Politics & Portfolios

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RECORDED EPISODE:

GREG HALL: Welcome to Accrued Interest, a new podcast from PIMCO focused on serving financial advisors and their clients. Accrued Interest is part of PIMCO Advisor Forum, our newly launched dedicated platform for financial advisors. You can visit us there@pimco.com. I'm your host, Greg Hall. I head the US Wealth Management business here at PIMCO.

It's a real pleasure for me to be introducing our second episode, increasing our episode count by 100%.

For those of you keeping track. It's an even bigger pleasure to be joined today by my friends and colleagues Libby Cantrill and Andy Maloney. Andy, you drew the short straw today. You'll be my, my co-host for the program.

ANDY MALONEY: Can't wait.

GREG HALL: Andy's a senior vice president here at PIMCO. He's a highly tenured account manager. He works with FA's across New York and Connecticut, hails from Fairfield, Connecticut, which has been a strong talent pool for PIMCO over the years.

ANDY MALONEY: Sure has.

GREG HALL: The star of today's program, though, was Libby Cantrill. Libby's a managing director. She's our head of U.S. public policy, joined PIMCO in 2007 after starting her career at Morgan Stanley. Spending time on Capitol Hill as a legislative aide. If you recognize Libby's voice, it may be from her very frequent appearances on CNBC, Bloomberg News and other outlets.

She has crisscrossed the planet on our behalf. Tirelessly visiting with clients to help them think through the impact of politics and policy on markets. Welcome, Libby.

LIBBY CANTRILL: Thank you! So excited to be here!

GREG HALL: I joke about how you crisscrossed the planet, but I really mean it. And I do want to start today's program with a thank you. Especially this year. You've just been an extraordinary partner to us and the clients we serve and moving around and helping to explain the latest developments in the election and what the implications are for policy and politics and markets.

LIBBY CANTRILL: Greg, I appreciate that. It's actually one of my, of my role's, sort of greatest joys really, is to talk to our clients, and particularly when there's a lot going on, and we can help provide at least some frameworks for how to think of things. So it has been, it's been tiring, but it has been, but it's also been fun.

GREG HALL: I'd imagine it helps you keep like your finger on the pulse too, a little bit, right? Like,

LIBBY CANTRILL: For sure. And of course, I mean, it's really, it's it quite interesting because you go to different geographies in the country and you hear for sure different feedback, but also, I mean, just globally, I'm having the opportunity to really visit most continents over the last few months, just in terms of how our clients are thinking through the election. And ramifications has been, it's an education in of itself. So...

GREG HALL: Did we did we happen to book a lot of swing state travel for you?

LIBBY CANTRILL: They're, they're actually, yes. And I make it a point whenever I'm in a swing state that I ask, you know, my Uber driver, the person who's, you know, I'm ordering coffee from, like, just, you know, try to drop just politely you know about politics and, and trying to get sort of a feel for how they're thinking through things. And sometimes, like on that, that on the ground research can be quite helpful.

GREG HALL: Libby, I think your role's so cool. You know, not only do you advise our investment committee on policy and politics and how they might affect markets, you serve PIMCO's interests in the industry. You represent the industry, you represent PIMCO you know, on Capitol Hill. you travel around, you get to meet and sample opinions from so many different types of people. Maybe you could do us a favor and give us a better sense of your day-to- day. What's your role here really like?

LIBBY CANTRILL: Yeah, I mean, it is a great job. I have to say. I feel like I have one of the best jobs, honestly, not only at PIMCO but sort of writ large. It really is in some ways a dream job. So, you know, my kind of task is to look at the intersection of politics, policy, the markets and the economy, all to help our portfolio managers make better decisions in terms of trying to drive Alpha for our clients, but also to help our clients as we talked about.

And honestly, any given day will look very different during an election cycle. It is oftentimes talking to clients or talking to either our investment committee or specific sector desks, trying to just evaluate kind of what the general range of outcomes are. Depending on you know, election scenarios, the other years, however, it's very policy intensive.

GREG HALL: Yeah, yeah. your expertise, I think, you know, is really, truly differentiated, not just at PIMCO, but in the industry at large. Andy, I don't want to leave you out. What's, a day in the life of Andy Maloney like?

