Bonds Price in Iran Risks

Summary

Bloomberg Surveillance Podcast: "Bonds Price in Iran Risks"

Date: July 22, 2026
Hosts: Tom Keene, Paul Sweeney, Karen Moscow
Featured Guests: Tony Crescendi (PIMCO), Tina Fordham (Fordham Global Foresight), Rafael Stewin (TKO Capital), Mona Mahajan (Edward Jones)

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Episode Overview

This episode dives deep into the interconnected world of global bonds, with an eye on geopolitical upheaval impacting markets—focusing especially on the US bond market’s outlook, the ramifications of the ongoing US-Iran war, and European fiscal challenges. Leading market strategists and geopolitical analysts give their view on bond yields, fiscal policy, geopolitical risk, and retail investor sentiment amid turbulent global affairs.

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Key Discussion Points

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1. Bond Market Strategy: Rising Yields, Global Diversification (01:27–08:28)

Guest: Tony Crescendi, Executive Vice President & Market Strategist, PIMCO

• Generalist Portfolio Management & Yield Outlook

  • The "generalist" portfolio manager must balance between US Treasuries, mortgages, and corporates.
  • Yields on the Bloomberg US Aggregate Index have reached 4.91%, the highest point in a year.
    Quote:

    "The starting yield today on the Bloomberg US aggregates is 4.91%. That’s the highest of the past year because yields have been rising lately. The starting yield…is the main determinant of your future returns." — Tony Crescendi (02:07)

• Return and Risk: Coupon Clipping and Probabilities

  • Historically, with a starting yield like today’s, a one-year horizon has delivered a positive return 96% of the time since 1978.
  • Investors in low-yielding money market funds are missing out versus portfolios with higher yields (5–7%) and strong credit quality (AA- ratings, 99.98% historical chance of principal return).
  • Global diversification is key, especially as US fiscal deficits pressure yields—PIMCO recommends sourcing duration globally (e.g., UK, Australia, emerging markets).

• Fed Policy and Bond Returns

  • Raised rates do not necessarily harm bond investors long-term; historical context shows positive returns after rate hikes.
  • Quote:

    "Don’t worry about hikes as a bond investor because it actually—it’s medicine, and it’s tough love, and it’s a good thing." — Tony Crescendi (05:41)

• Moving From Cash to Core Bonds

  • Core fixed income (5–6 year average maturity) outperforms cash 85% of the time on a three-year rolling basis; investors should “run, not walk” from cash to core bonds.
  • The "double lock club": lock in both a low mortgage rate and high bond yields.

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2. Geopolitics and Bond Pricing: The Iran War (10:06–16:23)

Guest: Tina Fordham, Fordham Global Foresight

• Security Dynamics: US, Saudi Arabia, and Iran

  • US nuclear sharing agreement with Saudi Arabia serves to “level the playing field” vis-à-vis Iran, and provides strategic equilibrium in the region.
  • The US is caught in a “classic textbook escalation trap”—objectives were unclear, Iran’s resolve underestimated, and now the war is both unpopular and expensive.
  • Quote:

    "This is the most expensive war in some time, but also the most unpopular. This is the least popular war, I believe, in US history." — Tina Fordham (11:42)

• War Costs, Off-ramps, and Unintended Consequences

  • Fordham sees the war costs exceeding any plausible geopolitical or economic return.
  • Diplomatic off-ramps are absent; episodic violence and potential expansion of the target set are likely.
  • Quote:

    "You’d be looking for off-ramps in diplomatic terms...what is most likely is episodic use of violence and expansion of the target set." — Tina Fordham (13:03)

• Societal Reaction to War Casualties

  • Fordham notes a shift—less public focus in the US on military casualties compared to other conflicts; she points to possible societal “cognitive dissonance.”
  • Markets are largely unreactive, with Brent crude around $90/bbl, below crisis levels.

• Market Thresholds for Oil

  • Hostilities unlikely to push oil sustainably above $100/bbl soon, but the situation remains volatile and unpredictable.

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3. Europe’s Fiscal Future and Investment Opportunity (16:54–21:35)

Guest: Rafael Stewin, TKO Capital

• French and European Debt Outlook

  • Though anxiety is high in France over deficits and political uncertainty, fiscal trends are improving; deficits are expected to drop from 6% to nearer 5%.
  • There’s consensus forming to control spending.

