BlackRock | 3+1 Series
FC Transcript 091626
Episode 120: Rick Rieder
Can I keep my sunglasses on?
Yeah, let’s do it.
Hi, I'm Rick Rieder, Chief Investment Officer of global fixed income at BlackRock. It’s the week of September 21st. This week, we’re taking 3+1 to Future Proof at Huntington Beach, California. Here are three things you need to know, and one you don’t.
First up.
If you go back to last year, I remember saying at Future Proof this is the best investment environment I've ever been associated with. This year, I think people are more on edge. Think about how things have changed. You know, earnings growth has been tremendous, with a big fiscal tailwind, interest rates were lower. Now there’s a bit more, “Okay I gotta think through a lot of these things. It's been pretty good. What do we do from here?” And the themes obviously AI, the debt, interest rates, and then our equities had a good run, what should I do with them? That’s where most of the conversation goes.
Number two.
I think the Fed was in a position that they had to move, given how hawkish they had been in the past. I think the biggest thing for interest rates going forward is the world’s going to try and come up with every answer to what’s driving rates higher. What's more important is actually the questions that you need to ask for your portfolio. And that is, “What do I do to take advantage of rates and where they are today?” From my perspective, you can think about where we’re going. These are yields we haven't seen in our generations. We can create 7% yields in portfolios. I've lived my entire career without being able to create 7%. We can debate why rates are where they are today. I said it’s time to stop talking and start doing. Let’s take advantage of this.
Next up.
I’ve been around this a long time, and when I'm drawn to fixed income it's getting to a boring 7. You know, the sleep at night 7. The percent of securities that get you above 6% in a good environment, meaning default levels stay low is as high as it's ever been. Now there’s a lot of tools. Use things like parts of a high yield market, use Europe, use some of the emerging markets. securitized market is still attractive. I’m now starting to buy some investment grade for the first time in a while. The big thing for us now is get seven, diversify it, and manage the interest rate exposure around it.
And finally.
I went truffle hunting in Tuscany, Italy. We had a dog, from 20 meters away, a tail would go up, he'd get excited and he’d find a truffle. My hot take? There's five essential food groups: peanut butter, bacon, eggs, escargot, and then truffles. My kids always talk about, can we ever get all five in a meal? I think we did it once, but it's pretty hard…with peanut butter.
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