ANDY MALONEY: Well, I serve financial advisors in Connecticut and New York. And first thing I do like most of our clients is review our morning notes, check performance on a lot of our funds and other portfolios, and then I usually see which of our advisors decided to allocate some capital to PIMCO that day that had been trusted by their clients and then express gratitude for that.

This election cycle has generated a lot of activity leading to, in-depth conversations about the results, the ramifications in portfolio construction.

GREG HALL: Yeah, I would imagine a lot of incoming questions over the last couple weeks in particular.

I mean, just to contextualize it, right? I mean, we all came back, you know, sort of from summer vacation, you know, August, back to school as soon, as back to school's done, Fed cut, right? 50 basis points off the mark. Then some interesting data readings kind of early on, and then right into the election. So why don't we talk about the election.

We got Libby here. Let's, let's move on to,

LIBBY CANTRILL: I didn't really have a summer vacation. I was like, to tell you, I mean, I was like, that sounds charming. A summer vacation. If you just remember what happened in the election cycle, it was not really a...

GREG HALL: We were glad you were working so hard on our behalf.

ANDY MALONEY: It seems like a lifetime ago.

LIBBY CANTRILL: Yeah, exactly right!

GREG HALL: So the election, is it? Over.

LIBBY CANTRILL: Yes, Oh, it is almost over. And I think, you know, regardless of one's politics, everyone can be very thankful that we did have a decisive result at the presidential level. That, of course, you know, President Trump not only won the electoral college by winning the battleground states decisively but he also won the popular vote. And he did that really by, you know, eating in to some of the traditional democratic coalition and some of the blue states like here in New York. But it was decisive.

Now, some of the votes are still being counted for the down ballot races, but for all intents and purposes, we have a good sense for now how things are going to look in 2025. Of course, not only at the presidential level, but also in both chambers of Congress, the House of Representatives, and also the Senate.

GREG HALL: And with a caveat that anything can happen, you seem pretty confident we know how things are gonna look. Do you want to walk through what that’s going to look like?

LIBBY CANTRILL: Yeah so I think one big surprise, again, not only was not that Trump won, 'cause I don't think that was a surprise or shouldn't have been a surprise, but just the fact that he did so, so well in some of these traditional blue states.

But one thing that was another surprise, another kind of component of the election was that there was a lot of split ticketing, much more split ticketing than we've actually seen in previous election cycles. So it meansa voter will vote for one party at the top of the ticket, so for the presidency but then vote down ballot meaning for the house or, and or the Senate race at a different party.

So what we saw was that in many of the states, these battleground states where President Trump won and decisively and Michigan or Wisconsin or Nevada or Arizona, the Democratic Senate candidate also won. , and this is sort of the punchline for markets, he doesn't necessarily have the majorities in Congress that you would've expected given how decisively he won.

And what do I mean by that? And the house in particular, Republicans will have either have a two or three seat majority, meaning that to pass any sort of partisan legislation, you need 218 votes in the house. He can only lose two or three votes and still pass a bill. Now, just to put that in historical context, in 2017, Trump had a 23 person majority in the House of Representatives, meaning that he could still pass legislation and even if he lost 23 Republican votes. So this is just a very, very narrow house majority. 

LIBBY CANTRILL: I can't underscore this, that is not really a governing majority. It's gonna make things that are difficult, even more difficult. We'll talk about task cuts. Those are always easy to pass. Like, you know, it's always easy to give people dessert, but in terms of actually like giving people their vegetables, that is harder. And that will kind of take more probably political capital and may be much more difficult to do.

GREG HALL: So the rumor, the Republican sweep, I mean, not to take away from the victory itself, or where the numbers came down, but the way that translates into governing power is a little bit more bounded than people might think.

LIBBY CANTRILL: Exactly! Especially in the house. And then in the Senate, he has a 53/47 majority, again, picking up four seats, and we don't wanna diminish their victories, But practically speaking, for most things in the US Senate, you still need 60 votes to pass things. So this is where, you know, I think that there is absolutely some justified optimism in the risk markets in particular. But I think people should just remember that maybe, you know, some sort of restraint or sort of sobriety is kind of is called for, because some of this will just be kind of the guardrails in terms of what can actually get done.