• Capex Needs and Market Dynamics

  • Europe faces an “endless” list of financing needs (defense, data centers, electrification, decarbonization, digitalization), but capital markets are stretched and liquidity is poor.
  • US alternative asset managers are moving into Europe to seize these opportunities.
  • Quote:

    "When you look at the capacity of capital markets in Europe to sustain and finance those needs, those are extremely narrow, extremely stretched...Here is really an opportunity." — Rafael Stewin (18:42)

• European Equity Bets and Stimulus

  • Earnings growth is strong; German fiscal stimulus may finally take effect in the second half, underpinning the investment case for Europe. Inflation and wage growth are more contained than in the US.

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4. US Economic Sentiment and the Retail Investor (23:12–30:34)

Guest: Mona Mahajan, Edward Jones

• Earnings and Sector Rotation

  • Strong consumer economy is boosting company revenues across sectors; tech expected to lead but breadth is returning to markets.
  • Semiconductor stocks’ recent correction seen as healthy and resetting.
  • Quote:

    "We think it’s a healthy sign as well in terms of broadening of market leadership...Earnings season will drive that." — Mona Mahajan (24:29)

• The AI and Hyperscaler Narrative

  • Despite enormous hype, major tech names are lagging the S&P 500. The coming earnings may reset this dynamic if tech can demonstrate revenue from cloud and AI investment.

• Retail Investor Optimism & Geopolitics

  • The US retail investor is "more savvy and…pretty optimistic" despite concerns about the Iran war.
  • Innovation in the US (MAG7 stocks, SpaceX IPO) continues to attract attention.

• IPO Cycles and Portfolio Approaches

  • IPO enthusiasm (e.g., SpaceX) is high, but history shows post-IPO performance often lags; broad index exposure is preferred over concentrated bets.

• Bull Market Duration and Mean Reversion

  • Bull markets are longer and stronger than bear markets; long-term discipline and diversification remain central advice.
  • Quote:

    "The only free lunch an investor will get is diversification. So there’s no such thing as over-diversification." — Mona Mahajan (30:18)

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Notable Quotes & Moments (with Timestamps)

• Tony Crescendi on yield and return:

  "The starting yield is really important. It’s the main determinant of your future returns…Just simply getting that return." (02:07)

• Tony Crescendi on moving from cash to core bonds:

  "Run, don’t walk to that idea...Why not lock in a high interest rate on your fixed income investments?" (06:55)

• Tina Fordham on the war’s cost:

  "This is the least popular war, I believe, in US history." (11:42)

• Tina Fordham on US war objectives:

  "The strength of the adversary in the case of Iran was underestimated...and Iran has gamed out that it is more patient and more willing to suffer casualties than the United States." (11:42)

• Rafael Stewin on European opportunity:

  "Europe now…a massive Capex cycle for years to come…against this backdrop of massive investment needed, markets are extremely stretched…an opportunity for people with capital." (18:42)

• Mona Mahajan on retail optimism:

  "The retail audience we think is getting more savvy and by the way, they’re pretty optimistic now." (26:45)

• Mona Mahajan on diversification:

  "The only free lunch an investor will get is diversification. So there’s no such thing as over-diversification." (30:18)

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Timestamps for Key Segments

• Tony Crescendi/PIMCO on Bond Market: 01:27–08:28
• Tina Fordham on Iran War Risks & Markets: 10:06–16:23
• Rafael Stewin on Europe’s Fiscal Landscape: 16:54–21:35
• Mona Mahajan on US Retail & Earnings: 23:12–30:34

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Overall Tone:
Direct, analytical, and pragmatic, with moments of candid humor and anecdote. The panelists and hosts balance deep market insights with accessibility for a sophisticated but broad audience, never losing sight of how macro risks affect actual investors.

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For listeners who missed the episode:
This installment of Bloomberg Surveillance delivers a wide-ranging, insightful view into the hubs of risk—bond markets, geopolitics, European fiscal policy, and retail sentiment—in a world where uncertainty is the new normal.

