Speaker 0:
Rich. Big, welcome back to you. This is your first secular forum back at Pimco after spending several years with the Federal Reserve. Well, I'm, I'm thrilled to be back. And as the saying goes, there's no place like home. So it was great, great to come back and, and uh and organize this forum. That's great. We're delighted that you reassumed your leadership for this process, but you have been here over the years and seen several important uh secular forums. And so as you reflect upon past themes, you know, what are the consistent themes that continue to persist today?

Speaker 0:
Yes. Well, I think that's the strength Kim of the process. But if you look back, uh the forums several years ago are still quite relevant. But Kim, you know, what we realize going into this year is that a lot has happened in the past, you know, 12 months, we have a very hawkish central bank pivots around the world. We had the biggest bank failures in us history in the spring

Speaker 0:
uh credit suisse. Um And uh if anything more escalating tension and so where we came down in this form is with our theme of the aftershock economy. So we think people navigating the economy and markets need to respect that there will be aftershocks from these disruptions over the next several years. So you mentioned be titled the second, the Aftershock Economy to talk about those things that we developed

Speaker 0:
is part of our discussion. Well, we really uh we really drew several important macro uh conclusions. First, we do think that there's gonna be more economic volatility in the next five years. You know, if you look back at the decade before the pandemic, especially in the US data, it wasn't very exciting, but it wasn't very uh either. We think those days are, are gone at least for the next

Speaker 0:
five years. Moreover, the FED has done a lot of quantitative easing. It's bought a lot of assets about $8 trillion worth in the last decade or so. And, and so we highlighted what we may think of as QE fatigue or QE exhaustion, which means less policy support in downturns. We think global growth is going to slow with risk to the, to the downside.

Speaker 0:
Another key theme. However, is, we do think that central banks will do what it takes to keep inflation expectations anchored at their targets. Um We're going to have a tough job ahead of them, but we think they will succeed in that. And we also think that rates uh you know, real policy rates, what we've called the new neutral, a prior secular theme are also going to return more or less back into the range that we saw before the pandemic. So with growth expectations lower, as you mentioned and our expectations

Speaker 0:
for inflation to return to longer term levels, how are we thinking about the return drivers of fixed income over the secular horizon? Well, I will say that's probably one of the biggest differences from a year ago, you know, we had reaching for resilience, but investors a year ago were reaching for resilience with yields at pretty low levels, yields are now at the highest starting levels we've seen in 15 years. And so we obviously think investors should, should seize that opportunity. Ok. Great Dan.

Speaker 1:
Well, we touched on this in the, in the research piece and not only have we had significant disruption in the last few years, it's also important to remember that we were in an incredibly low yield environment for almost a decade or more coming out of the global financial crisis. And again, a good predictor of forward returns and fixed income is the starting yield.

Speaker 1:
Uh We expect a lot more volatility across um different cycles, uh economic cycles, uh financial cycles, which is going to produce some interesting opportunities from a global opportunity set perspective as well. So bottom line is that we are excited about a global opportunity set.

Speaker 1:
We're excited about starting valuations and for more opportunistic capital, we think there's gonna be great chances to achieve high returns for the patient investor in some of these sectors that grew a bit too quickly and are gonna present attractive opportunities for for new capital over the next few years.