GREG HALL: Yeah. These, these are deliberative bodies and they're still gonna deliberate,

LIBBY CANTRILL: They're still going to deliberate. And in fact, like they, you know, they draw their power on deliberating. So, yes.

GREG HALL: All right. The one thing that I think is kinda interesting right now is we obviously, we haven't had a chance to see any new governance or new legislation from the Trump administration 'cause they're not in yet, but they're beginning to identify the people that they want to compose that administration. And one of the things that you say, which I find both true and clever, is that personnel is policy.  

LIBBY CANTRILL: I think what, you know, what President Trump is signaling is the mandate that we were just talking about in terms of his personnel choices, is that he is picking the people that he wants, not necessarily the conventional wisdom or the Republican establishment want.

Now, you know, I think some of them, he may find it difficult to get confirmed.

But more or less, I would be surprised if not most of those, these folks do get confirmed

And so he really is going to be able to have the government that he wants fashion in his own terms, you know, and he says this, by his own admission, he learned a lot by being president also by sitting out for the last four years, and so, like we saw with this campaign, this transition is a very well organized, or very strategic and very intentional for the most part transition effort.

And so we're, so the people we're seeing him nominate, and again, subject to Senate confirmation are folks who, you know, he really wants to serve in his government. Now, again, that advice and consent role that the US Senate plays, they take that incredibly seriously. Again, their powers derived from that oversight function. And so I would be surprised if we were to see at least one or two of the norms not get confirmed.

GREG HALL: Do, do you think if they exercise that right, and a couple of the nominees don't get confirmed, is that, can we extrapolate from that that we've got a bit more of a constraint on executive authority in this next administration? Or is that not something that we should extrapolate, say to economic legislation or fiscal policy?

LIBBY CANTRILL: Yeah, I think again, you know, I, the starting point for most of the US Senate, Republican and Democratic alike is that the president, whomever the president is, should have their own people in government. And so I think that is sort of where they're going to start from. But then they will, again, they take this process very, very carefully. I think, you're seeing a lot of folks be very intentional about not prejudging the outcome, but they're going to wait for the confirmation hearings.

They're gonna wait for the background information from the FBI and what have you. So I don't, I'm not sure you should extrapolate too, too much from it, because I do think that most senators come from that place of wanting to give the president, especially of their own party, the people that they want.

GREG HALL: I wanna ask one more question just about the, formation of the administration right now, and then I think we ought to move on to some market stuff and policy impact on that. But we spent a lot of time at PIMCO, obviously talking about fiscal deficits you know, and the path of government spending. Should we be reassured that the Department of Government efficiency is going to take care of fiscal deficits from here on out?

I think what, what should we expect from DOGE is that because they're not part of the government, because they don't have any sort of congressional authority or, you know, any real ability to affect spending or tax policy, 'cause of course that happens with the Congress. What we could expect from them is basically some recommendations to the president and to the US Congress to, you know, potentially incorporate for future legislation. But this idea that, you know, the president will be able to cut $2 trillion from the US budget deficit unilaterally. I mean, we wish he could, but he just can't. And this is where the,

GREG HALL: As to what percentage of the overall, right? Because it's an enormous percentage of,

LIBBY CANTRILL: Well, so two, yeah. So $6 trillion is the annual US government's budget. So $2 trillion of course of that is a third. I mean, if, even if over 10 years though, you're still talking about $200 billion, those are massive cuts. And just practically speaking, we're really talking about what is on the table is just about a third of the government budget, because two thirds goes to either interest expense or it goes to mandatory spending, which the bulk of that is Medicare and social security.

And of course the incoming president has already said he's not going to, you know, touch those. So you're really talking about, again, a third, and then about half of that is defense spending. So then you're talking about non-defense spending. But, and even though there is absolutely, you know, waste and fraud in the government, like any big bureaucracy, when you actually start really drilling down to these programs, they're often pretty politically popular.

