DoubleLine Capital's video: Ch 11 E4 - Bill Campbell Interview with charts

Global Bond Manager Bill Campbell on Ex-U.S. Markets, Central Banking and Digital Currencies Bill Campbell, DoubleLine Global Bond Strategy Portfolio Manager, joins Ken Shinoda on Channel 11 News to discuss Mr. Campbell’s approach to investing in bond markets outside the U.S., and the risks and opportunities he sees on the global investment universe. This episode was recorded Oct. 22, 2020. Mr. Campbell takes note of a sea change at the International Monetary Fund (IMF), which has switched from its traditional emphasis on restraining fiscal and monetary excess to prompting countries to pursue more stimulus. Over the past decade, Mr. Campbell tells Channel 11 News listeners, fiscal policymakers in various countries have tried “to save their bullets for a rainy day. Well, the IMF is telling all governments now to use those bullets.” Central banks, he notes, are embarking on a parallel role-reversal, “moving away from their policy of focusing on stability” in the markets, financial systems and inflation. Instead, they are engaging “in bond purchases across the globe – not just in developed markets in the U.S., Europe and Japan but in emerging markets, too, whereby they’re starting to fund fiscal deficits.” Before analyzing individual credits, Mr. Campbell starts with the issuers’ countries, including the makeup of the government, its fiscal and debt policies; the macroeconomic environment, including risk conditions (e.g., housing bubbles), the rate of growth, the driver of growth (e.g., domestic or export-driven) and inflation; and the central bank’s policies and actions. “Not only do we want to understand that policy, we want to have a view on one, where it’s going, and two, what are the implications,” Mr. Campbell says. “And then, finally, and not least probably … one of the most-important factors for the currency specifically is a balance of payment analysis.” The very openness of global markets is coming into question. Mr. Campbell notes that “another tenet of IMF dogma has been that currency should remain free floating and capital accounts should remain open, meaning that there should be free flow of capital in and out of countries. Will that change this time as well? Not only are they telling central banks to support fiscal policymakers, they’re saying, if you need to support financial stability, we are OK with implementing … capital account controls.” Mr. Campbell and Mr. Shinoda also discuss Mr. Campbell’s new paper, “The Pandora’s Box of Central Bank Digital Currencies,” published Oct. 6, 2020, on DoubleLine.com. “I try to lay out some of the structural elements of the current disinflation environment and … the potential for these new central bank digital currencies to break this framework that we’re stuck in right now,” Mr. Campbell says. “And it’s not just the U.S., it’s around the globe. … Japan has not been able, with all of their QE policies, to generate inflation. Europe, same deal, has not been able to generate inflation. … [W]hat I argue in the paper is that QE is effectively providing liquidity to the banking system, but the banking system isn’t willing to lend out that money.” Article: https://doubleline.com/dl/wp-content/... • This material contains the opinions of the manager as of the date it was recorded and such opinions are subject to change without notice. • The material represents DoubleLine’s intellectual property. No portion of this presentation may be published, reproduced, transmitted, or rebroadcast in any media in any form without the express written permission of DoubleLine. To receive permission from DoubleLine, please contact media@doubleline.com. • The views and forecasts expressed in any materials on this website are as of the date indicated, are subject to change without notice, may not come to pass and do not represent a recommendation or offer of any particular security, strategy, or investment. DoubleLine has no obligation to provide revised assessments in the event of changed circumstances. There can be no assurance that the strategies described will achieve their objectives and goals. • DoubleLine® is a registered trademark of DoubleLine Capital LP. • ©2020 DoubleLine