Transcript

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[Tom Keene]

Let's do this. Let's jump to Tony Crescendi right now. We're thrilled he could join us. He's been definitely definitive work over the decades. He was a Pacific investment management company. They're now an executive vice president, market strategy.

[Paul]

I love this suit.

[Tom Keene]

What in God's name is a generalist? Portfolio manager?

[Tony Crescendi]

Means we can talk about. Well, think of the Bloomberg Aggregate Index. It's a, it's got, it's a market index. It's got mostly treasuries, 40 somewhat percent. It's got mortgages around 30%. It's got corporates in the mid 20s or so. So generalists will decide between moving between those sectors. Perhaps. Also think about are you moving for

[Tom Keene]

coupon or for total return?

[Tony Crescendi]

Well, today you just think of the starting yield and the starting yield today on the Bloomberg US aggregates 4.91%. That's the highest of the past year because yields have been rising lately. The starting yield. So think the year 2031. I could probably tell you in 2031, God willing, that the yield, the return that you had on bonds was in the US aggregate was 4.91%, 94% correlation since 1978. So the starting yield is really important. It's the main determinant of your future returns. That's the thing I would focus on most is just simply getting that Return. The rise in yields lately provides another bite at the apple. Yields have been rising on and off for about four years, fluctuating. Some investors still stuck in care, still stuck in low yielding money market instruments. In the mid threes or so when you could get yields between 5 and 7% in portfolios, having an average credit quality is the key of double A minus, which is to say 99.98% chance of getting your money back according to historical statistics. So the starting yield is a really important story right now.

[Paul]

Look at first job, I think for this guy. Tom Trading assistant Guess where.

[Tony Crescendi]

Prudential Financial Base 115 Broadway, right next to Trinity Church. It's a wonderful place to be right near Wall Street. A room of stockbrokers which today they call financial advisors. And I learned a lot from them, about 30 of them. And so today, these days worldwide I visit many financial advisors again that they once called stock brokers working for commissions. Today it's a lot different. It's actually a good thing for investors.

[Paul]

Mike, in the fixed income world today. Tony, can I just clip coupons? That's a nice way to make a living.

[Tony Crescendi]

Yeah. And here's another statistic and looking at this yield where it is with yields where they are today and using the Bloomberg aggregate again as a gauge and it can be mirrored worldwide in a one year period going back to 1978, investors one year later have made money 96% of the time. In other words, the return a year from now probably will be positive. So even if yields rise further from here and they've been rising lately, that means bond prices could fall. The Coupon, the income is pound in

[Tom Keene]

the coupon of the 30 year old in France, the guilt in the UK even the United States gives pause. There's some superlatives like price back to where it was 2007. Whatever is, you look at the global system which you can do with Pimco, bring that over to U.S. investors. Is it idiosyncratic or are they attached?

[Tony Crescendi]

It's radiosyncratic. And that's why at Pimco we've been suggesting sourcing duration globally because the US story isn't great necessarily on the fiscal side. We know the US has a big budget deficit. It must continuously issue bonds and that could that could result in yields rising. So we decided lately to source our duration globally, including in the UK for example, where yields are above that of the US Australia for various reasons related to the macroeconomic situation. In the emerging markets, where this year has been very fine performance better than in The US and it seems like the asset class is tending to fare better in the eyes of investors. We think there are many idiosyncratic stories worth diversifying portfolio into.

[Paul]

Michael writes in and says he thinks the Fed's going to raise next week.

[Karen Moscow]

What do you think?

[Tony Crescendi]

We do not think so. Of course Wash isn't in the business of signaling things, but I think we think it would perhaps if it were imminent. We're in the camp of the Fed doing nothing this year. But even if it hikes rates, when I'm talking about this glorious bond market story, bond investing story. So what I think of Alan Greenspan who I'd met years ago, very fortunate when he was an advisor to pimcorn, I worked in Newport Beach. He raised rates aggressively in 1994, battling the inflation fears of the late 70s, early 80s, late 80s and he won as in his last two half point hikes, the end of February of 1994 and then early 95 yields fell. So don't worry about hikes as a bond investor because it actually it's medicine and it's tough love and it's a good thing.