So, you know, the national parks, or making sure that our food is inspected or making sure that planes are landing safely. I mean, when you actually sort of, you know, peel back the onion, it's actually things that people really do care about, they may just not know that they care about. So I think, again, like I'm not trying to prejudge and I, we wish them luck because I think we all are concerned about 6.5% deficits that the US is running as a sort of a starting point before we even talk about tax cuts and what have you.

But I think for all intents and purposes is obviously this oftentimes is easier said than done.

For better or for worse, this is the checks and balances that our founding fathers like, took so much pride in. It also makes, it means that things are really difficult to actually get done in Washington and kind of maddening to get done. But it also, you know, means that they have to be kind of intentional in order to really affect major change.

GREG HALL: So why don't we maybe switch gears a little bit, talk about some of the policies that you think have a better chance of, being actualized. What are some of the areas we ought to be looking at as very likely to occur?

LIBBY CANTRILL: Yeah, so I think there are areas where the market really likes, and that's sort of where the equity market has been really focused on. And then there are things that may cause markets a little bit more indigestion, and that's where the bond market is focused more. So it kind of depends on your lens. The things that I think rightfully so have been adding to sort of this risk on sentiment have been around taxation, sort of the uncertainty that we may have had around tax policy if Harris had been elected, for instance, we do not have under Trump, right?

We know that he is going to try to extend all of the expiring individual Trump tax cuts at the end of 2025. We also know that to your point, he made some promises on the campaign trail about no taxation on tips, reduction of the corporate tax rate for US manufacturers.

I think those things may be more difficult to get done, but maybe you have a sort of symbolic nod in terms of, you know, trying to honor some of those promises that were made. But for all intents and purposes, for people listening, you know, the Trump tax cuts will get extended. I think one big question though is for how long?

And one of the ways I think they're going to sort of try to maneuver from a deficit perspective is just not extend them for 10 years, but maybe just extend them for four years or maybe even a shorter period of time. And that just allows them then to sort of set up and get another fiscal cliff for the next president, most likely. But also to sort of reduce the deficit impact. SALT, I think is going to be part of the mix for those of us who are here,

GREG HALL: Here in New York City.

LIBBY CANTRILL: But, you know, but I do think that the SALT cap will likely increase right now, as many people know, it's 10,000 that could, you know, maybe that increases to 40 or 50,000. I doubt though it's reinstated, it's super expensive to do so, and I just don't think they'll have the wiggle room to do that. So anyway, tax, you know, so again, I think that's partly why the market has been responding, and then of course, the other, you know, narrative that's justified is this sort of deregulatory narrative.

I would put a little bit of nuance, though, around this, is that deregulation very difficult to actually do. What I think people are responding to, and again, for good reason is the sort of regulatory certainty, And that there's just more clarity around regulation, meaning sort of the absence of new regulation is what folks are responding to and then the lack of enforcement, or at least, you know, not as sort of aggressive of enforcement as we've seen under, under Biden.

GREG HALL: I think the term we hear a lot from advisors who are, who are quite bullish on the quote unquote Trump trade is, business friendly, business friendly, gross spirits. Right.

LIBBY CANTRILL: No, and we, I mean, I think for our organization as well, that's true, right? It is a, it will be a more straightforward administration to sort of navigate than maybe a, you know, a hair snap administration would've been, right.

GREG HALL: Right, right, right.

LIBBY CANTRILL: So those are the things that are, I think, you know, again, kinda risk on, and that's why the equity market has responded the way it has. I think the things that the bond market is responding to, again, deficits are gonna be higher. We're starting at 6.5%.

GREG HALL: You said throughout the campaign that no matter what happens, the deficits…

LIBBY CANTRILL: Are a big loser.

GREG HALL: Is a big loser.

