00:03:32 · Tom Keene, Paul Sweeney, Priya Misra
[00:03:32] S0: You can buy. [00:03:32] S2: How do you manage your risk to AI as a portfolio manager? Because maybe if you own a utility bond, one could argue that has exposure to AI. You have like a risk manager that comes in, knocks on your door and says, hey, I think you have too much exposure here. How's that work? [00:03:46] S1: Well, I think the first line of defense is the portfolio manager. So we're always looking at how much, you know, you think in risk factor terms, there's an AI risk factor. And if you have too much of that in the portfolio, then you have to think about sometimes the best hedge is actually reduce the risk. We've actually, we don't mind the AI risk factor. I mean, the technology works. I think we can question the economics. So let's look at, make sure we know the fundamentals. We like the companies that we're buying and then we hedge it. So much of the economy is dependent on the AI trade. I think this is why owning some treasuries as a hedge in case the economy slows down. [00:04:21] S0: She has three phones plus a red phone on her desk for the hyperscaler bond orders. So next week and on, you see no let up to these mega 6, 8, 10 tranche deals involving billions of dollars. You've got a single sentence in your note that they've been well received.
00:04:21 · Tom Keene, Priya Misra, Paul Sweeney
[00:04:21] S0: She has three phones plus a red phone on her desk for the hyperscaler bond orders. So next week and on, you see no let up to these mega 6, 8, 10 tranche deals involving billions of dollars. You've got a single sentence in your note that they've been well received. [00:04:42] S1: They have. Inflows into bond funds have been very strong, right? If you're getting 6%, 7% high quality fixed income yield and the equity market's super volatile and moving, you know, 15% sometimes in a day in certain stocks, Actually, owning bonds might be a safe haven to just ride out. Is this consolidation of the AI trade? Is this just slowing? Is it unraveling? So I think the inflows is allowing, you know, the good companies, the haves. to issue. We do expect a lot of supply because the hyperscalers came out and talked about CapEx needs. And, you know, I don't know if it's peaking this year or next year, but we're in the process of peaking in terms of CapEx. That's a lot of funding in not just the bond market. I think we're going to see some equity market equity issuance as well. [00:05:31] S2: Priya, thanks so much. We appreciate it. As always, Priya Misra, Portfolio Manager, Core Plus Bond Fund for J.P. Morgan Asset Management.