody’s Ratings stripping the US of its last top credit rating. He is joined by Bloomberg's Tom Keene and Paul Sweeney.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:06):
Robert Doll joins us right now this morning.

Speaker 3 (00:10):
Bob, thank you so much for joining us.

Speaker 4 (00:12):
How do you link price down, yield up into a
belief of conviction in the equity market?

Speaker 3 (00:20):
Hard to do, Tom.

Speaker 1 (00:21):
The market has been fighting at several issues, but it's
got a new one the bond market. Although bond yields
have been creeping up, as you know, inflation concerns, tariff
concerns and sort of the four to sixty level on
the ten year and the five percent level on the
thirty year, which we've now broken, have been technicians and nightmares.

Speaker 3 (00:42):
And we've crossed one, will we cross the other? Just
a hurdle for shots, particularly at these valuation levels.

Speaker 2 (00:48):
But Bob, you and I are enough of a fossil
a credit all weekend starting with the secondary of treasury
I got. It doesn't matter, Are you kidding me? Back
to nineteen seventy one to seven World War One? Moody's
has been looking at this. To me, it was like,
am I wrong?

Speaker 1 (01:07):
Bob?

Speaker 3 (01:07):
This is like big news? Right? Absolutely?

Speaker 1 (01:11):
Look, some would say this is the third credit agency
to downgrade.

Speaker 3 (01:14):
What's the big deal? The big deal is the bond market.

Speaker 1 (01:18):
And the big deal is the bill that's sitting in
Congress that's gonna exacerbate the deficit yet some more so,
as long as those things keep happening, we will be
decreasing the number of degrees of freedom. We have to
fix this thing before it really strangles us.

Speaker 3 (01:36):
Bob.

Speaker 5 (01:36):
A lot of people will come into this studio and
tell Tom and I that, Hey, as long as investors,
both domestic international, continue to show up and buy US treasuries,
it just doesn't matter what do you say to them.

Speaker 1 (01:48):
Well, you know, if they're gonna keep buying them and
the level is not gonna change, I guess they're right.
But the problem is the level the interest rates going up.
We've got an economy that is slowing down. We have
inflation that a lot of people want to argue.

Speaker 3 (02:05):
Has been solved.

Speaker 1 (02:07):
And why are bond yields moving up because we haven't
solved the inflation problem? Because we've got Look, the alternative
is the biggest tax increase in US history on December
thirty first. So that's not a pleasant alternative. Simply to
say no to the build it's a city in Congress.

Speaker 3 (02:26):
We've got a lot of work to do. I'm gonna
have the longer way.

Speaker 1 (02:29):
Wait, as you know, Paul, the fewer choices we're gonna have.

Speaker 5 (02:34):
So, Bob, given that backdrop here, what is your what
kinds of discussions are you having with your clients as
it relates to stocks, bonds, alternatives? Where do you go here?

Speaker 3 (02:45):
Yeah, with great difficulty. Look, I think, look, you can still.

Speaker 1 (02:49):
Buy on weakness, and we've had a lot of strength
in the US equity market.

Speaker 3 (02:52):
So you're hearing me. I'm a big canscious.

Speaker 1 (02:55):
We get a few days like today and some prices
will get interesting again.

Speaker 3 (03:00):
The pe ratio on the stock market, as you.

Speaker 1 (03:02):
Know, got down to almost eighteen in the tariff selloff,
but now we're twenty one twenty two. Not that eighteen's cheap,
but twenty one twenty two is certainly expensive.

Speaker 3 (03:12):
So you just have to be cautious. You have to
focus on companies that have a strong free cash flow, that.

Speaker 1 (03:20):
Have improving return on equity so they can weather these
valuation storms.

Speaker 2 (03:24):
See, but one find a question. We gotta run with
all that's going on, particularly in.

Speaker 4 (03:28):
Europe, Bob Dall, we got a higher real rate, does
that just make it harder to do business or is
it ambiguous where a higher real rate shows a spirit
of the American corporate economy.

Speaker 3 (03:43):
I wish it was.

Speaker 1 (03:44):
The latter, but sadly, in reality, it's the former. It
just makes it tougher to do business. And you know,
you hear, like the jawboning of Walmart.

Speaker 3 (03:54):
They have to run a business with low margins.

Speaker 1 (03:56):
If they're gonna have cost increases, they're going to increase prices, period,
full stop.

Speaker 3 (04:02):
Thank you so much.