Yeah. And I think that, you know, the bond market has internalized that to a certain extent. Of course, we saw that big steepening of the US yield curve. We've seen sort of a subsequent, you know, flattening a little bit of it. But we do think that the yield curve, as we all, you know, have talked about the yield curve should be steeper because of these ongoing deficits, again, you're starting at 6.5% deficit as a percentage of GDP, you know, this year. So you're already starting from a very high level, and that will likely just go higher. Even with DOGE you know, even with some spending cuts, you're still gonna be adding probably from a net deficit perspective. So I think that the bond market's reacting to that, but of course,

Can we pause like a little bit on curve shape? A lot of times when I hear even, you know, pretty thoughtful advisors when they're talking about the fixed income markets really tend to focus on just the absolute level of rates. Where's the tenure gonna be? That's the question that we probably get most frequently.

And I think people don't appreciate as much as they could that the shape of the curve can be a huge driver of performance within fixed income portfolios. And kind of what Libby's giving reference to is this notion is that when you're lending to the US government or to any entity, you get to decide how long you want to lend to them for.

And if you feel like the deficit is kind of on the wrong track, well, you don't have to lend to the US government for 20, 30 years, and you can actually bring your duration, the tenure, the longevity of your lending in to express that preference. Or you mentioned steepness, you can actually make investments based on the shape of the yield curve between different maturities.

And, one, I think even if rates trend higher, which isn't necessarily, you know, a base case, but potentially maybe more probable than it was before we had the election results, the shape of the curve can move such that there's still a lot of terrific investment opportunities if you're actively managing around it,

LIBBY CANTRILL: Yeah! And I think that's the, I mean, that you're an active manager, right? this is where I do think this is a really ripe environment for folks like PIMCO, right? So we can have a neutral duration position, but still taking a very active view on the shape of the US yield curve, which is basically what our positioning is now, right? Which is kinda across our portfolios, this idea that to your point, that if you're holding a 30 year bond that you should likely be making more than if you're owning a 10 year bond. Just because of that, I mean, should you, you sort of require more yield because of those high deficits, time,

GREG HALL: Value of money you're taking more risk.

LIBBY CANTRILL: Yeah. All of those things. And because no candidate, no politician seems to be really serious about deficit reduction and what have you. So I, you know, I think that this is where, you know, we think that the curve should have steepened, we would've sit that said, regardless of who won Harris or Trump, but we did see this pretty violent steepening. Yeah, now, of course, it's come back a little bit. But that is something that we think should, you know, will likely exist. And again, you don't necessarily need to have an overweight to your overall duration. You just have, you know, different parts of the curve in terms of where you're, you know, where you're, you're exposed to.

ANDY MALONEY: Well, this is the top of conversation in every client meeting today advisors are concerned about deficits post-election especially. I polled all of my counterparts nationwide, just to make sure it wasn't just me and Connecticut and New York clients. Are you worried about inflation? Are you worried about interest rates? Are you excited? Are you concerned post-election? First of all, everybody's relieved like all of us at the desk, right? So that's number one.

No hanging chads no contested elections. We know where we are. But there's also a lot of excitement about this pro-growth, right? Deregulated environment. But the flip side is, there's also concern, on the bond side where we spend a lot of time at PIMCO. So this concept that hey maybe this pro-growth deregulated environment potentially tariffs, which we'd love to talk about leads to higher stickier inflation and what does that mean to a bond manager?

And I think something that Greg and I talk a lot about every day, which is this concept of active, right? You named it. It doesn't mean you have to necessarily just own duration today. There's plenty of things to do for an active manager, and it's showing up in the numbers, it's showing up in the flows, it's showing up in the performance numbers. We're excited.

GREG HALL: One of the things Andy said, Libby, that I think would be great for you to kind of address. And by the way, like we don't know your answer here. And it, it doesn't have to be positive for the bond markets necessarily, but in our sense is that advisors post-election, their confidence in the path of interest rates, the path of inflation has been shaken. there's an unsettled sense of, 'Hey, where could this go?' So I'm curious where you think the boundaries are and what factors could give rise to controlling those things? 

LIBBY CANTRILL: Yeah and again, I think this is where the bond market has, I mean, has expressed some of these concerns as well, not only in terms around deficits, but other factors that could potentially, you know, provide upward pressure on inflation. You know, one of those is tariffs and the other is around immigration. Now, I think on those policies we should absolutely take the president seriously.