[Tom Keene]

Tell me your generalist portfolio manager, somebody with a real job at the Pacific Investment Management Company like Jerome Schneider is quizzing at the short term market money market. How's this year going? I mean Paul's talking about there's this wall. Is the wall of money moving out of money market funds into the Jerome Schneider space?

[Tony Crescendi]

It is. I'd say we should. You should run from cash to core. But of course cash has its place. But another statistic would show that on a three year rolling basis that core investments meaning an average maturity around five, six years or the Bloomberg aggregate around six years, three year rolling basis meaning three years from now should be able to tell you with 85% confidence that core beat cash. So it tends to beat cash. Especially with yields and cash high threes, the aggregate around 5 and high quality fixed income investments 5 to 7%. So you're probably better off shifting a bit cash decor. So I'd say run, don't walk to that idea. But here's one other point and many Americans have of course locked in on a low mortgage rate. Americans should start thinking about joining what I call the double lock club. You locked in the low mortgage rate on your debt. Why not lock in a high interest rate on your fixed income investments?

[Paul]

How much credit risk should investors be taking? I mean year to date, the high yield index and the Bloomberg terminals forming the best.

[Tony Crescendi]

It's winning. But these yields are Good enough. As I mentioned, double A minus 5 to 7% so you needn't stretch out into and go down in the capital.

[Tom Keene]

Thank you. You got a new book coming out.

[Tony Crescendi]

I'm contemplating a seventh. A few different ideas. One is a novel called the Wall Street Tale which will go back to my days I worked you mentioned potential Beijing. After that I worked at Lehman Brothers in the World Trade Center, 104th floor. Some good stories.

[Karen Moscow]

Wow.

[Tony Crescendi]

From an amazing view I had up there.

[Tom Keene]

Tony, thank you so much.

[Tony Crescendi]

Thank you so much as well.

[Tom Keene]

Wonderful to have him in studio. I should mention absolutely definitive effort and money market funds. A classic, all of 1200 pages. No, I have not read it cover to cover. Stay with us. More from Bloomberg Surveillance coming up after this.

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[Tom Keene]

Joining us now, Tina Fordham. She has been absolutely on fire out on LinkedIn Fordham Global Foresight with all of the international relations, the fractured foreign policy that we're facing now. Tina, I've got to go to the single item overnight that I believe the president of the United States going after the nuclear efforts of Iran has decided to give nuclear to Saudi Arabia. What are we giving to Saudi Arabia is any different than Iran?

[Tina Fordham]

Well, the security pact, the nuclear sharing agreement is normally regarded in international affairs circles as being part of a proliferation of access to weapons of mass destruction. But I think for the White House this is seen as a way to level the playing field in the region and give a loyal ally that is also an adversary of Iran some protection and some peace of mind. And that is probably much needed.

[Paul]

Tina, we heard from Secretary of Defense Hegseth yesterday, testifying before Congress here. I think a lot of people were trying to get a sense of how does the US Pursue its war with Iran with an eye on getting out of there. I mean, a lot of folks are unsure why we were there in the first place. Now we're trying to figure out how we get out of there in a positive scenario. Do you have any view of how this might play out?

[Tina Fordham]

I mean, this is a classic textbook escalation trap. Right. And you know that I've been consistent about this from the beginning, whereby the war aims weren't clear. The strength of the adversary in the case of Iran was underestimated with the new leverage that Iran has with the Strait of Hormuz. Going back to the original objective, which was mainly around depriving Iran of nuclear weapons capability, has now moved further down the list and Iran has gamed out that it is more patient and more willing to suffer casualties than the United States. And so we're trapped. This is the most expensive war in some time, but also the most unpopular. This is the least popular war, I believe, in US History.

[Tom Keene]

Help us just within the myriad of themes, Tina, you're expert at this with your decades of Citigroup is well, the Secretary of Defense is talking a 30, $40 billion war. So far, I would suggest no one on the planet believes that number. What is the Tina Fordham cost of the war?

[Tina Fordham]

I haven't made an estimate, but it certainly is going to cost more than it's going to deliver in terms of geopolitical or economic benefits in normal circumstances. And I was talking to Bill Burns in London here yester former director of the CIA, you'd be looking for off ramps in diplomatic terms. Trump tells us that the talks aren't happening, that there aren't even discussions going on. And so what is most likely is episodic use of violence and expansion of the target set. One of the risks is, you know, that the United States decides to make Iran uninhabitable without putting boots on the ground, which I think would be too high costs, unbearable costs for the United States contemplate.

