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Artist -- some stocks to bonds now disappointing read on economic growth here in the US pushing treasury prices higher today as investors seek safety in government debt.
But is this the right move -- -- Bryan Evans founder of the drone of funds and portfolio manager of the the drone global bond ETF frank thanks see you again thanks I first let me pitcher I'd take on the GDP report 2.2 percent weaker than expected no surprise -- tenure yield our benchmarks here.
Stay below 2% so what's the message in the bond market in regards the economy.
I think people still flocking to safety as you mentioned.
Into the treasures I still think that's mistaken I think most people are kind of aware that day you're gonna have some not only some inflation issues and by going the Treasury's.
But you're also not going to keep up with inflation in your own investing.
Some still watching the corporate types like the overall corporate even -- GDP is in growing corporate profits are there an all time high and the market itself is undervalued.
Quick thing about the bond bears they keep getting it wrong.
But -- bonds in well over except that and they don't really get Iran right now because we we see rallies in the treasury.
But if you look back on the yields and the returns -- investing corporate bonds that's where the money's been made lately look I wanna talk about corporate so let's just do that so okay -- do you like corporate and you really boil it down I just wanna -- to my -- so I get it correct high quality -- high -- you like both of them you really differentiate here what's.
-- how how do you do your homework what do you look for in terms of spread between these two.
Well and the reason differentiate him because one is is highly correlated to the stock market the other is not.
The high quality it bonds both corporate US high quality corporate bonds and international high quality corporate bonds.
Have some some difference from the stock market they don't moving news and where is high yield bonds absolutely do.
And -- be careful about the correlations of those two areas now the corporations themselves again I mention that corporate profits are an all time high.
Saving all they're not growing that top line -- GDP either revenue figures the bottom lines are growing at an all time high.
And we see that the the debt financing a lot of that I would imagine they are refinancing a lot of debt allow these companies are really good shape -- -- wise they had.
All time record amounts of cash for what they're doing like we do on our own mortgages were saying.
Gosh if we have better interest rates to get one and we get them so the refinancing to not only.
Strengthen their profit loss statements but also the strengthens our balance sheet.
You know watching Europe with an eagle -- -- he Spanish yields up again today what are your thoughts on some of the distressed investments in Europe I mean there's people kind of percolating along there there might be some upside here consists.
That got I think -- I -- a portfolio manager obviously fermenter on a global bond fund at WDB.
And so within my own my own investments have fifteen different major global bond categories.
-- -- I was -- there about the diversity knowingly.
Just for the average investment talk about diverse funds like stocks bonds cash simply but you really have to be careful that this is within the fixed income portion I have absolutely that so what's recommended allocation.
And I recommended allocations since we going to fifteen different areas my top four.
My cure one I'll call them.
Are the three corporates US high quality high yield and the international corporates and the mortgage backed securities my next here does include.
Those higher yielding emerging market debt international.
Sovereign debt and also treasury inflation protected both US and international.
You notice that none of my -- -- holdings.
Classes and holdings are treasuries.
And it it well yes no kidding -- out no kidding at some point those are gonna turn -- that -- interesting about that is that the typical bond index that is where most of the money is set to be very careful about most people are invested in broad market bond indexes.
And they're not holding what you and I would agree which is pretty obvious but if they look inside the got to be real careful about what's there okay interesting stuff right thanks so much.
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