I mean, he's sort of told us what he's going to do. And I do think that it is kind of this misnomer in the market that, oh, he won't do this 'cause he cares about markets. This is true. He does care about markets, he does care about the S&P, he wants a strong economy. He believes that's gonna be his legacy for sure. But I don't think we should underestimate his, that he cares about tariffs as well.

He thinks tariffs are a really effective tool to reduce the goods trade deficit. And, you know, most politicians don't know what the trade deficit is, but President Trump does know it. And his trade advisors are really focused on this reduction of basically how many things the US is buying versus how many things countries are buying from the US. And they want that deficit because of course, the US likes, we like cheap things from overseas, comparative advantage, what have you.

Where's a services economy, we're not necessarily manufacturing economy. They would like that to decline. So I do think tariffs are going up. I think that the direction of travel of tariffs is clear that they will be increased, but will they go up to the 60% that I think that the kind of the bond market folks really are worried about?

No, I think it is very unlikely. I think what you're going to see is that this administration will be very sequenced about kind of how they put, or how they kind of proceed with tariffs.

But I do think it is bound to your question. And what we saw is that, you know, and did tariffs, you know, increase inflation the first time around?

Yes. But it was relatively marginal. And like the producers and the, you know, so the countries, you know, that are the companies that are, you know, in these countries that are being tariffed oftentimes at least eat some of the tariff. That's at least what we saw the first time.

GREG HALL: A competitive market on the consumer side trying to get goods into the US... 

LIBBY CANTRILL: I think the thing that would be the most inflationary is, would be this universal, you know, baseline tariff of like putting a 10% tariff on all countries and then China would have an even higher tariff.

GREG HALL: So what's the probability of that?

LIBBY CANTRILL: That I idea? I mean, look, I think that legally he has a lot of authority to do a lot on tariffs unilaterally. That is the one area where there, it's very murky. I think he will threaten that. I, you know, I, I think he will be much more intentional and deliberate about where he applies those tariffs. So I would say, you know, definitely lower than 50% odds, but probably even lower than that.

I don't want that, that to conflate with the broader point that tariffs will be going up, but probably in a way that is a little bit more digestible for markets. The other thing is on immigration, and I think that the folks views on the inflationary impact of, you know, reduction in the flow of immigration's, probably a little bit overstated.

You know, I think that there's also some limitation about what the president can do unilaterally on immigration that's much more of a growth issue than it is an inflation issue. So I think kind of a long way of answering your question is, yes, could there be these forces that theoretically could be inflationary, could add to inflation? Sure. But are they going to be kind of bounded by whether it's just the what, what he can do versus, you know, unilaterally or this sort of, you know, nod to the equity markets and the sort of risk sentiment.

GREG HALL: Yeah, and I think, I think a major difference also between, you know, today and a few years back it's just the absolute level of rates where we're starting, right? The ability to absorb some increase in overall rates and still generate income, generate total return is just much healthier than it was when rates were at zero.

LIBBY CANTRILL: And absolutely, and again, I mean, we just think to be an active manager right now, you, when you see these market overreactions, it's like just a wonderful time to be able to, you know, the fact that we have been kind of keeping our powder dry in some areas and that we're able to extend capital and to take advantage of those dislocations is, is great. So in many ways we like the sort of high rate, high volatile market because it gives us more opportunities to make alpha for our clients.

GREG HALL: Let me just ask you one quick question before we wrap up here.

GREG HALL: I'm curious, as you look at over the next few months, what are, what are the key things that, that we ought to train our minds on, make sure that we're looking foreign headlines?

LIBBY CANTRILL: Yeah, I mean, again, I think some of these confirmation battles will, will be battles. They're not gonna necessarily be you know, all that seamless. But I think that for kinda the market's perspective, does that really matter? I'm not sure. I think what really matters is who's gonna be treasury secretary, you know, the independence of the Fed, our view is that concerns about that are really overstated. We think there are a lot of guardrails protecting the Fed.

And unlike 2017 when President Trump was able to come in and basically nominate people straight away to the Fed, there are no vacancies on the Fed right now. This is a really important point. And as a result, he's not going to actually be able to put any personnel on the Fed until 2026 at the earliest. 'cause that's when the first vacancy comes up.