[Tom Keene]

And Tina, you know this geography, folks. Here's an anecdote. I'm in London at Finsbury Square. It's where Bruckner wrote many of his symphony symphonies at the Bloomberg headquarters there it was just famed, famed headquarters. And Tina, I was absolutely thunderstruck how the United Kingdom media followed a soldier who died in Afghanistan and followed the casket home the entire way. Now, I'm not saying we're doing that right now with the dead and injured of America, but our reaction to this, these soldiers and sailors in harm's way, doesn't seem to be like other American wars. Has there been a shift in America to the agony of war?

[Tina Fordham]

Yeah, it's a very deep question. And as you share that anecdote, I would just add for your viewers and listeners that not only is the casket followed here, but people line the streets, strangers, people line the streets in a sign of respect. And it's a puzzle really, isn't it? I mean, the US Casualties currently are around. You know, my father was a war orphan in World War II. I know how these are all tragedies. And yet are we inured to the human costs of war, the economic costs of war? There is some pretty significant cognitive dissonance going on. But to bring it back to the markets, in a way, the markets are letting it happen by, you know, by not reacting, if you like, you know, we're still only at what, $90 a barrel?

[Tom Keene]

Yeah. Do you have a price in your head, Tina? One final question. Do you have a Brent crude price in your head where things unravel for the West?

[Tina Fordham]

I don't think that the hostilities will continue at a, at a sustained clip to get over 100. I think that's the kind of magic number. Having said that, the White House didn't expect this war to be going on for as long as it has and for the regime in Iran to still be in place and for the people of Iran not to have risen up. It's the law of unintended consequences and you can never plan the perfect ideal scenario.

[Tom Keene]

It's just wonderfully valuable. Tina Fordham, thank you so much. Fordham Global foresight with that $100 mark on oil. Stay with us. More from Bloomberg Surveillance coming up after this.

[Bloomberg Host]

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from 7 to 10am Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Tom Keene]

Joining us right now, Rafael soon, is that correct? I want to get it right through is good. Rafael Stewin joins us here at Tickle Tico Capital Ticket Capital hugely out of massively prestigious derivatives in capital markets at Soc gen years ago. Fact, I read every word of the pre election in Le Monde two days ago into the chaos of 2027. I got a backup price down yield up in French paper. Is it an opportunity or do you really see stress in the fixed income market in France?

[Rafael Stewin]

Yeah, if you take the front page of the newspapers in France, it's a lot of anxiety. We don't know what's going to happen. We know the deep left and the deep right are potentially contenders there. And what's going to happen with deficits? Debt yields on government debt is obviously a high anxiety. If you look back though and take a broader picture of what's happening, you're seeing actually deficits trending down in France from 6% starting point. We're probably going to be nearing 5% very soon. So that's good news. And there is somewhat of consensus building now around the fact that yes, it's time to act, that it's probably gone too far, that you know, people have to rein in spending and make sure that deficits can, can be manageable going forward. So obviously a lot of uncertainty, but maybe not as scary as it seems.

[Paul]

How are just, you know, when the tariffs came in, a lot of money left the US markets and went to other parts of the world, including Europe in particular. I'm not sure that trade's still there. How do you think about investing in Europe versus maybe the US or Asia?

[Rafael Stewin]

So it's interesting, the big picture in Europe now that we're entering as well as in the us, a massive Capex cycle for the years to come. When you look at the list of things we need to finance in Europe, it's endless. We need to finance defense after decades of underspending. We need to finance data centers and we are far behind compared to where we are in the us we need to finance electrification, decarbonization, digitalization, you name it. And so against this backdrop of massive investment needed, when you look at the capacity of capital markets in Europe to sustain and finance those needs, those are extremely narrow, extremely stretched. Liquidity is very poor on capital markets in Europe. And here is really an opportunity. It's an opportunity for people with capital to bring capital, take part of what are oftentimes mega trends in the making. And so that's what we are doing at tko. But guess what? This is what a lot of money managers across the world are doing. You're seeing for instance from the US a lot of alternative asset managers flocking to Europe, opening offices to bring capital to Europe.

[Tom Keene]

Your heritage out of socj and with their immense derivative and mathematics background is to always be aware of what is the bet. What is the bet right now on France? I'm not in France on Europe. Excuse me, what's the bet that's being placed by finance in Europe right now?

[Rafael Stewin]

So the idea here is you say, well, it's a pretty good setup to invest in Europe. If you take the broader picture, earnings will be strong this year, double digit earnings growth, which in Europe is quite something. You will have potentially the impact of fiscal stimulus coming from Germany. You know, that's a pretty sizable stimulus coming. It was a bit on the disappointing side in H1, some delays in implementing this stimulus. And there is a bet and a case to be made that in H2, you will see the effect of this stimulus. You will start using the fact in infrastructure, in defense, and so on, that inflation compared to what we get in the US is somewhat a bit more contained. I'm not talking about energy, but energy inflation, wage growth, service inflation, all of that is a bit more manageable.

[Tom Keene]

I got 20 seconds. Mrs. Keene. Thank you, dear, for listening. Today emails in and she says, would you ask Raphael what in God's name happened to France in the World Cup?

[Rafael Stewin]

Oh, please, don't start with that. You know, we had a nice conversation and here we are.

[Paul]

That's it.

[Tom Keene]

I'm sorry. They wanted to win.

[Paul]

They thought they were going to win it.

[Tom Keene]

It was like a layup and oops. But really, that was sort of like the one. France and Spain was like the.

[Rafael Stewin]

Yeah, the best team won. I think we can say that.

[Paul]

Yeah.

[Rafael Stewin]

I'm such a rap.

[Tom Keene]

I don't know beans about soccer, but it was magical to say, can you come back?

[Rafael Stewin]

I wish I can.

[Tom Keene]

Yeah.

[Rafael Stewin]

Okay.

[Tom Keene]

I'm gonna work on my friendship. We're just trying to get a remote here. We want to go get a remote with you as as we can. Rafael soon with us here from Chico capital of Paris. Stay with us. More from Bloomberg Surveillance coming up after this.

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[Tom Keene]

This is incredibly well time. Mona Margin does wonderful work at Edward Jones tearing apart the market, piecing it back together. She has really abrupt, terse notes, which I love is part of it into earnings season. And I saw this today with Philip Morris of Switzerland. Not Eltria, but pmi. A shocking revenue number. Are we going into this ballet where we don't understand the linkage of nominal GDP over the revenue pop?

[Karen Moscow]

You know, look, I think to your point, the consumer economy has held up really well and that is showing up in revenues across sectors. So yes, we are expecting tech to have an amazing pop this earnings season, but we are also seeing this revenue gain across consumer discretionary across.

[Tom Keene]

I'm not hearing enough about this. I hear earnings this and you know, a lot of navel gazing in that. But Paul, I remember Honeywell years ago like 4% revenue growth and all of a sudden they were doing 6% because of a spirited economy.

[Paul]

So we've seen, we've seen some rotation in the markets here. Maybe out of some of the tech names into, I don't know, cyclicals, defenses. Is that, is that a short term trade or is that the market telling me something?

[Karen Moscow]

You know, it is interesting. I do like to see some of the most parabolic moves in the market. Take a breather here. So an area like semiconductors was up close to 100% before we saw a little bit of a pullback at 20% type of correction. But we thought that was healthy. It was a good reset. Semis are still up 60, 70% this year. So not a concerning year to date number by any means. The rotation though we like to see it, we think it's a healthy sign as well in terms of broadening of market leadership. This, you know, year four of a bull market. Does it have legs? Well, I think earnings season will drive that. We're going to get Alphabet tonight. That'll set the tone and we think tech could potentially get some legs again here.

[Paul]

So what is the story from your perspective these days? I mean you just buy the chips? Do you try to buy in the, what people call the picks and shovels, utilities? How are you guys thinking about?

[Karen Moscow]

Yeah, you know, certainly what we've seen this year, interestingly, the hyperscalers and the Magnificent Seven have actually lagged the broader market. So they're up, you know, 1, 2% while the broader S&P is up 9, 10%. And so could we see an opportunity there? Especially if we do hear that not only are they spending more, but that spending is yielding some results, they're seeing better revenue growth, cloud revenue growth, potentially. They talk about return on this investment. I think all of that would be a good signal that the AI trade not at its last innings, but maybe even the middle innings of the cycle. And so we're hopeful that's the direction of travel and you get some opportunities in those lagging parts of the market.