And he can't fire Jay Powell, he can't put himself on the Fed. You know, all these things. There's not, not to say that he wants to, but they're just a lot more kind of guardrails and checks and balances than maybe people appreciate. But in terms of kind what to look out for, so again, like more personnel decisions, who he has on his economic team, who he has at the US Trade representative, that may sound totally banal, but it's actually quite important 'cause that person will be in charge of implementing tariffs.

LIBBY CANTRILL: so again, personnel is policy. So, how he fills those slots will be important. But then I think also, how quickly are they able to get things done in Congress? Because they've put out a very ambitious a hundred day agenda. I think practically speaking, that's gonna be very difficult for them to, I mean, we hope that we wish them well, but I think pretty difficult to actually get all of that done. The other thing I think that we haven't really talked about that just, you know, for folks should just keep their eye on, is that there will be a debt ceiling fight. And that is going to likely come in later spring. Maybe even the summer, sort of depends on revenues and what have you.

GREG HALL: So those are the things like, how much can they get done in that first a hundred days? Will they really be able to get a tax bill done again, like unlikely, but we wish them well. And then sort of how, how that all feeds into sort of, you know, what could be maybe a little bit more a surprisingly volatile kind of debt ceiling fight just given, you know, a question is if they try to attach provisions that are anathema to Democrats.

GREG HALL: All right.

LIBBY CANTRILL: So never boring.

GREG HALL: Never a dull moment, never a dull moment. Never a dull moment. We covered a lot of ground. Andy, do you think we helped some financial advisors just, just maybe develop a bit of a framework here to how to think about politics and markets over the next few months?

ANDY MALONEY: I think we did. I think they're yearning for information. They need help and guidance. And thank you Libby, that was great!

GREG HALL: Yeah, not shy about asking questions either. So we'll make sure that we route a few more questions to you over the course of the coming months.

LIBBY CANTRILL: No, fantastic. And of course, I have my Washington watch. So folks are able, if they are, if people like to sign up for a Washington watch, they're very welcome to do so. You can get our real time thoughts on what's happening in Washington, the intersection of markets and the economy and politics.

ANDY MALONEY: Get your account manager to sign you up for that.

GREG HALL: All right., Andy, thanks for joining us! Thanks for being here!

LIBBY CANTRILL: Thanks so much, guys. Number two, I've always wanted to be second place.

GREG HALL: Well, you know.

LIBBY CANTRILL: Marc Seidner was, I mean he was a good number one. I have to say. But a real but real honor to be here.

GREG HALL: Well, it's good to be in the top three.

LIBBY CANTRILL: Exactly. Beggars can't be choosers. So it’s totally fine. No. That's great. Thank you guys.

GREG HALL: Alright Libby thanks. Let me, in summary, just hit a few key highlights from today's conversation just to make sure that we all walk away with some takeaways. First of all, it seems to me like there's a pretty clear bet that we can expect some continued volatility in financial markets as the new administration takes shape.

Now, as Libby said, there are some natural constraints on how quickly and how much the new administration can accomplish.

I should also point out that volatility isn't always a bad thing, and I think we know this is financial professionals that market gyrations give us the opportunity to make investments at times of fear or greed, allow us to position ourselves actively to take advantage of the opportunities the market gives us.

the key determinant of fixed income returns historically has tended to be the starting place of yields, which are attractive in the market today, which is a stark difference from where we were three, four years ago when we were having maybe similar conversations about inflation in the direction of rates. Now, if you'd like to hear more from Libby, we'd recommend that you visit the advisor forum platform@pimco.com, where her work is heavily featured. You can also sign up for her Washington Watch email newsletter, which she sends out on a weekly basis by contacting your PIMCO account manager.

I hope today's conversation is giving you lots of food for thought conversations with your clients about tax planning, about their financial goals, their plans, risk management, portfolio construction. All of these are areas of expertise for our next podcast guest, John Nersesian, who heads advisor education here at PIMCO. He'll be joining us in December. Please join us again for a listen, then we look forward to bringing it to you. Until then, have a wonderful Thanksgiving. Enjoy the holiday season, and we'll talk to you in December.