[Tom Keene]

You have a wonderful vista, radically different folks. And this all going back to the Edward Jones who I never met. I regret I never met him. He, he lived to be a ripe old 89 dying in the early 80s. You have 15,000 ish branch offices managing umpteen gazillion dollars. The phrase here folks were TNT brokers. This is back to before World War II, which is they travel the countryside out of Missouri, St. Louis, Tuesday through Thursday used to be the heritage. Okay, so now you're not tnt, but you people have a handle on the nation like nobody else. What's the mood out there?

[Karen Moscow]

Yeah, and it's a great call out. Look, we have a client in every county in the U.S. so yeah, to your point, the retail investor base we have a strong handle on and look, this investor base has been leading the way. Actually it used to be institutions that, that LED markets. It's the retail audience we think is getting more savvy and by the way, they're pretty optimistic now. Are there worries out there? Yes, we're seeing a re acceleration or re escalation in the Iran war. Geopolitics never sits well with this audience. But there's some optimism that the end goal here is that neither side of this aisle will want, you know, it's not great for either side of the aisle. And so we want to make sure that there's some de escalation over time on the geopolitics. And by the way, innovation has been something that's captivating the retail audience. So the US has been hotbed for innovation. All the MAG7 are housed here. I think there's a lot of optimism around that as well.

[Paul]

Like a, you know, this year we're getting a lot of big IPOs. SpaceX obviously the largest. What is your Client base, the Edward Jones client base in every county in the country. Are they ringing up their advisor saying you got to get me into SpaceX or how they, how do they view those types of things?

[Karen Moscow]

You know, there was a lot of enthusiasm around Space X. The space economy over time could be exciting here we were very mindful that the IPO cycle tends to look very similar and it almost happened again, this time identically in that there tends to be a pop up front but over a 12 month period IPOs tend to lag the broader S&P 500. And so certainly SpaceX in particular is probably back at its near its IPO levels. There's ways to play it. If you have any sort of NASDAQ index exposure or Russell index exposure, msci, you're getting exposure to Space X. And so I think that's the basket approach is still the right one there.

[Tom Keene]

Let's talk reversion to mean. We've had a lot of fancy people in today like you and it's fine, it's an easy pet phrase to say. But for a moment, what is reversion to mean after a great bull market market?

[Karen Moscow]

Yeah, you know, look, I think bull markets tend to be longer and stronger than bear markets and that's what we know. So on average bull markets are five and a half years. We're probably four, four and a half years into this bull market. They tend to be up over 120% versus bear markets tend to be shorter lived. So you know, one one and a half years, maybe down 20 to 30% but they really present opportunities. So you know, in our, from our perspective you want to think long term, you want to think your 20 to 30 year horizon. And so while there could be some mean reversion after a bull market, if you are young enough, if you still have that horizon in front of you, there's your opportunity.

[Paul]

I think what's something that's new in your career? My career ETFs such a big part. How does Edward Jones, what's a typical Edward Jones client do with ETFs?

[Karen Moscow]

Yeah, you know, look, ETFs are a great low cost way to access a broad set of stocks, a broad set of sectors and we think get index exposure. And so, you know, I think it was Warren Buffett who said there's not been any individual fund manager that has beat the S&P 500 over a 10 year period. And so getting that ETF and index exposure in our view is a great

[Tom Keene]

way to with, with the ETFs are just I'm running out of time.

[Karen Moscow]

Oh, yeah.

[Tom Keene]

With the ETFs, are we over diversified today?

[Karen Moscow]

You know, I think there's ways even in ETFs to have sector ETFs, to have thematic ETFs so you could focus your investing. But in our, in our mind, the only free lunch an investor will get is diversification. So there's no such thing as over diversification.

[Tom Keene]

Speaking of free lunch, stop the food court on your way home. Thank you so much with Edward D.

[Bloomberg Host]

At Jones this this is the Bloomberg Surveillance Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 7 to 10am Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.